Finicity is part of the Mastercard family. Our open banking platform provides the financial data you need.

Finicity’s Chief Engagement Officer Steve Smith lays out the open banking payment security landscape with PYMNTS. Democratization of data. The consumer-centric mindset. Walking the tightrope between consumer ease of use and security. These are concepts that Steve has developed and incorporated into Finicity’s platform from the beginning. Complete, end-to-end digital transformations of verticals like personal finance management and payments are the next phase of open banking technology, Steve says. “Open banking is going to impact every aspect of financial services over the next decade.”

Watch the video here.

The financial services landscape is set to change drastically as open banking permeates and changes the way consumers view and use their financial information. As such, regulators, financial institutions and fintechs have striven to create a mutually beneficial relationship surrounding the use of consumer permissioned data (CPD), a trend that will test the limits of innovation, security, competition and more. 

Former Mastercard EVP of Global Open Finance Innovation Nick Thomas and PYMNTS Senior Editor Rasika Rane discuss data access and open banking in this PYMNTS Fireside Chat. 

Tech-forward, software-as-a-service (SaaS) startup LoanPro is partnering with Finicity, a Mastercard company. The partnership integrates FinicityPay™ with LoanPro’s platform, offering consumer-permissioned data, smart analytics, account ownership verification tools, and additional solutions to mitigate payment failure and fraud. 

LoanPro CEO and co-founder Rhett Roberts said that working with Finicity and utilizing its products will be an ‘excellent complement’ to LoanPro. “Our focus is to provide the most robust and quality user experience in the world for loan servicing, and this partnership helps to move that initiative forward,” Roberts said.

Read more here.

Mastercard announced a bank-driven buy now pay later (BNPL) platform to allow borrowers to apply for loans through mobile banking and be able to use a virtual card when making the purchase. The platform will pre-qualify borrowers for zero-interest installment loans.

Approved borrowers can fund their purchases with participating lenders and repay the loans through their card, checking or savings account.

You can read on how Finicity factors in at American Banker ($).

On a daily basis, payroll providers solve many of the pain points faced by HR teams. For example, payroll solutions save employers time and resources and deliver valuable services that enhance the employee experience. 

However, by leveraging their valuable data in new ways, payroll providers have the ability to deliver income and employment verification solutions that even better meet the needs of HR teams. Payroll providers can benefit from their data by connecting with an open banking platform—a consumer-permissioned means of accessing financial data via APIs. By leveraging data to enable empowering and innovative services open banking benefits both the service provider and the consumer.

Ultimately, payroll providers also hone their competitive edge and bolster their security when they connect to open banking platforms. Once connected to the platforms via API, payroll providers empower employers and consumers to benefit from their payroll data on request. The API connection is a partnership between a payroll provider and an open banking platform. A mutually-beneficial partnership that’s dedicated to delivering the best, most secure experience to businesses and their employees. 

Providers can use the open banking connections to add new services and apps to their offerings. Additionally, the data doesn’t have to be sent in batches to be stored in a database to be used by third parties. These real-time data connections benefit consumers, payroll companies, and employees by minimizing when and how data is used and providing it more securely and transparently. 

Let’s look at how these partnership-driven connections help payroll providers unlock new opportunities.

How Does Connecting to Payroll Data Work?

Payroll data can streamline the verification of income and employment for various use cases, such as:

Payroll providers can connect to open banking platforms and data aggregators in a variety of ways. Many aggregators offer only credentialed access to payroll data, which means that the data access provider uses a consumer’s credentials to access a payroll platform and get the necessary data. While this method may deliver the data necessary for employment and income verifications, credentialed access is less secure for payroll providers and a less consumer-friendly experience since employees may not know their payroll provider or login credentials. 

Ideally, connecting consumers to their valuable payroll data happens via direct API connections. API connections are far more secure than credentialed access and don’t require employees to know their payroll portal credentials to access the content. The user doesn’t even have to know their provider. An open banking platform, or data access provider, is a better method to connect employees to their data with a direct API connection. It provides the highest standard of control and transparency over who is accessing their data and how it is being used to benefit them.

