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Build an investment portfolio, from the ground up.

That’s what GROUNDFLOOR is doing. This real estate investment platform allows accredited and non-accredited investors to invest in real estate loans on a fractional basis, starting at $10 a share. Each real estate renovation or rehab project is thoroughly vetted and given a grade between A through G, with A having the least amount of risk for investors. After each loan is fully funded—through micro-investments from a collection of individuals—the borrower can withdraw the money from GROUNDFLOOR to complete the real estate project.

After completion of the project, the property is listed, sold and then the borrower repays the investment through GROUNDFLOOR.

Typical loans have seen average returns of 10% on a six to 12 month term.

“There’s nothing more satisfying than seeing a small balance investor who is investing over and over again,” says Nick Bhargava, GROUNDFLOOR Co-Founder and Executive Vice President of Regulatory Affairs. “That’s our prototypical investor who we had in mind. We have big balance investors, too, but the original idea that started GROUNDFLOOR was those smaller investors. GROUNDFLOOR is designed to be accessible, easy to use and something anyone can participate in.”

To enable investors and borrowers to send and receive those funds, Bhargava needed a payment integration leveraging the Automated Clearing House (ACH) Network. The ACH Network would give GROUNDFLOOR access to lower transaction costs and a reliable payment system that wouldn’t eat into their profits as they looked to scale, like credit cards or paper checks. The ACH Network was a natural solution due to the high volume of anticipated transactions, and a number that was only going to rise.

But how to connect to it?

“We’ve been looking at ACH vendors for a long time–since we started this GROUNDFLOOR adventure about six years ago,” Bhargava says. “Options are to either buy the ACH service from a bank or find a reliable, technology-driven intermediary who can do it for you.”

“The choice was clear for us.”

After launching in 2013, GROUNDFLOOR tried two payment integrations and even tried building their own integration with a bank. Every solution was either too expensive or came with too many strings.

GROUNDFLOOR CTO Chris Schmitt says they had conversations with a local bank that offered an API for access to the ACH Network.

“We went pretty far down the process of integrating directly with a bank but the compliance part of that is really cost prohibitive for a startup,” Schmitt says.

Then they found Dwolla, a secure, scalable and reliable way for GROUNDFLOOR to move money for their business.

Whether it’s a micro-investment towards a loan, sending funds to a borrower or powering its 2019 Stock Offering, GROUNDFLOOR uses Dwolla to initiate the transfer of all payments on their platform.

“Between the ACH API and the dedicated support, Dwolla won us over,” Bhargava says.

Hammering Out A Cost-Savings Payment Integration

When GROUNDFLOOR realized its initial payment integration was becoming too expensive for their business, they went looking for a new payment solution and found Dwolla.

However, with a payment solution already in place, Dwolla needed to show GROUNDFLOOR that its functionality would be an upgrade from multiple business aspects, starting with the ACH optimized API.

“We did play in the sandbox and that environment mirrored all the functions that we expected,” Schmitt says. “Once we understood the integration, it was more about the other payment integration needing to give us a reason for why we should stay. Dwolla was the clear operational choice as far as cost and benefit for us. We just couldn’t see any reason to stick with what we had.”

After testing GROUNDFLOOR within Dwolla’s Sandbox, Schmitt says Dwolla’s ACH API was a “welcomed upgrade” compared to the previous payment integration.

“The fact that Dwolla is such a reliable and efficient payment solution, it’s tough to know exactly how much we’ve been able to decrease fees and technology issues,” Schmitt says. “Dwolla was a much more forward-thinking product, responsive during our onboarding and hungrier for our business. Dwolla was just more competitive.”

Making GROUNDFLOOR more competitive too.

Schmitt says after switching to Dwolla, the onboarding time was cut from days and hours, to minutes, thanks to the Plaid integration for bank account verification through an additional integration with the Dwolla Platform.

For example, borrowers or investors sign up for GROUNDFLOOR by registering an account through the website or calling a dedicated GROUNDFLOOR support line. Once a bank account is connected and verified, they can begin investing.

“We can—in real time—authenticate a bank account and get our customers up and running in minutes,” Schmitt says. “Having that reliable solution with Dwolla that can help to process payments is really nice.”

It’s always risky changing the engine in flight. The aspect of going live with a new payments partner was where Dwolla really shined. Dwolla helped us convert from our old provider, it was seamless.
Chris Schmitt
Chief Technology Officer

Establishing A Foundation with Real-Time Support

Schmitt says there is always some initial hesitancy when integrating with a third-party payment provider.

“The biggest uncertainty with any integration is that what you are pitched and what you are sold are not the same,” Schmitt says. “There are times I’ve looked at developer documentation that is out of date but when you go to implement, you get hidden functions or pathways that don’t make sense. So there’s a huge technical risk. What I like about Dwolla is that the sandbox environment left us with no surprises.”

Schmitt says because they were able to test in an environment that mirrored the production environment, the overall integration and implementation came with “no surprises.”

“It’s always risky changing the engine in flight,” Schmitt says. “The aspect of going live with a new payments partner was where Dwolla really shined. Dwolla helped us convert from our old provider, it was seamless.”

Schmitt says the developer documentation featured excellent use cases and Dwolla’s support engineers worked with their team to solve any issues that came up.

“And we’re still getting that same support,” Schmitt says. “One of the things Dwolla has done best is the real time support, that’s incredibly helpful. Dwolla shortcutted the support cycle down from hours and days with email exchanges to real time. When you’re moving other folks’ money around, that real time support is invaluable.”

Widening the Base for Scalability

In 2019, Schmitt and Bhargava are continuing to focus on expanding GROUNDFLOOR.

“We are working to enable our customers to do more, faster,” Bhargava says. “We want our customers to be able to transfer money easily.”

One example Schmitt used was a feature they built around Dwolla’s ACH API to enable their users to setup an automated transfer schedule.

“We have users who are using our platform as an alternative to a savings account,” Schmitt says. “That really brings together the vision we had. It’s amazing to see someone transferring $20 or $30 from each paycheck and watch their portfolio grow over time.”

All using Dwolla’s ACH API for bank transfers.

“When we started this we had to make sure GROUNDFLOOR was as accessible as possible to everyone,” Bhargava says. “A fundamental ethic in our company is being accessible. From providing high yield investments to people as well as the opportunity for smaller dollar investments is where we are looking to appeal to the market.”

With Dwolla’s technology supporting their business goals, GROUNDFLOOR is eager to build more.


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