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Banking API for P2P mobile app  RSS feed

 
Greenhorn
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So I am in the process of creating a P2P payment app outside the US, similar to Venmo. Is it absolutely necessary to get permission from a bank to connect to their API? I don't want to involve the banks as they I would be a potential competitor and they will definitely be against this platform.
 
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Sheriff
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Sergio,
Welcome to CodeRanch!

If a bank provides an API, wouldn't they also provide a way to register an account? If you are using an unsupported/undocumented API against their wishes, that is definitely a problem. It's also a poor choice for your app because it could break at any time. Or you could get sued. Or...
 
Sergio Consuegra
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Hi Jeanne!

Thanks for your prompt answer. I see. So it would be necessary to get their permission according to your answer. That said, what would you recommend to obtain such permission from banks knowing that my app represent a threat to their interbank transfer fee business.
 
Sheriff
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I'm not clear on how you plan to transfer money for people. Right now it looks like you're going to get an account with a bank, and then use their API to transfer money from one person's account to another person's account, using your account as an intermediate step. But then the bank would charge you for transferring the money, wouldn't it? Perhaps I'm misunderstanding your application design, though.
 
Sergio Consuegra
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You are right in the part of working as intermediary. But the bank (in theory) wouldn't charge me for transferring the money as the movements will be done within a same bank.

The way that I devised such lower cost was acting as intermediary between users. As transfers within a same bank are virtually "free", opening up accounts in every bank that will be accepted in the app and having enough funds in each of these banks to move money would allow me to reduce the interbank costs greatly and still make a profit.

The diagram attached explains the idea better. User A (who has Bank X) wants to transfer $100,000 Colombian pesos to User B (who has Bank Y) through my app. The user transfers $102,000 pesos (after the 2% commission that I plan to charge) to our company's account in Bank X and we provide the service of transferring those $100,000 from our company's account in Bank Y to User B. Hope this explains the idea bette!
Screen-Shot-2017-11-06-at-3.45.38-PM.png
[Thumbnail for Screen-Shot-2017-11-06-at-3.45.38-PM.png]
 
Marshal
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Your app sounds a lot like Revolut and Monzo.

I expect that you / your company will be deemed by your country's government as a financial institution or an FX Broker or something similar and will be subject to the same regulations as any other Bank. Adhering to those regulations will almost certainly be non-trivial. Have you considered that?
 
Sergio Consuegra
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Hello Tim, things in Latin America work differently than in other regions. I hired a team of lawyers to look into your concerns as I had the same doubts. Fortunately, the law says that for this particular platform or way of transferring funds it is not necessary to be regulated by any entity nor we will be treated as a financial institution.

As per the lawyers' findings: "The relationship that will exist between the users and the application will be carried out as a payment management mandate; this refers to an operation in which a person manages one or more businesses to another, in this particular case, it is configured at the moment in which the user deposits a sum of money in the application with the sole purpose that a payment is managed in favor of the other user or final recipient."

That said, apparently I do need to get the banks on board with my platform to connect to their APIs. Any ideas into how I can persuade them to grant me such permission?
 
Saloon Keeper
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That's something you would need to discuss with the banks, no? They probably have developer web sites that spell out what requirements there are for using their APIs.
 
Sergio Consuegra
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I agree. A discussion must be done with banks. This is what worries me the most. Knowing that my app provides lower transfer fees than what banks charge, they will not be likely to grant me access to their APIs. That's why I am at a crossroads here.

Does anyone know what Venmo did or any similar platform to get the banks on board and being able to access their APIs?
 
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