I want to give everyone a heads up on ACH issues we have run into, including why it’s so challenging and what we are doing about it.

The Problem: Wells Fargo pulled the ACH connection, so we currently have to pause this mechanism for funds movement in the API.
for more info check out – http://crowdfundattny.com/2014/12/11/wells-fargo-withdraws-from-crowdfunding-space/comment-page-1

Escrow: Continues to function just fine, but only receiving funds via wires and checks at the moment (as has historically always been done in the securities business). You can use the API to create an escrow account, have the issuer e-sign the agreement, inform escrow of investor commitments, trigger investor refunds, trigger deal funding (both at minimum and at close), recieve automated alerts (via WebHooks), review escrow ledgers, review investor ledgers, etc, etc. All good.

The Fix: We are working with a number of other banks, quite frantically, to show them how we mitigate risk and to get them to allow use of their ACH system.

Why Is This a Problem?: A fact of funds movement, whether checks, wires, ACH’s or credit card transactions is that the person sending the funds has a regulatory-defined window to recall the money. e.g. someone gives you a check for $100, which you deposit and your bank credits you the $100 even though they haven’t put it through the clearing system. Once in the clearing process that check may get returned NSF, stop-paid, or the account holder may claim fraud. If that happens, your bank will charge back your account...but if you’ve already taken the money out (if the bank didn’t put a hold on it) then your bank is out the money, not the person who wrote the check.
Wires – typically have a recall period of 24 hours
Checks – up to 10 days (though fraud can longer)
Credit Cards – are not allowed for securities investments as the SEC considers this to be a form of “unregulated margin”
ACH – is 60 days
Thus if an investor sends funds via ACH and decides, say, 57 days later that they want to reverse it…they can. And if the funds are no longer there then the bank is forced to eat it, not the investor.

So it’s high risk for the banks. And that’s why nobody will work with any crowdfunding companies. However, since we hold the funds in escrow then obviously the risk is mitigated. The problem then becomes operational; tracking the holding period for each investor, which of course our technology does just fine. We cover the bank on both fronts.

Things are looking very good for a solution, and we should have news very soon. In the meantime you can use the escrow API to open and manage accounts, including having investors remit funds via wire or check.

Also, this shouldn’t affect our payment processing operations. The problem isn’t “pushing” money via ACH, it’s the risk associated with “pulling” it; thus we can push money to people just fine.

Reach out to me anytime with questions or ideas. I’ll update you as soon as I have some good news.