Hey banks, let account holders fund accounts with a debit card
When you open a new bank account, there’s usually one dominant emotion driving that decision: frustration. You’re fed up with your current financial institution. Maybe your account was mishandled, or you didn’t like the fees, or perhaps your bank just wasn’t meeting your needs. So, you decide to open a new account somewhere else.
The experience usually goes like this: You find a new bank and, in the best-case scenario, you breeze through account opening because the experience is elegant and the technology is impeccable. Everything is going perfectly. But then it’s time to fund the account. After funding the account with an ACH, you discover that you can’t even use it for three business days (or worse, five days if it’s Friday).
Three to five days! By the time your funds are transferred into your new account, your old bank may have fixed the issue, you solved the problem in a different way, or you’re not as upset anymore.
So, what happens to that new account? In most scenarios, it is never used. Time, as they say, kills all deals, and account opening is no exception.
Account abandonment is a headache for financial institutions. The average abandonment rate for new deposit account openings is over 50%, and for lending products, the abandonment rate is even higher. In fact, users even abandon the account application process at an astronomical rate—possibly as high as 97%, according to some studies.
Considering all the time and steps that happen behind the scenes when a customer opens a new account—like KYC, KYB, document OCR, and generative AI widgets—the costs really add up. Not only does the financial institution end up with a dormant account, but it also bears the costs of this inefficiency.
The entire experience matters
The problem with ACH is that it’s a slow system. Customers are essentially abandoning their shopping cart at the grocery store checkout because they have to wait three days before they can pay for their items.
Imagine using a debit card instead of ACH to fund an account. The transaction is instant. Your $200 is immediately available, allowing you to start using your new account right away. With Moov, sending money instantly into a new account using a debit card is the user experience customers expect, not the delayed ACH, which results in a dead-end.
Slow money movement doesn’t just make customers unhappy; it also impacts those working within the institutions. A large mortgage company we work with shared with me just how much their employees dreaded the first day of every month because they knew their payments processor, a third-party technology, would go down. This wasn’t just a minor technical hiccup; it was causing employee turnover and disrupting their work life. When you hear these stories time and time again from customers and prospects, the impact becomes clear.
That’s why I wanted to build Moov. I, too, have experienced the frustrations of relying on many intermediaries to move money. The failures are painful core memories I won’t soon forget. That’s why I didn’t want Moov to be just another ACH provider. We built our payments engine layer by layer, and we added Visa Direct and MasterCard Send to help tackle these pain points head-on to improve user experience and operational efficiency.
Costs add up quickly
Speaking of operational efficiencies, let’s consider the numbers: it costs around $150 to open a checking account. If AFT can reduce abandonment by 20%—a significant improvement given the industry average abandonment rate of 80%—the ROI is compelling.
And then there’s the issue of onboarding. We’ve heard from customers that they’ve tried to use well-known payment companies, but the process takes over a month. That’s unacceptable. It’s a clear sign that the system is broken and needs fixing. That’s why we built our infrastructure in layers. It makes onboarding cost-effective and fast.
Ask me your payments questions
Seriously. This is what I love to do. I’ve spent so much time building in this space that part of the fun is helping people navigate the intricacies of this space. The whole team understands the frustrations and pain points of the consumers, the businesses wanting to move money, and the people who get gray hair and wrinkles from trying to run those businesses.
If you’re considering adding debit card funding or need help deciding the right path for your business, we’d love to offer a no-pressure evaluation. If you use a vendor to open an account, put them in touch with us. We love making products better!