How to collect members' bank info?

Question

Say I have a company where I want to make direct deposits to members' bank account. I understand that's it a really bad idea to ask them their information on the site and store it in the database.

But what If i ask our members to email us their bank info for direct deposits? I would then simply take their info and put it in excel sheet instead of storing it in the server(and delete the original email). That would be my reference point to sending the members direct deposits using my bank account. Is that legally allowed? If not, what would be another method to request a member's bank account info to make direct deposits?

Answer 1

Collecting banking account information has significant security implications and doing via email is not kosher. But there are alternatives. The simplest alternative is using interbank service like Zelle where you can send money to your members' bank accounts using just their email accounts (the one associated with their bank login). We pay our smaller vendors this way and most get paid immediately without any transaction fees. But this may not work for members who use smaller banks outside the network (e.g credit unions) and the service does not have sophisticated tracking or linking to invoices.

If you have international members or need a more scalable/programmatic/self-serve solution, you can consider using a payment gateway provider like paypal/braintree or stripe-connect. Stripe is especially easy to integrate with a website and instead of you collecting and maintaining banking information for your members, stripe does on your behalf. Companies like Lyft use this to pay their drivers. It scales and works in almost all major international locations. Downside is there are per transaction fees which get steep if you want instant payments.