Yotta was founded to help Americans become more financially secure. According to a recent survey, 56% of Americans wouldn’t be able to come up with the cash needed to cover $1,000 in emergency. This leaves more than half of Americans financially vulnerable nearly three years into the coronavirus pandemic.
To help solve this problem, Yotta incentivizes saving by offering bank accounts (through its partnership with Evolve Bank & Trust) that pay out rewards–up to $1 million every day–just for joining. In order to drive engagement, Yotta’s Co-Founder and CEO, Adam Moelis, wanted to come up with a way to speed up transactions while also reducing ACH fraud and shortening settlement times for loyal customers.
That’s when he turned to Plaid. Here, Moelis shares how Plaid Signal helps Yotta release funds earlier and optimize its user experience–all without increasing the risk of return.
Plaid: What problem are you trying to solve with Yotta?
Adam: According to the Federal Reserve, over 40% of Americans can’t come up with $400 in an emergency, yet the average household spends over $640 per year on the lottery. Why is that? Playing the lottery is fun. Saving, on the other hand, is boring and lacks that instant gratification we look for as humans.
That’s why we founded Yotta. It makes saving more rewarding by making it feel like you’re playing the lottery. Plus, you’re building better savings habits along the way.
How does ACH fit into your business model?
Adam: ACH transactions are a convenient and cost-effective way to accept payments. They’re fast, flexible, and unlike most debit cards–they tend to carry lower fees, which ends up saving our business and our customers a lot of money over time. ACH payments can also be recurring which makes it easier for any customer who might want to automate their savings. All of these are reasons why the majority of Yotta customers use ACH to move money into their accounts.
What are some of the challenges that you experience with ACH?
Adam: The biggest challenge with ACH is fraud and risk. What makes it tricky is that in order for businesses to protect themselves, they’re often forced to degrade the user experience by manually trying to verify the identity of the account owner. This flies in the face of today’s users’ expectations when everyone wants to be able to get up and running on an app as quickly as possible. Finding the right balance between a good user experience and preventing fraud can be difficult.
Why did you decide that Plaid was the best partner to help you solve this?
Adam: We left no stone unturned when it came to searching for the right partner but at the end of the day, no one else had the data or the teams in place to execute on ACH fraud prevention. With Plaid Signal, we don’t have to choose between risk reduction and a great customer experience. Instead, we can turn payments into near-instant experiences–while reducing risk to our bottom line.
How does Signal help your business?
Adam: Signal gives us a 20% improvement in identifying transactions that will return and nearly 100% accuracy in identifying transactions that will settle successfully. This easily saves us tens of thousands of dollars each month. It’s also saved us valuable time by improving customer satisfaction. Before, we were having to spend hours troubleshooting and putting out fires. Now we can use that time to grow our business.
What are some ways that Signal impacts your customers?
Adam: It’s no secret that today’s customers care a lot about fast transfer times. With Plaid Signal, we can provide that for low-risk transactions while also mitigating losses on the higher risk transactions. Since we launched with Signal, we’ve been able to confidently drive 60% of transfers through in just one business day versus just 10% prior to Signal. This makes our customers a whole lot happier. And for a business like ours that cares so much about our customers’ ACH experience–it makes us happy, too.
How does Yotta use the scores, tiers, and attributes that Signal offers?
Adam: Before Signal, we had a one-size-fits-all approach. Now, we can deliver different ACH settlement times depending on the risk of the transaction. Being able to do this at the transaction level is huge because it allows us to provide good customers with a better user experience while preventing fraudulent losses.
Signal’s risk scores on every ACH transaction are also the reason we’re able to save tens of thousands of dollars each month. We’re able to use those scores to prevent high-risk ACHs from settling too quickly or from processing at all.
What was the implementation process like?
Adam: It was easy. We already use Plaid for other products, so incorporating Signal was extremely fast–we finished in one or two days. Once we rolled it out to a small sample of transactions and analyzed the data over a few weeks, we were able to easily tailor our decisioning model to fit the needs of our business.
What would you tell similar companies trying to navigate the challenges of ACH?
Adam: ACH is an outdated protocol that is heavily exploited by fraudsters–don’t underestimate them. It’s inevitable that you’ll run into big issues and when you do, Plaid Signal offers a great solution.
Also, be sure to talk to other companies. We all face similar challenges with regard to ACH, and it’s better to learn from others’ mistakes than to make them yourself.
What’s next for Yotta?
Adam: We’re laser-focused on improving settlement speeds for desirable customers and reducing the cost of fraudulent losses. We also want to add more ways to move money in and out of Yotta, not just ACH. We want every method to be as frictionless as possible.
