If life is a highway, Ingo Money CEO Drew Edwards wants his clients to take the fast lane.
Available at Google Play and the App Store, Ingo Money allows users to cash most checks and have the funds quickly sent to their bank account, credit card, PayPal account or prepaid card.
For a fintech company Ingo Money has deep roots. It started in 2001 with a model of providing financial services to underbanked people in the Hispanic community. It was sold in 2008 but Ingo Money was allowed to keep their risk management service, which is what drives their current service.
Americans pay $30 billion in overdraft fees every year, Mr. Edwards said. The most frustrating part of that is many of the fees are unnecessary, because people often have the money.
The problem is the check cashing and clearing process, which is like driving behind the guy on the freeway with the big hat who’s had his turn signal on since Albuquerque .
“If you think about payments as a bunch of highways, many options available are slow and unreliable,” Mr. Edwards said. “It’s a $24 trillion space yet much can be reversed even after checks are deposited.”
That potential for reversal and multi-day clearance times are troublesome for the estimated 138 million Americans living from check to check, Mr. Edwards added. Most of their money is accounted for well before they receive the check, and must be paid at fixed intervals, clearance times be damned.
“People get their checks, look at their bills, and, for some, decide which ones they have to pay.”
Ingo Money helps people get off the highway by cashing their checks without the chance of reversal. For a fee the check can be cleared instantly in more than 90 percent of circumstances.
Checks are risky because they are fully blind, Mr. Edwards said. Three weeks after you cash in it can be returned NSF or reversed. For many working people and small business owners that can make ensuing checks NSF too.
“For this to work we had to be able to assess and assume risk, telling the consumer to give us that risky instrument and we’ll push it into your account,” Mr. Edwards said.
Ingo Money can safely assume that risk across the entire load network, including credit and prepaid cards, bank accounts and PayPal accounts. Many companies have tried, but Ingo Money was the first to succeed, both with their overall model and the ability to male it work on mobile devices, Mr. Edwards said.
In order for the business model to work a company has to get over the initial cost of underwriting new customers. Ingo Money makes it work because every payment type is on the network, so once a customer is on the network, there is little risk in adding a new card or account.
“We only have to underwrite and assume risk one time with the customer because they are all in the same load network.” Mr. Edwards said. “We were able to shift that risk out.
“Once we filter through the bad guys, we are left with the good guys and they keep costs down.”
Mr. Edwards said the three drivers behind check cashing services are speed, convenience and reliability. A traditional deposit is free, but slow and unreliable. Mr. Edwards recently experienced that first-hand after receiving an insurance refund. He took pictures of the check, emailed them to the bank and still had to wait two days to use it to pay off a credit card expenditure.
“Cheap, slow and a pain in the ass,” Mr. Edwards said.
There is an obvious incongruence in a process where customers can take pictures off their phones and immediately send them to their bank but still wait two days to use that money. The marketplace senses it and now that a more fluid option is available, don’t be surprised when they flock to it.
The migration has started, as Ingo Money has been downloaded one million times and is available at 5,000 retail locations across the country. Mr. Edwards expects that to accelerate as several partnerships with large players are announced in the coming months.