Payroll data clearly helps consumers benefit from their financial data to access important financial services. But what’s in it for payroll providers? Why should they connect to open banking platforms?

How Payroll Providers Benefit from Connecting to Open Banking Platforms

Payroll providers can leverage open banking platforms to enable better experiences for their customers, effectively improving their competitive position and ensuring secure data sharing. A competitive advantage of payroll providers would then be the security and privacy standards baked into the API direct connection. In the end, everyone benefits, from payroll providers, to data access providers, to verifiers, to employers and employees.

How Connecting to Open Banking Platforms Makes Payroll Providers More Competitive

Connecting to an open banking platform empowers payroll providers to better serve their core target: HR executives. 

What do HR executives need? They need a reliable payroll solution, one that may also deliver other ancillary services, such as benefits, expense reporting, applicant tracking. Like almost any other executive, HR executives need more time and resources for their team, which means that time-consuming, manual employment and income verifications can become a burden.

Many HR executives are already choosing to outsource their payroll and ancillary HR services in order to cut costs and save time. But to whom they outsource matters. The payroll and HR experience is an important element of a positive employee experience with a company. Payroll providers who already offer successful payroll and HR experiences have the opportunity to further enhance those experiences with an additional service: streamlined, simple, and empowering income and employment verification.

By connecting to an open banking platform, payroll providers enable employees to self-permission their employment and income data when trying to access a financial service or engage with the other use cases described above. In this way, the employee benefits from their financial data by delivering a more reliable, comprehensive view of their financial story for greater access to financial services. In turn, verifiers get more accurate, real-time data for better decisioning. Both get a streamlined, faster experience that saves everyone time and resources. And employers (HR executives specifically) never had to waste the resources performing the verifications.

A ready connection for third parties through an open banking connection also makes it easier to add or provide services through third parties like fintechs. These connections can provide financial guidance, simplify complex purchases like insurance or mortgages, or just provide a clearer view for tax preparation.

All of those benefits come from the payroll provider who, through partnership with an open banking platform, offers a better experience and empowers both employer and employee. That payroll provider distinguishes itself among its competitors and better positions itself to onboard more clients and scale.

How Connecting to Open Banking Platforms Maintains Payroll Providers’ Security

In contrast to the model described above, payroll providers and employers open themselves up to risk when they send data used for verifications in batches and are stored with a third party. These methods leave them open to breaches because they house the data. This method potentially compromises employees’ private information by duplicating data and storing it in multiple places. However, connecting to an open banking platform through an API removes the necessity of sending data in batches. Instead, verifiers only need to access the data at the moment of verification. Thanks to real-time connections to accurate, data,no parties have to pass through the protection of an employer’s or payroll provider’s firewall. 

And when those APIs use secure authentication, such as OAuth, employees keep their credentials secret and secure. By partnering with an open banking platform, payroll providers protect themselves, employers, and consumers. Offering a secure experience also empowers employers and employees, and further sharpens the competitive edge already honed by connecting to an open banking platform.

Connecting to open banking platforms enables payroll providers to scale by delivering secure, streamlined, empowering experiences for HR teams and employees. 

Read this post to learn more about the connections that power payroll provider data. Or reach out and we can answer your questions about using an open banking platform for payroll provider data.

Automated Clearing House (ACH) transfers may feel like one of those invisible processes that go largely unnoticed yet have become essential to everyday life, especially in business. When you received your last paycheck through direct deposit to your bank account, that was made possible through an ACH transfer. When you paid your utility bill directly from your checking account, you likely used an ACH transfer. 

If you’re already passively benefiting from ACH transfers, imagine the positive outcomes that could come from actively leveraging the ACH network. Here are six fundamentals to get you started. 

What Is ACH?

“ACH” stands for “Automated Clearing House,” which is a payment network built by the National Automated Clearing House Association (Nacha). An ACH payment is an electronic bank-to-bank payment enabled through the ACH network, rather than through a card network. ACH payments are also frequently called ACH “transfers” or ACH “transactions.” The ACH network is used in the United States, but there are also International ACH Transactions (IAT).

