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Avoiding Indebtedness: How Aeropay Ensures Transparent Transactions

April 8, 2024
Aeropay Team

The idea of bank-to-bank payments is readily appealing. A customer can move money from their bank account to a business bank account in a single click with no cards or line of credit to worry about. 

However, some account-to-account (A2A) payment providers use processes that facilitate payments from accounts that lack sufficient funds, putting consumers at risk of debt.

This post explains what causes A2A payment debt, including examples—plus a breakdown of Aeropay’s transparent solution to this growing problem. 

How some A2A providers put consumers in debt

Moving money via bank transfer involves a payment processor authorizing the funds before transferring the payment amount to the business.  

But some A2A processors only pre-authorize a portion of the total amount owed, meaning there’s no guarantee that the customer actually has enough funds for the purchase. 

To mitigate the risk of ACH returns for the business, these processors claim their A2A payments are “guaranteed”—meaning that the processor will cover the funds and make sure they’re sent to the business no matter what. 

There are a couple problems with guaranteed payments:

  1. They only protect against insufficient funds or closed accounts, not buyer’s remorse which is very popular in industries like iGaming
  2. They implement additional verification steps and criteria to fulfill their “guarantee,” but this filters out legitimate transactions and deters potential customers—guaranteed ACH payments have an average acceptance rate of only 60-70%.

Learn more about guaranteed payments.

Trustly InDebted: An example of A2A debt repercussions

An example of the risks involved in accepting payments from accounts lacking sufficient funds can be found via Trustly bank transfers. 

Trustly bank transfers enable customers to pay directly from their bank (as long as it’s via Trustly supported banks).

ACH return fees via Trustly are handled with “guaranteed” ACH payments. They’re also known to approve payments from consumers who only have a portion of the total payment amount available in their bank account. 

While this results in merchants being paid in full, the consumer still owes the money to Trustly. In order to recoup those funds, Trustly uses a service called InDebted to collect the remaining payment. 

Customers receive communication from InDebted on Trustly’s behalf when transactions don’t clear their bank. Then they must settle up with InDebted or risk being sent to collections. 

This becomes especially dangerous in industries like iGaming when players realize they can fund their games with money that’s not actually in their account. This is a slippery slope and is ultimately a short-sighted approach that prioritizes transaction completion over financial health and consumer well-being.

How Aeropay keeps consumers out of debt

There’s a reason Aeropay A2A payments are trusted by both consumers and merchants—we leverage transparency and a balanced approach to mitigate returns and maximize acceptance rates.  

Instead of simply guaranteeing payments, Aeropay’s AI/ML risk model is designed in-house using dozens of evolving influencing parameters, taking advantage of the billions of transactions on our platform, user-specific risk, historic decline patterns, and merchant/industry behaviors to maximize acceptance rates and highly target returns. 

Aeropay has a smart fraud engine that is selective about what transactions get let through, while still maintaining a high acceptance rate. 

Essentially, we look at the balance in the account in comparison to the amount owed to determine whether it’s sufficient to cover the cart amount. However, other factors influence the final decision to approve or reject a transaction, such as user reputation—if they have a VIP or “green reputation” (vetted, trusted individuals) we may still pass the transaction through. 

Aeropay also leverages an integrated fraud prevention approach that eliminates gaps, preventing bad actors. We ensure swift detection and immediate action, minimizing any potential costly play time.

In the off chance funds need to be recouped, Aeropay uses a method called "smart-recovery" which means we look at our bank data to decide on the best time to recoup failed transactions. This process is different than something manual like InDebted, instead Aeropay’s retry or “collections” bot is smart about retrying the transfer of funds.  

Learn more about Aeropay A2A transfers

As a leading A2A payment provider, Aeropay offers reliable instant payments for in-store and e-commerce business transactions nationwide. 

Businesses using Aeropay experience: 

  • 25% higher customer spend 
  • 30% increase in completed online orders
  • 70% increase in online customers returning at most locations

The simplicity, security, and transparency of Aeropay make it an easy choice for your customers—and your business. 

Schedule a 15-minute demo to see our full payment solution and make bank-to-bank transfers work for your business.

Author

Aeropay Team

Articles written by the collective Aeropay team on various topics and subjects.
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