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Americans started 2021 with nearly $900 billion in credit card debt. One fintech company is offering an alternative way to access credit that is based on cash flow, not credit scores.

That company is Grain, who launched their application in 2018 with the objective to help its users access credit in a more equitable way. With Grain, users are charged a flat APR based on the amount still owed on the line of credit. This interest rate doesn’t change based on credit risk, or passed totals, with the minimum amount of credit being $150. Once a line of credit is approved, funds become available to the user, who can then pull funds into their existing checking account. The user is prompted to make minimum payments manually or by using their Smart Auto-Pay feature that will pull funds for repayment from that same checking account back to Grain. This feature is based on the income cycle of the user and monthly minimum payment. Grain then reports that activity to the credit bureaus, empowering its users to build or improve their credit.

And while Grain is using Plaid to perform balance checks and negative balance checks which help verify the funds available in user accounts, Patrick De Suza, the CTO and Co-Founder of Grain, said the company needed reliable payment technology to help send funds to users and eventually collect the repayments.

In their first year with Dwolla they saw more than a 42,000% increase in transactions and 98,000% increase in user growth. Since Grain has integrated with Dwolla they have seen their transactions scale– having initiated nearly 1 million transactions through the Dwolla Platform.

“Dwolla is something I don’t need to stress about,” says Patrick De Suza, CTO and Co-Founder of Grain. “We can rely on Dwolla and know that if a customer is moving money, that money is going to get to where it’s intended to go. That in itself is priceless. I worry about a lot of things, Dwolla is not one of them.”

Credit For Your Checking Account

De Suza says the thinking behind starting Grain was how unfair, predatory and exclusive he felt accessing credit was becoming. Situations in the past, whether immature decisions when young, surprise medical expenses or otherwise, could cost someone years later when they attempted to get a mortgage or car loan.

“We don’t use that to negatively impact the credit we provide to someone,” he explains.

As he researched various options for money movement and the financial habits of his targeted user base, De Suza and his co-founders realized millennials prefer to use their debit card compared to a credit card. So they wondered, would millennials want to sign up for a new debit card to help them manage their finances? Or, could Grain help millennials using their existing debit card or bank account?

“It came down to user preference, finding a way to let them use their existing debit card and transfer money into their account,” De Suza says. “I wanted no part of building our own payments solution. Especially at that time, I was the only engineer on the team and I had neither the time, nor the expertise, so we needed to find someone to help us with payments.”

Being in the very early stages of a startup, De Suza said Grain needed to find a reliable and affordable way to do account to account transfers. He remembers, outside of affordability, placing a high level of importance on detailed developer documentation and the simplicity of the API.

“Through all our models, Dwolla came out on top,” De Suza says. “Then we factored in the actual API and as a developer, it was important for me to have an API that was simple to use as we added new features. We didn’t want a brittle build out. Dwolla’s API is simple to understand, easy to integrate with and there was a nice Node SDK library that had a simple example of how to initialize the client and make a call which allowed me to get started immediately without much head scratching. The SDK follows very closely with the API, so it’s really intuitive.”

Development took less than a week to complete. With Dwolla’s 99.9% uptime, Grain has been able to transfer hundreds of millions of dollars through the Dwolla platform.

1. Preloading the Grain Master Balance


POST https://api-sandbox.dwolla.com/funding-sources
Content-Type: application/vnd.dwolla.v1.hal+json
Accept: application/vnd.dwolla.v1.hal+json
Authorization: Bearer 0Sn0W6kzNic+oWhDbQcVSKLRUpGjIdl/YyrHqrDDoRnQwE7Q

{
    "routingNumber": "073000228",
    "accountNumber": "123456789",
    "bankAccountType": "checking",
    "name": "My Bank"
}

HTTP/1.1 201 Created
Location: https://api-sandbox.dwolla.com/funding-sources/1d4b642f-f0c0-417d-a931-570b8e2be38d

2. Sending Funds to Consumer


POST https://api-sandbox.dwolla.com/funding-sources/1d4b642f-f0c0-417d-a931-570b8e2be38d/micro-deposits
Content-Type: application/vnd.dwolla.v1.hal+json
Accept: application/vnd.dwolla.v1.hal+json
Authorization: Bearer 0Sn0W6kzNic+oWhDbQcVSKLRUpGjIdl/YyrHqrDDoRnQwE7Q
POST /funding-sources/1d4b642f-f0c0-417d-a931-570b8e2be38d/micro-deposits
Authorization: Bearer 8tJjM7iTjujLthkbVPMUcHLqMNw4uv5kG712g9j1RRBHplGpwo
Content-Type: application/vnd.dwolla.v1.hal+json
Accept: application/vnd.dwolla.v1.hal+json

{
    'amount1': {
        'value': '0.03',
        'currency': 'USD'
    },
    'amount2': {
        'value': '0.09',
        'currency': 'USD'
    }
}

HTTP 200 OK
HTTP/1.1 201 Created
Location: https://api-sandbox.dwolla.com/funding-sources/1d4b642f-f0c0-417d-a931-570b8e2be38d

Grain Tips the Scale

Because of the ongoing competition with credit cards, where funds are available right away, De Suza understood they needed to shorten the transaction timeline to remain competitive.

“Fortunately, Dwolla has Same Day ACH and we made the decision to offer that based on the customer experience,” De Suza says. “We’re looking forward to the next evolution of speed improvements to our platform, adding real-time transfers. Funds need to be made available faster, we’re excited to be at the point where we can roll out a real-time payment experience to our customers.”

Configuring Same Day ACH or real-time payments is simple, De Suza says. It’s a matter of specifying which transactions are run through which processing times.

“You don’t have to change much to offer faster payments with Dwolla,” De Suza says. “It comes down to us rolling out RTP and aligning our roadmap with the various goals we have. Dwolla keeps the technical change to switch between ACH and RTP transfers as simple as possible for us and will help us roll this out much faster.”

All customer support agents at Grain have access to the Dwolla Dashboard to monitor transaction activity, and De Suza says he will regularly check the dashboard to make sure funds are available and going to the appropriate places.

“While Dwolla was the first payments integration we have had, we can’t compare apples to apples with others, but we can say that it has been working well for us. Even as we have scaled our volumes, the reliability of the technology hasn’t disappointed,” De Suza says with a laugh. “We’re growing the company to become the standard for cash flow underwriting and with Dwolla and the addition of real-time transfers, this is going to be huge for our customer experience.”

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