Account Funding

After a client is successfully onboarded and an account is created, they can fund their platform account in several ways as described below. For additional information on moving money through transfers and payments, please refer to our Intro to Transfers and Payments Guide.

External Funding - Push payments

External funding, as its name implies, requires the client to take the initiative to arrange for funds to be sent to the new account from an external source, such as another external bank account they own or through their employer. This is commonly referred to as "pushing" funds to an account.

Mechanisms / Payment Rails

Common mechanisms or rails to transfer money from external accounts for account funding include

• Direct Deposit - Direct deposit is a method of electronically depositing funds into an account from an employer or a government agency. It's most commonly used for the distribution of salaries, pensions, tax refunds, or government benefits. To set up direct deposit, the account holder provides their account and routing numbers to the payer, who then arranges for the funds to be deposited directly into the specified account on a recurring basis. To streamline this process, the platform can facilitate this payroll switch within their app via third-parties like Argyle.
• ACH - ACH is a secure, efficient network for processing electronic transactions in the United States. Users can fund their accounts through ACH transfers by initiating a direct transfer from their external bank account to their new account. ACH transfers usually have lower fees than wire transfers but might take 1-3 business days to process. Learn more in Incoming ACH Tutorial.
• Wire - Wire transfers are a fast, secure method for moving funds directly from one bank account to another, domestically or internationally. Unlike ACH transfers, wire transfers can typically be completed within the same business day, making them ideal for urgent or large transactions. However, they often come with higher fees compared to ACH transfers. Clients can initiate wire transfers from their external bank account to their new account. Learn more in the FED Wire Tutorial.
• RTP, Fednow - The client initiates a real-time payment from their external bank account to the newly created platform account. This is typically done via the banking apps provided by the external bank. Real-time payments are usually inexpensive, and the funds settle in near real-time. As of 2024, many banks in the US do not offer real-time payments.
• Platform Issued Cards - If the platform issues cards linked to the newly created platform accounts, the client can use these cards to transfer funds in real time from external wallets like CashApp and others.
• Visa ReadyLink - Cardholders can add cash to their Prepaid cards at participating merchants if they are Visa ReadyLink enabled. These cards will have the Visa ReadyLink logo on the back. Cardholders can add funds to their account from a ReadyLink enabled merchant terminal. This ReadyLink functionality is only available for “Card Present” USA domestic transactions. ReadyLink merchant locations are only available in the USA. Merchants may set their own fees for cash reloads.

Costs:

• In general the cost to the Platform is near zero and is typically born by the Client with the external financial institution.

Risks

• The funding risk from an external push transaction are low. However, there are still fraud and AML risks. For example, the Client may have stolen access to an external account, or may be using the Platform account in a chain of accounts to obfuscate the true source of the ill begotten funds.
• When external push funding involves extra steps outside of the Platform app, there is a higher risk of Client abandonment.

In-App Funding - Pull

In-App funding means that the account funding is initiated directly from within the Platform app itself. This has the lowest "friction" and reduces the risk that the Client might lose interest and abandon setting up their account and conducting business with the Platform. It is commonly referred to as "pulling" funds from an external account. While this is a better user experience, it can add considerable risk to funding the Client's Platform account

Mechanisms / Payment Rails

There are a number of mechanisms or rails to pull money from an external account to a Platform account :

Internal Transfer

If the Client already has another account with the same Platform, it is easy to simply transfer funds from this existing account to the newly created Platform account. The funding account can be a pre-existing savings account, or a cash rewards account, or even an account that holds the proceeds from a loan distribution. Learn more in the Make an Internal Funds Transfer Tutorial .

ACH - Pull

In this funding the method, from within the platform app, the Client will initiate an ACH debit transaction to Pull funds from an External bank account. To do this they will need the bank routing number and their external account number to create the transfer request.

Before initiating the funds transfer, we must verify that the Client is an owner of the external account, and ideally determine if the account has sufficient funds for the transfer. Third party services like Plaid and MX can facilitate such verification by allowing clients to login to and link their external bank accounts from within the platform app or prove ownership via other mechanisms like micro-deposits.

Once the account ownership is verified the other remaining risk is whether or not the external account has sufficient funds for the transfer. See the Risks section below.

Debit/Pre-paid/Credit Card - Pull

Another method for funding a newly created account is to pull funds in from a credit or debit card issued by another bank.

For example, John created a new Platform account and wants to fund it with $50 from his Visa Debit Card issued by Bank of America. To achieve this, the Platform would act as a merchant (acquirer) and would initiate a $50 charge against John's BOFA Visa Card. This transfer is nearly instantaneous. However, since this uses the card network, the cost for this transfer would include the "interchange" fee that the card network charges. Learn more in the Acquiring Card Transfers Tutorial.

Costs

The costs associated with In-App Funding vary by the transfer method:

• Internal Transfer - Zero costs for the Platform.
• ACH Debit Pull - Costs are for account verification and origination of ACH debits are fixed irrespective of the funding amounts. However, effective costs can increase due to return fees for insufficient funds and losses, especially when dealing with newer customers.
• Debit/Pre-paid/Credit Card - Pull - The pricing might work out similar to ACH debit pull for smaller amounts, but gets progressively costlier for larger amounts due to network interchange fees being calculated as a percentage of the funds being transferred.

Risks

The funding risk from an external pull transaction are:

• Insufficient Funds - (ACH Specific) ACH debits are not real-time, the Receiving bank has upto 48 hours to reject the incoming ACH debit after receiving the payment instruction. For better customer experience, some platforms may choose to make funds available to thier clients within this return timeframe. In the event the ACH debit was returned, that Platform would be liable for any potential losses.
• Disputes - Both NACHA and card networks allow an accountholder/cardholder to dispute pull payments. In such cases, the Platform would be responsible for the cost to investigate and resolve the dispute and any potential losses arising from the same.
• Fraud and AML - the Client may provide a bank account or card number that does not belong to them. The actual account or card holder would likely dispute the charge. The Client may also be using the Platform account in a chain of accounts to obfuscate the true source of the ill begotten funds.

Comparison of Pull Transfer Methods