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How Zaarly Storefronts Payments Work

10/12/12 10 December, 2012 1 note

We have a simple yet powerful mission at Zaarly: help people make money doing what they love. We believe that everyone has useful skills that they can package up to sell to others. Zaarly storefronts are how we enable true person-to-person commerce by allowing buyers to purchase goods and services directly from storefront owners.  The payment experience is a core part of what makes Zaarly great, and I want to talk a bit about how it all works.

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If you have any experience with systems that move money around (charging credit cards or transferring money via ACH) you’re fully aware that the actual flow of funds is dizzyingly complicated. To keep a long story short, the idea of a buyer paying a storefront owner directly is simply not possible with our existing banking infrastructure. There are significant time lags between different intermediaries and clearinghouses, so funds aren’t actually settled for multiple business days.

On Zaarly, however, a storefront owner will receive their funds in their bank account the following business day. This is a convenience few other services on the planet provide, and we’re very proud of it.

So, how does it work?

The details of charging credit cards and transferring funds to Zaarly storefront owners  are quite simple, despite the complexity of the underlying banking infrastructure. We have two fundamental fund-moving primitives — money-in (by charging a credit card) and money-out (by transferring funds to a bank account). We use a payment provider called Balanced to carry out the details of these operations.

Using Balanced as our payment provider has been a really fantastic experience, and here’s why:

A completely white-labeled payment solution. Our users never have to be redirected to another website or get emails from our payment provider. Our users are always dealing with us, and we deal with Balanced behind the scenes.

Next-day ACH. From when we submit the ACH transfer API operation, the funds will appear in the storefront owner’s bank account the following business day (subject to a daily cutoff time of 3pm PST). I cannot reiterate enough what a powerful user experience this is: As a Zaarly storefront owner, I can charge a buyer on Monday afternoon, and the funds will be in my bank account on Tuesday morning. No waiting periods, no intermediate holding accounts, no manual process for the user. Just charge the buyer, and the money shows up in your bank account the next business day. Simple as that.

Credit card gateway and ACH provider under one roof. Credit card payments and ACH transfers move in and out of the same account. There are two things worth mentioning that make this extremely powerful.

First, credit card payments are transactional — as soon as the Balanced API operation to capture a card charge succeeds, the funds are available in your Balanced escrow account for subsequent API operations (Most credit card gateways impose some sort of holding period).  What this means is that as soon we successfully charge a buyer, we collect our fee and transfer the remainder to the storefront owner via next-day ACH.

The result of this is the second, very crucial point: you do not need to manage a “float” balance to ensure you’ll make payout that day. This is a *huge* reduction in operational and cognitive overhead, and cannot be understated. 

Balanced as the authoritative ledger. Knowing that we can rely on the integrity of Balanced’s ledger and record of what took place enabled us to move faster to get to launch than we otherwise would’ve been able to. Don’t underestimate the value of relying on the experts in their area of expertise, so you can focus on yours.

Free merchant identity verification. As part of the process to create merchant accounts for storefront owners, Balanced verifies the storefront owners identity as part of the process, and they try to do it in the least intrusive manner possible, by not asking for the user’s social security number unless absolutely necessary.

Small company, personalized customer service. Balanced is still a relatively small company, and being an API service, they are extremely developer-friendly. Having the experts that built the system at the ready to help is hugely important as a customer to an API service. The Balanced staff was extremely helpful throughout our implementation process, and they continue to be valuable as support cases come up. Getting help with an issue is as simple as shooting over an email or hopping into their IRC channel.

Pretty much everything that affects customers happens in the open on GitHub. If you need support right now, just hop in IRC, and they’re almost always active. If you have a suggestion for the dashboard, open a ticket. If you’d like to see something changed in the public API, open a ticket. They run their company like an open source project, and it makes for a fantastic customer experience.

If you enjoyed this post, please upvote it and join the discussion over on Hacker News.

- Alex Sharp (@ajsharp)

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