Coming to this page means you’re likely part of an innovative proptech company and your end users need to move money. We’re making the assumption that you recognize that real estate transactions are best suited for account-to-account payment methods. These transactions could be recurring payments between a tenant and landlord or one-time transactions like agent and broker commissions, appraisal fees or earnest money.
Use this playbook as inspiration to create your own recurring payment system with Dwolla. To illustrate the potential funds flows, we’ll use an example company and work through the different funds flows, customer types and payment possibilities with the Dwolla API.
How Dwolla Can Help:
- Provide best practices to help onboard end users and improve verification rates.
- Shorten transaction timelines with faster payment options, like Next Day ACH, Same Day ACH, and real-time payments.
- Automated ledger to track all of the transaction and end user activity.
- Pre-built wallet functionality for Verified Customers to hold funds.
- Drop-in components to get solutions to market quickly.
Identify Your Use Case
Before deciding how money will move on your platform, consider the different parties that will be transacting.
The Dwolla API has multiple customer types to provide our clients and partners maximum flexibility with their end users. You can learn more specifics about customer types in the API by checking out our developer documentation.
Facilitate Recurring Payments
Let’s get into an example.
Koala, a real estate company, built a platform to facilitate recurring payments between tenants and landlords. Through the platform, tenants can attach their bank account and agree to have funds debited each month. The funds will go to the landlord’s account.
The ACH Network is ideal as a recurring payment system in this use case because of its ability to handle large transactions securely (compared to paper checks) and at a lower cost (compared to wire transfers). Dwolla’s facilitation funds flow enables Koala to power these transactions without getting in the middle of any payments. The Koala is merely facilitating a transaction between two end users.
This is made possible by configuring the Dwolla API based on the needs of the end users—providing greater control over transaction timing and risk mitigation. Within the API, Unverified Customers are created with a lightweight onboarding and weekly transaction limit of $5,000. This end user type can attach a bank account and authorize the landlord to debit the account each month. Landlords would need to be onboarded as a Verified Customer because one party in the transaction must be fully verified.
Koala can easily toggle between standard ACH and a faster payment option, like Same Day ACH, depending on the end user’s transaction history and type of transaction being initiated. Once a recurring payment schedule is set up, transfer calls to the API can be set based on that schedule.
That’s how the Koala creates its own recurring payment system.
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Sending Funds (Disbursements)
Koala is expanding its platform to send commission payments to real estate agents. The agents they’re sending funds to will not need to send the funds back.
With the Dwolla API, the Dwolla Koala creates the real estate agent as Receive Only end user. For this type of customer in the API, end user onboarding is streamlined and the agents can receive funds from the business quickly. This guide explains how to create this customer type.
The question for the business then changes from, “how long will it take for the check in the mail” to “when do we want the funds to arrive?”
For disbursements, multiple transfer speeds are available, from standard ACH to faster payments like Same Day ACH and Real-Time Payments. These payment types can shorten the transaction timeline from days to hours—or even minutes.
Once the transactions are initiated and as the payments are processed, real-time webhook notifications are sent to the business, which can be used to trigger any downstream event like updating a database or alerting an end user with a notification.
“Whether it be rental, sales, escrow deposits, earnest money deposits, paying your own agents as a real estate company, sending refunds, sending payments; any real estate transaction you can think of—we can do it because of Dwolla,”
CEO and Founder, DepositLink
Collecting Recurring Payments
The Koala is expanding into investments and needs to collect payments to fund projects.
Within the API, create an Unverified Customer. Once the customer sets up their account and agrees, each month a standard ACH debit transaction pulls funds from the Unverified Customer’s attached bank account into Koala’s balance, where Dwolla’s ledger functionality records the activity. For late payments or one-time transactions, Koala initiates a Same Day ACH debit transaction to have funds debited from the end user’s bank by the end of the day
“Dwolla enables us to disrupt what is currently happening, which is that initiating a rent payment is costing people money. With Dwolla, we’re able to provide more value to our customers by not charging a fee for residents to pay what is probably the biggest bill of the month.”
CEO & Founder, Homebase
Other benefits of a payment API for real estate transactions include:
- Maintaining company branding while using Dwolla behind the scenes for powering payments.
- Real-time updates on payment processing statuses via webhooks.
- Addenda records allowing for streamlined reconciliation.
- Micro-deposits and third-party providers to verify bank accounts.
“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, but it has been significant. The switch to Dwolla improved our user onboarding time from days down to minutes.”
When you are ready to build your own recurring payment system within the real estate industry, reach out to our team and we can talk through your use case.