Building the payment system with Casey Hingtgen

Konstantin Dubovitskiy
Foreign Today, as a guest speaker, we have Casey Hinchin, the COO of the Wheel. And in this episode we are going
to go through the process of actually building out the pulling and pushing system for an actual company that is now
using the pulling and pushing system of the funds. We're also going touch onto how to make sure that the funds are
not intermingled, how to navigate the legal system within the payment system, but most importantly, we're going to
talk about polling and pushing the funds for your actual users. So, Casey, without further ado, let's kick it off with a
simple question of Tell us about yourself and about the Whale.
Casey Hingtgen
Yeah, sounds great. Thanks for having me this morning. So, a little bit about myself. Most of my background has
been in E commerce. I started my career at Wayfair, more on the marketing side, but eventually found my way into
production. Spent many years leading different product teams and initiatives in the E commerce world and recently
made the switch to Whale, which is kind of at the intersection of fntech and prop tech. So I lead operations,
marketing, technology, analytics. Kind of wear all those hats at Whale. We're still in our early days. We have an
incredible team and we're building a really innovative solution to help renters and landlords with security deposits.
Casey Hingtgen
And so for those many of us who have rented much of our lives, or at least for a portion of our lives, security
deposits tends to be a pretty contentious part of the relationship with your landlord. And what we've done is really
fipped the paradigm. So instead of handing your money over to your landlord for them to put it in an escrow account
on your behalf for any damages, we're actually allowing renters to hold on to the money themselves in their own high
yield interest account. So they earn interest on their money, but the money locks for the duration of the lease so the
landlord still has access to it, so it's still guaranteed to them. So it's a really interesting switch to how it's been
handled in the past.
Casey Hingtgen
And we're seeing a lot of interest from both renters and landlords in adopting this new way of handling it.
Konstantin Dubovitskiy
Perfect. Thank you for the background. Now that everyone knows what the goal is, we kind of have a general idea of
what the problem is that you're trying to solve when it comes to making money. Move. Now let's jump a little bit
more in depth. And actually before we do that, my one question was when we had the pre interview meeting is why
would landlords go for it? And the answer is because in some counties, some Cities.
Casey Hingtgen
Right. There's a ton of regulations. Yeah, you're right. So, you know, if you think about places like San Francisco or
Seattle or just the entire state of New York, New Jersey, Florida, many states and localities have a ton of regulations
built intended to protect renters. Right. From landlords using their funds for other purposes. So they can't return
them at the end of the lease. So a lot of safeguards in place and that puts a huge burden on landlords to be able to
collect the deposit. A lot of this is still done with physical checks. They have to go open an escrow account at the
bank and the renter's name, they have to inform the renter where the account is held, they have to pay them interest
annually. And then when it comes time to return the deposit, they need to collect a forwarding address.
Casey Hingtgen
They're printing checks, they're mailing the checks, they're paying for postage. You know, we have one customer that
spends over a million dollars on their FedEx bill just returning security deposits to their renters. And so a ton of value
for the landlord and fully automating this and taking this completely off their plate. And then obviously for the renter,
the ability to earn interest in a high yield account is incredibly appealing to them.
Konstantin Dubovitskiy
That's just one of the things I wanted to take out of the way because I never lived in an area I had that. I'm like, why
on earth I know the landlords, I know for a fact they will not give me a dime if they don't have to. So that answers that
question. With all that being said, now let's take a deeper dive into the goals that were in your mind when creating
the system for the whale. So, main considerations, I'll push it over back to you. What were the main considerations
when creating whales?
Casey Hingtgen
Yeah, I mean, we really wanted to create a solution that was a win for both sides. Right. We wanted something that
renters would love and something that Landlords would love. And so the kind of key considerations for the landlord
is they need to make sure that money's guaranteed to them. They don't want to take any risk that, you know, maybe
the money's not going to be available at the end of the lease. So we had to create a really bulletproof product that
allows us to lock those funds in an FDIC insured account and only hold that money in cash. So we don't invest it or
anything like that, it's just held in cash. So we can guarantee that money back to the landlord. So that was a huge
consideration as were kind of evaluating how to build this product.
Casey Hingtgen
And then on the renter side, we needed to make sure it was incredibly easy for them to fund their account. Right.
There's a lot of things you're doing when you're moving in, a lot of steps to the process. It's a stressful time. You're
moving out, you're moving in, you're paying a bunch of fees. How do we make it easy for them? So there's no fee to
use Whale for the renter, it's easy for them to just sign up and connect their existing bank account to pay their
deposit. Using plaid, we pre fll all of their information from their existing lease application so they can quickly open
their whale account. It takes less than three minutes.
Casey Hingtgen
And so that was another kind of aspect that was super important to us is like how do we make it as frictionless as
possible for the renter and help them understand the beneft that's in it for them by not having to hand their money
over to their landlord to be able to hold on to themselves. So that combination is really kind of the magic behind
whale.
Konstantin Dubovitskiy
Perfect. And last consideration was of course making sure that the funds are not intermingled. You're staying within
the regulations. Good graces, right?
Casey Hingtgen
Yeah, we're complying with all the laws just by the native nature of the product. Right. We're opening a separate
account for each renter that's dedicated to their security deposit, their interest bearing accounts, their FDIC insured,
they're held in the state. It complies with all the kind of regulations that a landlord might need to follow when it
comes to how they treat the, the renters money.
Konstantin Dubovitskiy
Let's, let's start there. Let's start with the opening of the accounts. I'm assuming that's the frst step in the process of
moving money within whale system. Let's go with that. Yeah. What happens there? You said that you are creating the
whale or sorry, the bank accounts for the user. Is that the case or does the user have to go to a bank or well think
that you work with and then.
