The Sila API is a powerful fintech innovation that can boost your company’s functionality when it comes to financial payments. Because it is a software developer kit (SDK) package, the Sila API can be developed into an effective multi-use financial API.
If you are a new or young company and you want to do more when it comes to accepting financial payments, the Sila API will grant you this capability at an affordable price and with relative ease of use.
If you’re interested in the Sila API but you’re not entirely sure how it will benefit your company, here are the reasons why you should use the Sila API to propel your business forward.
Business compliance requirements and the Sila API
The Sila API platform is a financial API SDK that allows developers, fintech companies, and business owners to create a high-functioning and versatile fintech application that can process ACH transactions, act as a digital wallet, send and receive cryptocurrency, perform secure identity verification for customers and businesses, and provide secure bank account linking.
As a private operating business, managing compliance requirements for secure financial transfers can be difficult or costly. Many businesses might seek to obtain a license for payment systems, which either takes time or money or both. And if they do no obtain the license, they have to operate using a third-party payment processor (TPPP) that may charge them an excessive amount of fees to process the payments.
With Sila’s platform, a business owner or fintech startup can actually create their own completely compliant fintech application that facilitates a range of money transfers. The Sila API provides the following:
- Compliance-as-a-service since compliance comes built-in
- Know Your Customer (KYC) and Know Your Business compliance through trusted third-party partners
- National Automated Clearing House Association (NACHA) compliant by using Sila’s FDIC insured bank, Evolve Bank and Trust
- Compliance under the NACHA Operating Guidelines, Offices of Foreign Assets Control (OFAC), and Regulation E of the Electronic Fund Transfer Act
- Compliance for blockchain transfers, including Ethereum and smart contracts
- Compliance under the Payment Card Industry (PCI) Security Standards Council by outsourcing payment data collection to third-party partners
If any single private organization wanted to provide all that the Sila API provides, they would be adding years to their startup simply waiting to become certified and compliant under any one of these regulations.
How the Sila API can save your business money
If your business decides to move with the Sila API for creating an ACH API for transferring digital currency, this will save your business a lot of money and shorten the start-up time for that business.
For example, PCI compliance alone costs around USD 300 for small businesses, but USD 70,000 for large enterprises. Regular PCI audits must also be done to maintain PCI compliance, which can average USD 15,000. Ensuring that your equipment is PCI compliant is essential considering that your company might be facilitating the process and handling of payment card data.
If your company would like to process payments (as every company would want to do), then you will need something in place to properly handle the collected payment card data. Without being PCI certified, you rely on a costly outsourced program to do this all for you; and these outsourced programs typically aim to do as much as possible on your behalf so your company is limited in what it can and cannot do, allowing the outsourced program to charge costly fees for processing and storing payment card data.
KYC and KYB compliance is extremely expensive and can take, on average, one month to complete but often takes as long as four months. A lack of automation usually means a lack of compliance and businesses can be fined for transaction types that aren’t compliant. So if you have hundreds of thousands of transactions below a certain price point and all of those transactions are non-compliant, each of those hundreds of thousands of transactions could be pegged for thousand of dollars in fines. Unfortunately, the lower end of a financial firm’s cost of compliance can total up to $60 million.
By outsourcing your KYC and KYB compliance, you are ensuring that not only will your business and customers fall under KYC/B regulations, but your company will not have to front the money nor will it be pegged if compliance faults are found.
While the cost breakdown will vary between financial institutions, becoming certified under NACHA, as an Originating or Receiving Depository Financial Institution (ODFI or RDFI), and being compliant under the Offices of Foreign Assets Control (OFAC) and Regulation E of the Electronic Transfer Act, takes a lot of time and money. Not only that, but you will have to ensure compliance 24/7.
Fraud security with the Sila API
Fraud security is of course one of the main reasons why compliance is so strict in the payment processing and the fintech sector. When a payment is processed by any outsourced agent, even a bank, credit union, financial institution, or anything online, then the chance of fraud occurring increases.
The same is said for third-party payment processors (TPPPs). So while these TPPPs provide a lot more security and trust in terms of the customer using their services for security, the TPPP must also ensure that fraud measures are affectively handled and that customers can trust the TPPP to minimize fraud in all their transactions.
When handling ACH payments and other forms of electronic cash transactions, there are several ways to try to prevent fraud. These include:
- Complying with all PCI and NACHA protocols for storing sensitive banking data, including using PCI approved hardware and software, NACHA approved service providers and encrypting the storage of all financial data, including credit card, debit card, and banking information
- Be FDIC insured
- Regularly perform internal and external cybersecurity audits, seek an appropriate NIST maturity level, and perform regular ACH risk assessments
- Test for return codes and proper authorization procedures is a requirement for being approved
- Maintaining KYC/KYB compliance for each bank account
Luckily, the Sila API platform comes with a PCI and NACHA compliant trusted partner, as well as a bank partner that is FDIC insured for up to $25,000 of pass-through transactions.
Since your company will not be storing the payment data or processing the transactions, the NIST maturity level is not necessarily mandatory (for these transactions, although they may be mandatory for other transactions). And, our Sila sandbox allows the software teams to test for return codes in a realistic but safe environment so that your team is prepared for potential return codes including fraudulent return codes.
Our third-party partners also provide secure ID verification, bank account linking, and KYC/KYB customer and business data storage so that any personal information that is collected to ensure payment compliance is secure. The third-party partner will be dedicated to securely collecting and storing this data, and doing so over an encrypted network.
Lastly, by using our patented Sila token cryptocurrency, the U.S.-issued SILAUSD, and the ability to provide users with their own blockchain address, payment transfers are even more secure, as the transaction is encrypted but publicly available for verification worldwide.
Sila API availability
By outsourcing a company’s financial services and its payment system, a tech startup can move money faster and not only ensure that the company saves money in payment processing and financial payment compliance, but also save time and effort in ensuring compliance and financial security.
Luckily, the Sila API allows you to outsource the financial services but have total control over the platform, minimizing the hefty financial fees and also providing that business the ability to whitelabel the product.
By creating a custom banking API fully capable of operating along the global financial system and opening transactions to international money transfers, your clients will be happier and you can focus on delivering your product while still ensuring financial compliance and stability.
Sila’s API platform can create fintech applications in a number of financial networks to further a card payments system and bolster existing payment systems. The Sila API is a financial innovation that aims to move outdated payment systems forward into a more versatile and accepting payment industry.
6 Advantages of Using Payment APIs
Adding payment APIs into your business model is easy with Sila. Read on to learn how.
Outsource your US Financial Compliance with Sila
Financial compliance is tedious and costly, and it’s even worse if you fail it. Outsource your US financial compliance with Sila.
Sending ACH Payments with Sila
With secure solutions like Sila, you can move ACH payments and money internationally faster (and more affordably) than ever before.
U.S. Know Your Customer (KYC) Regulations and ACH Payments
If you operate as a financial institution or a third party payment processor (TPPP) and wish to send money through the U.S.’s Automated Clearing House (ACH), then you must follow the guidelines for knowing and verifying your customers. Older guidelines were centered around Customer Due Diligence (CDD), but more updated measures look to KYC, or the Know Your Customer rule.
Understanding Financial Platforms: Dwolla vs Sila
Dwolla is a financial platform entrepreneurs can use for fintech innovation. Here’s the breakdown of Dwolla vs. Sila.