As you know, access to banking is becoming more and more restrictive today for MSBs (primarily due to Operation Choke Point). Bonafide MSBs are seeing their banking privileges revoked, leaving them out in the cold, with the looming threat of going out of business.
No bank account – No business.
What type of a MSB Business Bank Account is this?
So let us be clear about the type of bank account we can assist you in getting. It is essentially a banking service. It is not a traditional bank account. Funds are however, FDIC insured.
What does a banking service entail?
For starters, you do not get your own bank account and routing number. There is no facility to directly deposit checks or other paper instruments and there is no checkbook. So if you’re a check-cashing service, unfortunately, we cannot help you.
The service is essentially an ACH service.
If you subscribe to an ACH service, you have the ability to electronically deduct money from customers’ accounts and these funds would be placed in an escrow account of sorts. The funds are held by the ACH processor’s bank. Only the bank has access to the funds and this is an FBO (For Benefit Of) account in your name, i.e. the lien on the money is yours.
What type of transaction can I do with this banking service?
You can do the following services:
- Electronically deduct money from customers account via ACH Pull.
- Push the money out via ACH or Wire transfer to any other account.
- Client can also Wire money into your account (only wire into your account and not ACH (push) into your account.
- The wire out can be domestic (US) and International.
Because you subscribe to the ACH service, the banking service comes with it. It is analogous to the example of when people outside the US used to open a US bank account, by simply signing up for a trading account with E-trade. It’s a crude comparison.
The solution is essentially a workaround.
How can this bank account be put into use?
The bank account can be put into use as following:
- You have some online app or mobile app, via which you can have customers pay you (i.e. deduct money from their account).
- Have access to the dashboard and then be able to push money out.
Between have and have-not, this is a semi-have.
Can I pull money from any US bank account?
Yes, the service works with all US bank accounts. If you want IAV (Instant Account Verification – with bank logins) then the number is about 30 or so banks, which cover about 90%+ of the US banking consumers.
What if I don’t have an online app? So how do I go about it?
You have two options in this scenario. If you don’t have an online app that can work with the banking service API, then you can program (code) one. Implementing an online app to work for your specific business is not that difficult. It can be time-consuming, but that’s about it.
Alternatively, you can provide certified providers who have apps built for the online API. For example, if you are an MTO (Money Transfer Operator), then you can lease an online platform that will allow you to take advantage of the API. The SaaS platform in question is a complete online Money Transfer solution that integrates with the banking service in question. Think of it like getting your own Xoom or TranferWise online portal.
All at a very affordable cost.
What’s the catch?
There are a few catches:
Because it is a service, KYC information is required from both ends. That means no anonymous transactions. Photo ID & SSN of sender and just SSN on receiver works fine. Again this depends on the business as well, in some cases we don’t even require Photo ID. For money transfer businesses, Photo ID is a must. There is no workaround this. This means, if you are sending money to a beneficiary in Kenya or Philippines – the photo ID of the person receiving the money is a requirement.
The ACH processor’s bank can deny you ACH processing and banking services if they don’t want you to work in a particular country. We have no control over this.
For international money transfer operators, there are two scenarios:
(a) If you have a money transmitter license(s) in the US, and you are picking up transactions only from the State you are licensed in, then the requirement of having a Nostro Bank to work with is not needed. The condition that the bank decides which countries you can/cannot work with, still is in place.
(b) If you do not have a money transmitter license in the US, then you will have to find a bank in your country, which has a Nostro account in the US. The Bank will sign the agreement with the Banking Service (ACH) provider. In this case, you will not touch the funds, it will be a US Bank to Foreign Bank transaction.
(c) If you Scenario (b), but cannot find a bank to work with, we might be able to find a correspondent bank for you, however, results are not guaranteed.
The last catch is monetary.
As each signee is a merchant for the ACH processor, hence, each corridor (US to India, or US to Bangladesh) is a separate account and will be billed as such. Currently, the processor charges US$ 2,000 per merchant signed up. The charges are monthly recurring. So if you have only one merchant who is serving a single corridor, that means you will be paying US$ 2,000 monthly.
ACH settlement is next-day (rather than 3-days).
Per ACH transaction charges range between 10 and 20 cents per transaction. Wire charges vary (depending on the business) between $5 to $10. Receiving wires is between 50 cents to $2. International Wire transfers are US$ 55 each.
It is extremely important to know, wires are all subject to approval (as a customer), specially international wire transfers.
How long does it take to sign-up?
It takes about 2-4 weeks to sign up, provided all the documentation is present.
You can learn about the MSB Friendly Bank charges here