Banks and other financial institutions use the ACH network to aggregate transactions for batch processing. In a given year, the ACH network processes around 25 billion transactions, likely including your paychecks and monthly bill payments. There are three types of transactions:

  1. Direct Deposits: These transactions are any electronic transfer made from a business or government entity to a consumer. Direct deposit transactions may include: 
    • Paychecks and other employee expense reimbursements, bonuses, and commissions
    • Social security payments and other government benefits
    • Pension/401(k) disbursements
    • Annuities
    • Tax refunds
    • Interest payments
  2. Split Deposit: This transaction enables deposits to be split into different accounts. For example, an employee could have a percentage of their paycheck deposited into a savings account while the rest is put in checking.
  3. Direct Payments: If you’re sending money through the ACH network, then you’re making a direct payment. Payment solutions can enable any consumer to make these kinds of payments with their bank account:
    • Charity donations
    • Bill payments
    • Tuition payments
    • Send money through social payment apps
    • Send money to friends and family
    • Make ACH-enabled purchases

How Do ACH Transfers Work?

The ACH transfer happens in two key steps: initiating the payment and receiving the payment. Before you can initiate the transfer as the payment originator, a customer must first give the business approval to initiate the transfer. This approval usually happens by signing an ACH authorization form or through verbal agreement. During this initiation process, the customer can set up one-time payments, recurring payments, split deposits, and so on.

Once the customer has authorized the transfer, your bank account will “pull” the payment from the customer’s bank account. If your customer has insufficient funds, then the payment can “bounce” just like a paper check. 

“Pulling” money from an account is known as an ACH debit transaction. An ACH credit transaction, on the other hand, allows you to “push” money from one bank account to another.

What Are The Benefits Of Accepting ACH Transfers?

More and more businesses are leveraging ACH transfers in their business transactions. That increasing adoption has likely come as more businesses realize the benefits of ACH transfers for both them and their customers:

What Are The Costs Of ACH Transfers?

ACH transfers will save your business much more than processing fees or wire transfers (which we’ll get to in more detail shortly). The median cost per transfer is $0.29, but that number can rise or fall depending on:

What’s The Difference Between ACH Transfers and Wire Transfers?

In many instances, ACH transfers have replaced more traditional wire transfers. But that doesn’t mean that wire transfers have completely lost their utility. For example, wire transfers happen in real time, which means they can process within minutes or hours, where ACH transfers could take a few days. However, wire transfers cost more, typically between $20 and $30 for the customer, and the recipient frequently has to pay a fee as well. 

The bottom line: wire transfers are likely better for large-sum, international, or time-sensitive transactions, where ACH transfers are more appropriate for smaller, more frequent transactions that can stand to take a little longer to process.

How Does Finicity Enable ACH Transfers?

What does all of this have to do with Finicity? On March 19, Nacha implemented a new WEB Debit Rule that requires account validation with the first use of an account number, or following changes to the account number. The purpose of the rule is to reduce the chances of fraud. 

In order to help businesses satisfy Nacha’s new operating rule, Finicity delivers an instant account validation solution as part of our Finicity Pay solution set. In fact, Finicity is a Preferred Partner of Nacha for using instant account validation to mitigate fraud and maximize the accuracy of payment transactions by providing account and routing numbers, account owner and balance checks to make ACH payments even simpler. The speed and security of our open-banking-powered validation solutions also empower consumers with a streamlined, easy, digital-first experience.

ACH transfers are an innovative way for both businesses and consumers to move money while also cutting costs and saving time. Learn more about how Finicity is enabling secure and less risky ACH transfers.

Payroll data is a tremendous resource upon which fintechs and financial services providers can build better experiences for consumers and, at the same time, enable consumers to benefit more from their financial data.

But enabling access to payroll data isn’t as easy as flipping a switch. And we can’t build better experiences without a simple and trusted process for consumers. This is where open banking comes in. Open banking platforms can unlock payroll data, but such data access has to be done the right way with a consumer-centric model that ensures successful connections and collection of data.

