Summary:

BancBox is formally launching its payment platform today, offering not just the ability to accept credit card and other payments, but also hold the funds in stored accounts and move it around between financial institutions, all in compliance with regulatory requirements.

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Developers are increasingly blessed with a lot of options for dropping simple payment services like Stripe, PayPal (e ebay) and Braintree into their websites and mobile apps. But what if you want to do more than just accept payments? That’s where BancBox is looking to make its mark.

The San Mateo, Calif. company is formally launching its payment platform today, offering developers not just the ability to accept credit card and other payments, but to also hold the funds in stored accounts and move funds around between financial institutions, all in compliance with regulatory requirements. With its set of APIs, BancBox is trying to help companies without financial expertise create a new set of applications from gifting apps and e-wallets to light banking services and collaborative consumption apps.

The idea, said CEO Sanj Goyle, is to provide a payment back-end that works like Amazon Web Services, allowing developers to concentrate on their products without having to think about the payment integration details. In essence, BancBox is integrating with banks so its developer clients don’t have to.

BancBox, which launched a beta last month, is built around three services:

  • It can accept payments from credit card, wire transfers, ACH, checks, wires and moneygrams, and multi-party transactions. That’s not so different from other developer services that make it easy for apps to process payments.
  • BancBox works with banking partners to create stored accounts so a developer’s money can be held safely, with full ledgering, account reconciliation and FDIC insurance. This is helpful for apps that take in money from users but don’t use it right away. For example, a collaborative consumption service can hold on to payments and allocate them to multiple sellers over the course of weeks or months.
  • After receiving the money, BancBox can send it directly or through various channels such as ACH, checks, e-bill payment services, PayPal or other services. That makes it easy to transmit money to and from different bank accounts. BancBox, for example, is working with a company called ReadyForZero, which helps people reduce their debt by storing money and automatically routing cash to various debtors.

“Some others make it easy for ecommerce companies to collect payments and they make that process simple and elegant,” said Goyle. “But our belief is that’s the starting point. After you collect funds, you need to be able to hold it, store it and send it. You need to have a technology and regulatory solution to do that.”

The regulatory point is important, said Goyle. Many apps are storing and sending funds but they don’t necessarily adhere to the different regulatory rules of each state. Getting a license to transmit money across all 50 states can cost more than $1 million, he said. Since BancBox works with existing banks on money movement, it meets the various regulatory standards so developers don’t have to acquire licenses or maintain PCI compliance.

BancBox has been around for five years and first developed payment services for itself. But over the last 18 months, it’s been working on extending those services to developers with its APIs. The company, which has been profitable with its legacy business and expects to be cash-flow positive with its new service in 12 months, has raised a little more than $11 million in funding, including $6 million in 2009, when Baseline Ventures, Floodgate, Harrison Metal Capital and Founder Collective invested.

I think Bancbox is poised to do well, because it brings real disruption to the banking world by making payments and more sophisticated financial transactions easy for app developers. That can lead to more compelling commerce and payment apps, but it could also mean more apps that offer real banking services, kind of like banking start-up Simple. Personal finance services could also become much more versatile, not just tracking spending but now helping people move money automatically into savings accounts or transferring funds to the debtors.

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