Offermatic [0] used to do the same thing with issuing refunds to cards. They could offer rewards such as "Get 10 dollars off your next purchase > $50 at xyz". They would poll your cc to check for the purchase at xyz and you would then see a refund for $10 from offermatic on the same card. I personally thought that this company had a lot of potential.
How Square moves Cash
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Re: How Square moves Cash
#12This is what x.com (aka payPal) did in the earliest days. You could submit a credit transaction to a credit card without an initial charge.
It worked, but it was strictly against Visa/MC policy, and they had to stop. By that time they had some critical mass and got ACH going quickly.
I don't know if it's the same thing with debit cards, but I suspect it is -- the transaction goes through Visa/MC, but settles via ACH once it's known that it's a debit card.
But Square might be big enough to change the policy. Especially since Visa is an investor?
Re: How Square moves Cash
#13This is what x.com (aka payPal) did in the earliest days. You could submit a credit transaction to a credit card without an initial charge. It worked, but it was strictly against Visa/MC policy, and they had to stop. By that time they had some critical mass and got ACH going quickly. I don't know if it's the same thing with debit cards, but I suspect it is -- the transaction goes through Visa/MC, but settles via ACH…
The debit networks don't universally allow for refunds, even for legitimate transactions. Additionally it is generally against their terms of use.
Either Square is flying under the radar or has gotten special permission to do this.
Re: How Square moves Cash
#14By the way, Planet Money (a public radio show in the US) had a great episode on how ACH works, and the history behind it.
Excerpt from summary: "On today's show: Why the invisible pipes that move money around America are so slow. (And why the ones in England are so much faster.)"
http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
Re: How Square moves Cash
#15By the way, Planet Money (a public radio show in the US) had a great episode on how ACH works, and the history behind it. Excerpt from summary: "On today's show: Why the invisible pipes that move money around America are so slow. (And why the ones in England are so much faster.)" http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
I keep seeing this radio program referenced every time a thread comes up related to (blah blah ACH...).
So I listened to it. It wasn't that interesting. If you had never heard of ACH before, it would perhaps be illuminating, but if you already have a decent grasp of the existence of this system and it's shortcomings, there's not a lot more meat in that program...
YMMV.
Re: How Square moves Cash
#16To be fair, it's not some amazing flash of brilliance that led to square realizing you can "refund" a card without a charge first.
About 4 years ago I was building a payment processing solution for an ad network (something along the lines of an adsense clone) and for new users we needed to support micro-deposit verification. Usually this involves ACH deposits but to cut down the time it took, I implemented this using the Cybersource API against debit and credit cards. Obviously sending somebody money only reliably works with debit cards, because many people don't use a credit card often, but I just want to downplay the rhetoric in this post about squares unique brilliance in this regard.
Re: How Square moves Cash
#17I personally liked this explanation better: http://www.quora.com/Square-Cash/How-does-Square-Cash-work-t...
Re: How Square moves Cash
#18Are there any API's out there currently that allow you to issue a debit card refund like this? After some googling I found this: http://www.fuzenetwork.com/contact-us/ linked to from here https://github.com/balanced/balanced-api/issues/32 I tried to use their contact form but was redirected to what looks like a version of their site that isn't supposed (or expected) to be public yet. From there I find a link to this…
Debit-card only is something you'd need to determine yourself. But any merchant account API lets you issue refunds in this way. I've used Cybersource for it myself.
And of course, has anybody verified w/ Square that it MUST be a debit card. It could also just be a marketing distinction. For me, I NEVER use a debit card -- i abhor them -- and put everything on a credit card. So I wonder if it would let me provide a credit card number. For a friend sending me $20, it's no difference to me whether it goes directly to my Amex or makes a brief stop in in my bank account first.
Re: How Square moves Cash
#19This is all irrelevant when Bitcoin supplants all these silly money transfer companies anyway.
Re: How Square moves Cash
#20By the way, Planet Money (a public radio show in the US) had a great episode on how ACH works, and the history behind it. Excerpt from summary: "On today's show: Why the invisible pipes that move money around America are so slow. (And why the ones in England are so much faster.)" http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
I keep seeing this radio program referenced every time a thread comes up related to (blah blah ACH...). So I listened to it. It wasn't that interesting. If you had never heard of ACH before, it would perhaps be illuminating, but if you already have a decent grasp of the existence of this system and it's shortcomings, there's not a lot more meat in that program... YMMV.
Why listen to it when it's a layman's finance podcast if you already have a decent grasp of ACH and it's shortcomings? Did you really expect them to be giving an in-depth look at ACH for their 3million+ audience?