Money Transfer API Best Practices

Money Transfer API Best Practices

Money transfer APIs enable users to send peer-to-peer, business-to-consumer, and business-to-business money transfers in the blink of an eye. Running a money transfer API provides this service to your customers, but it takes work to maintain it. 

Keeping your money transfer API fully functional takes work. Here are some best practices to keep in mind to keep your API competitive and easy to use:

1. Follow a Strict Pre-Launch Checklist

If you have yet to launch your money transfer API, then this one’s for you. Following a pre-launch checklist will ensure that you’ve crossed your Ts and dotted your Is, making sure your app is ready to go before it launches. A faulty launch could set up your API for disaster. 

Included in your pre-launch checklist should be:

  • Regular meetings with a lawyer and financial adviser, which can be accessed through Sila as a Sila member
  • Sandboxing and testing return codes to work through the majority of problems consumers will come across
  • Improving key tutorial information to avoid confusing user experience
  • Beta testing your app with a small group to make product improvements
  • Connecting with an engineer to clean up code back end and ensure that your API security is optimal; this can also be done through Sila

2. Know Your Return Codes

Managing return codes is a huge part of your money transfer API business. Return codes are codes that are issued when a money transaction is rejected. These codes are regulated by NACHA, and are something that the bank will usually monitor. However, when you are running an ACH transfer API, this is your responsibility. 

There are a number of reasons why a client would get a return code. This includes things like: 

  • Insufficient funds (R01)
  • Account closed (R02)
  • No Account/Unable to Locate Account (R03)
  • Invalid account number (R04)
  • Unauthorized Debit to Consumer Account Using Corporate SEC Code (R05)

There are best practices when dealing with return codes; as a small business owner managing this, be sure to have your return code spreadsheet handy and to have prepared steps that a user can take in order to get through the issue.

Try to work through as many of these return codes as possible when sandboxing your money transfer API.

3. Monitor Your API Dashboard for Compliance, Security, and Identity Verification

With an active money transfer API, each API call presents a threat to the security of your app. Your money transfer API has to maintain strong regulatory compliance as sending money in the U.S. (and anywhere, really) presents significant threats to homeland security. Identity verification is performed through what is called Know Your Customer, or Know Your Business (KYC/KYB) to ensure that banks know who they are dealing with and have verified information to back this up. 

Every user that gains entry into your payment app is verified through KYC/KYB but this doesn’t mean that your app is completely safe. You must continue to monitor your app for compliance, security, and to ensure that the KYC/KYB is working properly. While our third-party connectivity ensures additional levels of integrity, continual security monitor is essential. 

Our app dashboard enables you to verify that your active users are KYC/KYB verified. It also allows you to check security measures and other compliance protocols.   

4. Strongly Consider Your Protocol for Client Communications

One elemental aspect of your money transfer API is ensuring strong communication with your clients. If there is a security breach, for example, you have a set amount of time to tell each client that this is occurring. 

Regular security patches and other key updates should be communicated to your client in a clear and informed manner. How you do this will make or break your API experience. You want a concise and easy-to-understand protocol for communicating with clients. You want them to know that you care that they are informed and want to do so in the best possible way. 

5. Be Careful When Sourcing Outside of Sila

When you partner with Sila, you gain access to our powerful technology. This includes our powerful bank transfer technology:

This gives you the option to offer multiple payment method options through a single wallet, and only a few API endpoints. We also offer more financial features through our Fintech Marketplace, including cross-border payments with Corpay (CambridgeFX), Thunes, and Currencycloud. And our partnership with Plaid offers seamless bank account connectivity and security.

Our tech is compatible with most API connections, but our tech is also designed to work with our partners efficiently. With our partners, we know the levels of security that they have (which is up to our standard). 

Sourcing other tech partners are possible, but we encourage you to do your research and ensure that these partners are doing their due diligence to keep your clients protected. Check for API integration when partnering with another API provider.

6. Talk to a Financial Adviser Who Knows the Tech Industry, Especially When Adding Products

It’s no joke that the fund’s transfer industry is complicated. If you’re new to this industry, then maybe you learned this the hard way. We get it (and great job for coming back!). 

When operating your payment API, it’s best to connect with a financial adviser, lawyer, compliance offer, and someone who is familiar with banking in the tech industry. This ensures that your online money transfer business is running smoothly. These experts will have the inside knowledge on the documents that you may need for compliance purposes or best practices that will avoid fines and compliance infringement. 

When you work with Sila, you luckily get these features included. Our support team is filled with fintech experts who can guide you not only on money transfer API best practices, but also money transfer compliance, tech support, and financial advisory services. We have also trained in business management best practices. 

7. Monitor Security Patch Updates and Keep it Updated

As mentioned, one of the most important aspects of your banking API is its integrity. While you can access the payment system through a single API endpoint, it’s important to maintain that integrity through KYC/KYB and API security. If you’re not careful, each API request could signal a new security vulnerability. 

Luckily, with the Sila, many security measures are built into our API design. We follow KYC/KYB for client integrity and integrity within the ACH Network, and we also update our API codes with security updates. 

These points are extremely important as failing to update your money transfer app regularly can increase its risk of being compromised. With Sila, you’re getting a lot of this support already, and we walk you through any patches we’ve done on the back end. But if you’re going at it with your own tech, then you’ll need to stay on top of this. 

With this said, you’ll also want to stay on top of NACHA News updates. NACHA regularly issues press releases with new features and updates to its current model. By staying up to date with NACHA, you’ll be well informed of potential changes coming down the pipeline.