42. For example, an ODFI complained to Defendants that one of its clients, an auto title lender, which was debiting varying amounts from consumers’ accounts multiple times, did not have the contractual right or proper consumer authorization to do so, stating that it was “not ok [for the] merchant to us[e] the ACH to ‘sneak’ attack a consumer’s account, [as] it will only draw regulatory attention.” Continue Reading..
Payday Loan & Car Title ACH Alternative – The Offering:
Image Cash Letter: A web based portal that will allow for the following:
1) Collection of payments in as early as 1 day
2) Verification of the account prior to deposit to minimize return items and fees (option to push payment regardless)
3) The ability to collect payments by batch, single payments and recurring payments
4) The ability to use the system for scheduled and unscheduled collection payments
5) The ability to use account verification independent of payment processing
6) The ability to push money to customers
7) The ability to collect from persons or businesses.
There are no reserves or extensive underwriting like ACH as the company does not hold your funds or provide you credit. All funds flow directly from your customers account to your account. If an item is returned, it is returned into your account. We do not charge return fees.
The first service is defined as E Check Draft. An Electronic image is printed out and submitted to your bank for payment. If you bank with Chase, BBT, SunTrust, 5th 3rd or PNC, Payment is credited next day. This is RDC but we create and scan all the items. If you bank at any other bank, payment would not be removed from your customer’s account for 3-5 days and credited to your account.
The preferred solution is ICL (image cash letter) which is also built into the system. This will allow for an electronic file to be set up directly with the bank. This is not check 21 and no image is required to be printed out. This can work with any bank and generally takes 2 weeks to set up. We can guide you on the steps necessary to request this product from your bank so that we may set up ICL. In that case, regardless of where you bank, the money would post out of your customers account next day.
Differences from RCC
ICL creates an electronic file and not a check image like RDC or RCC. RCC takes at least 1 day or more whereas ICL funds enter your account same day if before cut off.
It’s a much faster delivery. Quicker by at least a day over RCC.
Its posts direct to fed same time as bank.
The bank is hands off so they are happier with little involvement on their side once it is set up.
For example with Chase, if you were to send 10,000 items now by 8 pm, they would post SAME DAY unless bank has special holding rules.
We pre-scrub each item (included in fee) so you know if it’s bad before you send it! This greatly assists you in your decision process.
This SERVICE WILL greatly reduce returns and help in the collection process.
The Payday Loan Tsunami, ACH, Virtual Wallet, Paytoo: Thoughts and Interpretations
By: Jer Ayler Trihouse
It’s Tuesday, Sept. 10th and I’m in Paris contemplating the TSUNAMI that hit the payday loan industry!
As YOU know, this is an incestuous industry. Billions $$ are at stake! We’re in the midst of a hurricane! Operators are bailing, consumers can’t get a loan – they’re calling out-of-state stores and literally begging for cash. Loan portfolios are being abandoned or sold at fire sale prices, call centers are shutting down right and left…
I’ve been on the phone 6 AM to past midnight with EVERYONE for the past 14+ days non-stop; Saturday’s & Sundays’ included. You know me! Until this firestorm hit, I woke-up whenever I felt like it :o) Half the time, I was kayaking on the back-bay when I pontificated on our industry.
As you digest this, remember, “Disruption rarely comes from within.”
So what happened?
New York Banking Commissioner Lawsky launched a series of punches to banks and online payday loan lenders demanding they stop making loans to residents of New York. Additionally, he said all outstanding loan principals and fees with NY borrowers are “void and uncollectable.”
Then the NY AG piled on with more…..
ACH providers, NACHA and banks were attacked for enabling payday loan lenders to “skirt NY usury laws.” The Native American Financial Services Association walked the halls of Congress demanding the State of NY back-off on all this “ACH noise” and “end their attack on tribal sovereignty.” ACH providers reacted in knee-jerk fashion and began shutting-off lender access to the ACH system – virtually overnight without warning! Even state licensed payday loan lenders were cut-off!
The bottom line? The online payday loan industry had its business model cut-off-at-the-knees. Lacking the ability to utilize the (ACH) Automated Clearing House, the industry couldn’t deliver funds (debits/credits) to borrowers nation-wide.
