How do people link their bank account to an online financial service or app?
Banking
Asked by Question Bot06/Feb/20141 answer
1 Answer
F
Faisal Khan
Answered 06/Feb/2014
The linking a bank account to an online account in the payments field is pretty simply and is known commonly as implementing a wallet. PayPal is a wallet.
Wallets are simply a virtualized account. What this means is that the bank that you decide to work with (you would need a bank nonetheless), makes a special arrangement in their core banking software and assigns you (the wallet owner) as a virtual branch. Each account in this virtual branch would be an online user.
So the linkages is simply a container pointer that moves money from a regular bank account to the wallet account.
When you work with multiple partner banks, you can opt to run the wallet yourself, but you would still need a settlement bank at the bank-end, because the money (for all practical purposes) lies with the bank, not you as the wallet owner.
As a wallet operator, you are simply keeping a record of how much money is loaded into a wallet (or loaded out of it). The actual settlement is done by the bank on a real-time basis of moving money...
Depending on where in the world you operate, this is typically a transaction banking functionality and you can start working with your bank to implement the same. Granted there will a business plan at play here. In some cases you can implement it as a branchless banking setup, in some places like a virtual account.
If you get to be big enough (like PayPal), you can implement your core-banking software for your wallet and it will still be treated as a branch as far as the bank is concerned. You are simply doing accounting of the money, with the actual money being with the bank.
On top of your wallet software, you can then implement various apps to take care of on-boarding, account management, fraud, screening, etc.
The security risks can vary from country to country, bank to bank and regulator to regulator. The main focus is to ensure accountability, risk exposure and mitigation and keeping all inline with the checks and balances as required by the bank's compliance department, which in turn are provided by the regulator. These can easily be implemented.
Wallets are simply a virtualized account. What this means is that the bank that you decide to work with (you would need a bank nonetheless), makes a special arrangement in their core banking software and assigns you (the wallet owner) as a virtual branch. Each account in this virtual branch would be an online user.
So the linkages is simply a container pointer that moves money from a regular bank account to the wallet account.
When you work with multiple partner banks, you can opt to run the wallet yourself, but you would still need a settlement bank at the bank-end, because the money (for all practical purposes) lies with the bank, not you as the wallet owner.
As a wallet operator, you are simply keeping a record of how much money is loaded into a wallet (or loaded out of it). The actual settlement is done by the bank on a real-time basis of moving money...
- in between accounts in your virtual branch
- amongst accounts between the virtual branch and the regular bank branches (regular bank account holders), or
- amongst the virtual branch and other banks
Depending on where in the world you operate, this is typically a transaction banking functionality and you can start working with your bank to implement the same. Granted there will a business plan at play here. In some cases you can implement it as a branchless banking setup, in some places like a virtual account.
If you get to be big enough (like PayPal), you can implement your core-banking software for your wallet and it will still be treated as a branch as far as the bank is concerned. You are simply doing accounting of the money, with the actual money being with the bank.
On top of your wallet software, you can then implement various apps to take care of on-boarding, account management, fraud, screening, etc.
The security risks can vary from country to country, bank to bank and regulator to regulator. The main focus is to ensure accountability, risk exposure and mitigation and keeping all inline with the checks and balances as required by the bank's compliance department, which in turn are provided by the regulator. These can easily be implemented.