Stripe Says It Is Remolding Bank Transfers to Ease Acceptance by Businesses

Stripe Inc. has introduced a direct-transfer product that it says allows users to send payments from their bank accounts to businesses without the account-reconciliation headaches that have historically plagued wire transfers.

The new service is now available in the United States, Mexico, and the European Union, having been launched in Japan earlier, the big San Francisco-based payments fintech says in its announcement. The launch “adds a key capability for businesses to more easily accept push-based bank payments,” Stripe says.

Stripe says the service overcomes traditional issues with bank transfers by offering such capabilities as automated reconciliation, a smoother refund and return process, and direct integration into invoices, subscriptions, and other payment-related processes. “We’ve built a solution that takes away the operational pain of receiving and manually reconciling transfers,” Stripe’s announcement says.

This manual process results from mistakes senders can make with traditional bank transfers, including outright errors such as wrong amounts or transfers to entirely wrong businesses. With bank transfers, senders start the process, unlike the case with card payments, which are controlled by businesses receiving the payment. Dependence on the payer allows errors to creep in with traditional transfers, Stripe says, leading to “hundreds of hours” of time businesses spent reconciling bank transfers with manual processes.

Stripe claims its new technology attacks problems like this by assigning a virtual bank account number, or VBAN, to each customer. A reconciliation layer in Stripe’s technology permits businesses to recognize over- or underpayments. They can “resolve” overpayments using an associated dashboard and an associated application programming interface.

Stripe points to the results of a beta test to support its claims for the new technology. “Our beta users have freed up time and resources previously spent on reconciliation and accounting using bank transfers on Stripe. These savings can add up,” the company’s post says.

The wider launch of the new bank-transfer technology follows Stripe’s introduction last month of Stripe Financial Connections, which enables businesses to forge direct electronic links to customers’ bank accounts. That connection allows businesses to verify account ownership and balances.