Payday loan lenders having “bricks-n-sticks” were jubilant! Suddenly their online competitors – the offshore, the tribes, the choice of law lenders were out of business! Phone calls to stores by consumers “looking” for a loan increased 1000% overnight. Little payday loan stores in places like Lake Forest, California (Danny Verette – Paid2Day.com) were receiving 20, 30 40+ calls per day from consumers all over the country!
During this “firestorm” of attacks and, what APPEARED TO BE eminent destruction of the payday loan industry, a company called Paytoo arrived! What IS Paytoo you ask? Simple! A “virtual wallet.” Literally, a consumer’s financial purse or wallet “in the cloud.” Cash-in, cash-out and money management all from a mobile phone, a tablet, a computer, an ATM machine… The Paytoo virtual wallet platform enables a consumer to access ALL their financial data, bill pay, payroll loan request, transfer funds to friends, family, merchants, load a Discover or MasterCard, get cash at an ATM machine, create a virtual check, deposit payroll proceeds, manage their finances… a Paytoo virtual wallet is literally a depository for a consumer’s dollars made available anytime, anywhere, 24/7 “LIVE.”
What’s this mean for consumers? NO need for the 30,000,000+ so-called “unbanked” to physically visit their local check casher and pay 3% – 9% of their net payroll proceeds to cash their check. Paytoo does this FREE! No one gives a crap about having a bank account. YOU NO LONGER NEED ONE! ASTOUNDING! Via Paytoo, a consumer can deliver money to merchants, family members (in Mexico City, San Diego, or Paris :o) FREE! Cash savings with each “spend.” “Virtual” pay by check is featured. A consumer having a bank account, can choose to “tie” it to their “Wallet.” Paytoo’s platform subscribes to the philosophy of 1 wallet/1 consumer/1 lender. Paytoo brings “real-time” 24/7 comprehensive money management tools to the masses.
What’s this mean for lenders and the AFS industry? No more “check is in the mail.” No more waiting for an ACH to be batched, submitted and wait 2-4 days for transactions to clear. No more 3-5 days of “reserves” to be held by your ACH provider. The lender is at the “front-of-the-line” to be paid by the consumer. The Paytoo platform lowers your “scrubbing” and due-diligence costs on the front-end. Check cashers are DEAD! MoneyGram ?? Western Union?? The stored value cards we’ve all been trying to peddle with ridiculous consumer fees; DEAD! Implement the Paytoo API and launch today.
What’s this mean for Regulators? 1 consumer = 1 payday loan. (Hm.. appears to be a state data base “killer.” States may not be happy to lose the revenue many of them currently receive from Veritec. Think Florida for example.) KYC (Know Your Customer) issues? Solved. Paytoo Corp, a wholly owned subsidiary of Paymotech Finance Corp., is a registered Money Service Business (“MSB”) with The U.S. Department of Treasury.
Mobile phone owners have already achieved “KYC.” Should Paytoo become the “de facto” payday loan lending platform, a federal solution to multiple, simultaneous PDL’s would be moot.
So, what’s been the reaction by the payday loan industry to the intro of the Paytoo platform? “Every lender wants to keep this for themselves.” Not possible. Could not keep the “lid” on this thing. All hell broke loose! It’s like a shark frenzy :o)
And, how is it that Paytoo just “happened to appear” on the scene at this moment in time? Just as this “ACH TSUNAMI” nearly annihilated a $50B industry?
Paytoo CEO Michael Poignant has been quietly laying the groundwork for the Paytoo virtual wallet “killer application” since 2005. Michel P. has been beating on our vertical for years! He was used, abused, disrespected, left waiting in lobbies…until “The Perfect Storm!”
You might ask at this juncture, why Jer finds himself in the enviable position of playing a role in helping Michael Poignant, Brett Hudson and the rest of the Paytoo Team re-introduce the Paytoo platform to the AFS industry? All I can say is, “Thank god I promptly responded respectfully (and with humor) to the communications Michel P. shot out to me over the past many, many months!