How to Leverage Payroll Data the Right Way

Payroll data is a beneficial resource, but how it’s accessed is central to enhancing the customer experience and ensuring successful data collection. Let’s look at this in greater detail. 

API Connections Vs Credentialed Access

In some cases, data providers look to access payroll data by using a consumer’s credentials. Unfortunately, this model is overly cumbersome for the consumer. Unlike digital banking, where consumers know the data source and have login credentials, consumers are largely unaware of their payroll provider, and in many cases haven’t even set up an account to access a payroll portal. Plus, many employers use a firewall-protected HR portal to enable employees to view paystubs and other income information, which means the employee never directly interacts with the payroll provider. That firewall also protects the payroll data from external access. 

These credentialed-access hurdles make it painful for employees to permission data access and significantly depress successful connections to payroll data. With a low hit rate, financial services innovators or others looking to leverage such data are left with an awkward, sub-par user experience at best and no data at worst.

The best way to leverage payroll data is to provide technology that enables the consumer to easily access their data, and protects them while they do so. This is achieved through direct API connections to payroll providers that eliminate the need for employees to have or know their credentials. It even eliminates the need to know who their employer is using as a payroll provider.

By connecting directly via an API, an open banking platform provider partners with payroll organizations that are equally committed to providing consumers with access to their financial data. The open banking platform can then connect the employee with their payroll provider for them, enabling the employee to more readily benefit from their payroll data and, should they choose, permission access of that data to a fintech or financial service provider. 

Finicity is already leveraging direct API connections to payroll providers and is quickly expanding those tested and proven connections to reach more employers and benefit more employees. We already provide direct connectivity that covers tens of millions of employees in the U.S. Finicity has a history of building partnerships with leading data sources, such as our  direct API connection with the largest payroll provider.

In the case of payroll data, direct API connections have created the best experiences and led to the best outcomes for both our partners and for consumers. This remains consistent with our market push on direct API connections to a broad range of financial institutions.

Consumer-Centric Means Consumer Protection: Operating as a CRA

It’s not enough to promise consumer-centric processes or protection in word only. After all, leveraging payroll data the right way also comes down to how the open banking platform handles the data and how they involve the consumer in that process. 

One of the primary uses of payroll data is in lending. Our Finicity Lend™ solution set, for example, currently leverages payroll data to enhance income and employment verifications necessary for credit decisioning. In this use case, consumers can gain additional protection and strengthen engagement through the Fair Credit Reporting Act (FCRA). These protections hold the data provider accountable for data accuracy and ensure the consumer has a mechanism to dispute the data in case of issues. 

While other data providers claim FCRA compliance, at Finicity we’re not just talk. Finicity operates as a Consumer Reporting Agency (CRA), which means we are legally required to adhere to FCRA requirements. When data providers are delivering income, asset, and/or employment data for the purpose of credit decisioning, operating as a CRA is not only the best way to provide the data, it’s the right way. 

But data access that truly empowers the consumer and keeps data secure doesn’t stop there. We also keep the consumer at the center of all our data-access experiences with our CATTS data principles: Control, Access, Transparency, Traceability, and Security. These principles inform our policies, our products, and ultimately our entire approach to empowering the consumer with their financial data.

It all comes back to trust. Consumer-centric principles, reinforced both in word and in deed, establish trust between data access providers and consumers, as well as with financial institutions, payroll providers, and other financial services providers.

How Can Open Banking Platforms Use Payroll Data?

Payroll data enables financial service innovators to leverage consumer data to improve decisioning and enhance lending processes, as well as create new financial services experiences.

While financial service providers have traditionally relied on ‘physical’ documents, such as bank statements, tax documents, paystubs, and more to verify information about consumers, digital payroll data via open banking provides quick access to all insights necessary to create next-gen financial experiences.

