One of the key metrics for consumer investment apps is reducing the time to trade once an account is opened, according to an update from Alpaca.
However, slow funding can be “a big friction for this engagement,” Alpaca noted in a blog post.
To provide a seamless user experience, Alpaca has reportedly “launched Instant Funding for Broker API, a new payment feature that gives your end customers instant buying power to start trading right away.”
As explained by Alpaca, buying power is the “availability of funds to investors in their brokerage accounts to begin purchasing assets.”
Alpaca also noted that due to fund transfer settlement times, market holidays, weekends, documentation errors, or time zone differences, customers “often experience delays to receive their buying power.”
With Instant Funding for Broker API, Alpaca say that they aim to improve “the customer experience by allowing your end-users to begin trading immediately without waiting for funds to arrive and settle.”
As stated in the update from Alpaca, it “helps to make the trading experience quicker, smoother, and more consistent.”
With instant funding, partners can “remove the barrier of waiting 1-4 business days for their customers and let them trade instantly, leading to better engagement and reducing churn rates.”
Alpaca explains that it “offers various funding models that help partners streamline their operational flow of funds.”
With the addition of Instant Funding for Broker API, you “can wave goodbye to multiple international wires or domestic ACH transfers.”
Instead, a single payment is “due on the the settlement date, removing the friction of creating batch journals or individual wires to fund every customer’s account.”
According to Alpaca, this simplifies “reconciliation and ensures that you will be able to support your customers’ funding activity at scale.”
You can generate an additional revenue stream “via an additional markup fee.”
This is dynamic and customizable, “enabling you to strategically configure a spread markup based on your business needs and goals.”
Alpaca says that it offers “instant buying power of up to $1,000 per account while waiting for electronic fund transfers to arrive and settle.”
Broker API partners will have the ability “to set specific funding and deposit limits for customers. Note that firm-level instant funding limits apply.”
Alpaca further noted that you can “enable access to instant buying power for end customers to start trading immediately.”
Alpaca added that you may take advantage of the following:
- Eliminate the need to pre-fund with Alpaca on T+0 for stock trading
- Configure a flexible fee mark-up to generate additional revenue streams
- Set specific limits on customer accounts for instant funding
- Integrate seamlessly with Broker API
- Support for stock trading
- Streamlined and compliant reconciliation flow managed via API
- Instant Funding Availability
- Instant Funding for Broker API is currently available to select international partners who fulfill certain eligibility requirements.