Those of us in the AFS industry who survive, and come out on the other side, bent but not broken, will be rare. The “Virtual Wallet” is the future. ACH will remain but there are better, cheaper options. Europe, S. America, Mexico… even Africa is ahead of the States with adoption of digital, virtual currency, bill pay, money transfer…
Is Paytoo the “killer app” for our space and more? Will Paytoo become the “default” $$ delivery platform for the AFS industry as Google is for search? How far along are Paytoo’s competitors? Can Paytoo scale fast enough to meet demand? Can DLLR, CSH, EZPW… or any other behemoth build/employ/scale as robust a platform as Paytoo has already deployed in Europe and S. America and now the USA? Paytoo is inundated with Demo Requests and “sandbox” setups for testing. Lenders with $100M + are testing now; they’ve only dipped their toe in the waters so far… afraid they could be eaten by a SHARK. Afraid of what happens to their data, their customer… Can Paytoo sell-out? Get eaten?
Remember: 1 wallet; 1 consumer; 1 lender. If Paytoo IS the “killer app,” lenders better “jump-on board” and secure market share FAST! Are you listening Al Goldstein., Mark C., CSH, DLLR, EZPW, FCFS, OLA, CFSA, FISCA, NAFSA…?
Paytoo has 4.5M world-wide consumers currently using the Paytoo virtual wallet! Only 300,000 are U.S. based. These numbers are increasing daily. Who wants to partner with Paytoo? Who wants to do business with Paytoo in the USA NOW?
“Apple will sell a few to its fans but the iPhone won’t make a long-term mark on the [financial services] industry.” Bloomberg, January 14, 2007. (THX to Bank 3.0 by Brett King. Attention: READ THIS BOOK or die! Better! Buy Brett’s book and bring it to FISCA for his autograph :o)
No single Lender has a large enough market share to slow adoption/integration with the “virtual wallet.” A complete and irreversible DISRUPTION is upon us. Fail to embrace the “Wallet” and your business will perish. We are in the midst of a MAJOR SHIFT in financial services. The $$ distribution system HAS changed.
Today’s consumer has grown-up with Facebook, Twitter, iPhones… Lenders who fail to figure out this new paradigm will soon be irrelevant. As a lender, your costs will come down, your market share will increase, Big Data loan decisioning algorithms will improve your ROI, human loan officers will soon be archaic, consumer rates and fees will fall…
OK, ENOUGH NAME! Signing out from Paris. I’m hiding out from all the flack… :o) Use this in its entirety!
Jer – Trihouse
Jer@TrihouseConsulting.com (Skype: 702-425-9106)
Brett Hudson BHudson@Paytoo.com 954-465-7202
Michel Poignant m@Paytoo.com
You’re kidding me? You’re a lender and YOU STILL have not seen the “Paytoo Wallet demo?”
GO HERE: http://trihouse.wufoo.com/forms/request-for-demo-of-wallet-via-trihouse-consulting/
WHAT? You’ve demo’ed the Paytoo Wallet and you’re still on the side lines? Then get out of the way. You are about to be crushed.
Continued reporting on the payday loan industry by New York Times reporter Jessica Silver-Greenberg:
“JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts are tapped by the online payday lenders more power to halt withdrawals and close their accounts.”
“Under changes to be unveiled on Wednesday, JPMorgan will also limit the fees it charges customers when the withdrawals set off penalties for returned payments or insufficient funds.”
“JPMorgan said that the bank will charge only one returned item fee per lender in a 30-day period when customers do not have enough money in their accounts to cover the withdrawals.”
No doubt, there are still some “bad players” in our industry. But the days of automatic roll-overs, multiple ACH’s resulting in excessive consumer bank fees… are coming to an end and the smart guys know it.
Forward thinking, long-term “players” in the payday loan space have understood the necessity of embracing best practices, strong branding, acceptance of compliance and disclosure, and great customer service as basic requirements for long-term profitability in the AFS (Alternative Financial Services) space!
The payday loan product is evolving. Millions of consumers use them – or some form of AFS product – world wide. The payday loan industry is maturing and iterating. “Bad guys” will be pushed aside while responsible Lenders will profit handsomely.
Ultimately, consumers of AFS products will decide who the winners and losers are, not the regulators or the banks. Jer – Trihouse
Link to the Jessica Silver-Greenberg piece.
Link to The New York Times piece.
How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!