Finicity payroll partnerships provide access that enable or enhance various use cases, such as:

And where Finicity has been leading the market, the market is following. Along with an increasing number of financial institutions and other financial service providers, more payroll providers are recognizing that consumers can benefit from the data they hold. As a result, these providers are adopting API connections to open banking platforms that expand the use of financial data. 

Employees aren’t the only ones who benefit from consumer-permissioned data. Payroll providers ensure greater security when specific data is only shared with third parties for the use case, rather than released on a large, broad scale. They retain greater control in their role as data stewards.

Payroll data goes even further in delivering a more complete view of a consumer’s financial story when it’s paired with other open banking capabilities, such as validating information with bank transactions and, in appropriate cases, with digitized paystubs—another area where Finicity has led the market. 

Consumers own their payroll data, and they should be able to benefit from it. But to ensure the best experience for the consumer and the financial services innovators looking to use such data, enabling access to that data must be done right. See in action how Finicity is leveraging partnerships with payroll providers and financial institutions to provide technology that empowers consumers to benefit from their financial data and improve their lives.

There are many ways to verify online Automated Clearing House (ACH) payment details for transfers. Voided checks, micro deposits, pre-validations and account scores all validate ACH account payment details in one form or another. They also take more time than is necessary and typically can only verify something rather than adding key data to what the consumer has provided.

This is where open banking and open banking platforms make verifying account details and speeding up the ACH payment process simpler for everyone. Consumer-permissioned data pulled straight from bank accounts makes verifying accounts simple. It can also provide account details like account owner or balances that make facilitating payments easier and less risky for both sides of the transaction.

Finicity’s open banking platform provides a complete suite of data services with Finicity Pay™ to verify essential account details, owners, and balances that are needed to charge, get paid, or set up an account with confidence. Finicity Pay enables payments and validates funding sources. You can also seamlessly verify loan account details, including student loans, to detect eligibility for refinancing, loan consolidation, or to support employer student loan repayment and other benefit programs. 

This means that Finicity Pay both satisfies Nacha’s WEB Debit Rule but also speeds up the ACH payment validation process and enhances fraud protection. Finicity is a Nacha Preferred Partner, recognized for offering products and services that align with Nacha’s core strategies to advance the ACH Network.

Finicity’s instant verification solution takes advantage of Finicity’s open banking platform to use API connections to the many financial institutions in the US and Canada. Consumers permission the use of their account details which are then used for approved ACH payments, account creation or other permissible uses. The consumer can complete the verification process in minutes rather than waiting hours or days as in other solutions. Meaning their ACH transfer can process more quickly or they can get funds right into their new account.

Other ACH validation solutions either don’t provide the option for as much key data, only factor in account and routing number, or take much longer, up to a week in some cases. You may remember the days when you needed to provide a voided check to set up direct deposit transactions. Or to set up online accounts that are connected to your existing checking account you had to respond with how much was deposited into that checking account. There’s also pre-validating by providing information that is verified before the ACH transfer happens, which can take up to a week. Those days are over, thanks to Finicity Pay.

Some digital solutions are available but are limited either by what they provide, a score or likely probability that the account is good or has funds enough to cover the transaction, or only cover certain segments of the industry, as in providing details for accounts from certain FIs but not the industry as a whole.

Finicity’s instant verification can not only validate account details but can also provide account owner and account balance details to further mitigate risk and make ACH transfers easier.

Learn more about Finicity Pay or how it fits your needs by requesting a demo.

Southwest Business Corp., known as SWBC, has entered into a partnership with Finicity, a Mastercard company and Open Banking solutions provider. SWBC will use Finicity’s Open Banking platform Finicity Pay for instant account validation of online ACH payments

Read the full article.

Southwest Business Corp., known as SWBC, will rely on Finicity’s Pay for real-time verification of accounts.

“Our partnership with Finicity will allow SWBC to deliver new security capabilities protecting consumers and the institutions that serve them,” Tucker Stovall, vice president of product strategy at SWBC, said in a statement. “In addition, instant verification allows for speedy enrollment and immediate access to ACH transaction initiation, a significant improvement to the user experience.”

Read the full article.