Casey Hingtgen
Yeah, they don't have to go there. They don't have to go anywhere. It's fully digital. Happens is as soon as their, you
know, application or their lease is signed for a new unit and they owe their security deposit, we see that VR
integration with the property manager's property management system. So we see when they're approved to approve
for the lease. And once that happens, that triggers us to send an invite directly to the renter to open and fund their
Whale account. We know what the deposit amount is, we know where they're moving into, we have all their basic
information. A lot of the information that you would need to fll out when opening a bank account, we have a lot of
that already. So that's all pre flled.
Casey Hingtgen
So they get an email from Whale, they click a link, they fip through the application really quickly because most of it's
pre flled. They answer a couple bank related FINRA questions, right? Like are you a politically exposed person? Do
you own more than 10% of a public company? Questions like that. So we can make sure that, you know, we're
complying with all the FINRA regulations. We do a identity verifcation check to make sure that they are who they say
they are when they're opening that account. And then we have them connect their bank account via Plaid and the
money's moved. And so that's really the, that's really it for the renter. And then Whale kind of takes it from there and
make sure that money's moved into their account. It's locked for them.
Casey Hingtgen
We send confrmation back to both the renter and the landlord that money is secured. Obviously, it's important for
both parties to know that so that the landlord knows that the renter is ready to move into the apartment, they can
hand over the keys and the renter knows that they can check this off their list and their money safe and they can
then log in and see it anytime. Right. It operates like a typical high yield savings account where they can log in,
they're paid interest every month, see those funds and have full visibility.
Konstantin Dubovitskiy
Makes a lot of sense. All right, great. That sounds like a straightforward step. I mean, sounds straightforward, but I
can imagine a lot of work went into that one. But now let's talk about the landlords. I mean, they are the ones that
actually have to onboard to your platform and then have their users or, well, their tenants be onboarded. So your goal
is to make sure that your system is appealing as hell to the landlords. Let's talk about that.
Casey Hingtgen
Yeah, yeah. We need it to be easy for them to adopt. Right. And they're so used to implementing new technologies
that end up placing an extra burden on their operations team. There's a lot of training, there's a lot of things to learn.
The integration is never as smooth as people promise it is. So we've invested a ton to really make it simple for them.
And that kind of comes back to the kind of plug and play integrations that we have with the major property
management systems that are out there. So it's really easy to onboard. It's as simple as really providing us with your
API key to your property management system to give us read access to that so we can read all the data that we need
to see when that movement happens to confrm that deposit has been received.
Casey Hingtgen
It's actually pretty funny. We've told landlords that our integration process takes fve to 10 minutes to set up and
launch your frst property. And it almost hurts us because people just don't believe us. They're so used to the over
promising and under delivering from a lot of other solutions out there. And so we're almost kind of wondering, well
do we kind of say it takes like two days and that's really good and really pleasantly surprised. But like, you know,
we've taken some videos and shown people like yeah, this is all you got to do. This is, this is it. And, and they wonder
well, what are the other steps that aren't shown in the video? Like nope, that's it that the videos, you know, it's pretty
easy.
Casey Hingtgen
So anyways it's, that's been an interesting challenge to have to overcome because we've invested so much there to
make that truly turnkey.
Konstantin Dubovitskiy
That is a great problem to have where your promise sounds like an over promise. Well, in reality it's very much reality.
Let's talk about the guarantees to the landlord specifcally. So how does the bank that is opened by a user become a
custodial account? Essentially between, I'm assuming is going to be shared between your banking partner, Whale,
the tenants and the landlord, Correct?
Casey Hingtgen
Right, Right. So there's kind of a multi party agreement that renters agree to when they're opening their bank
account. You know, I'm sure all your listeners have probably opened a bank account before and know there's a lot of
paperwork that goes behind it. We have kind of all that standard legalese. The kind of. One interesting aspect of
Whale, right is a portion of your high Yield savings account is locked and controlled by the landlord during the
duration of the lease. And so that's kind of the special sauce. The account itself is. If you were to log in, you would
see, you know, your overall account balance, but then you'd see two buckets, you'd see your locked bucket. That's the
amount that you can't touch, but you can See that it's there, it still earns you interest, but you can't access it until it's
released.
Casey Hingtgen
And then you have your unlocked bucket. That's where you can put other money if you want to invest more in your
savings account. Interest shows up that we pay you because you have immediate access to any interest earned.
And so that's the kind of the dual nature of the whale account. And so for landlords, when we're opening that
account with our brokerage partner, we have that agreement in place and that's what allows us to operate and that's
why we invested so much early on in becoming an SEC approved registered investment advisor. That's really what
allows us to take custody of the funds and hold them on behalf of the banker between both of these parties.
Konstantin Dubovitskiy
Interesting. Okay, let's talk about that a little bit more. That is my major weak points, one of my major weak points
when it comes to payments, the regulations around it. All right, who is touching the funds there? I would imagine that
it's your banking partner that is actually holding the funds and you would just be essentially borrowing their
credentials and just having potentially just the visibility into the fund slash the permission to act on behalf of the
user. So on behalf of the tenants and on behalf of the landlords. Is that correct or how exactly are you touching the
funds?
Casey Hingtgen
Yeah, that's pretty much right. I mean, we are opening an account for the renter based on the application that they're
flling out and we're opening that with our brokers partner who operates that account. So that money is being moved
directly into their account with that brokerage partner. So it's being ach directly from plaid into that account using
kind of our plaid auth token. Right. And so that money gets pulled in there. We have, you know, via our partners API,
we have access to see the funds, move the funds, control the funds. We're obviously beholden to all the kind of
agreements that we signed. We can only kind of handle or move that money in certain ways. Right. We can only
release that money if the landlord gives us permission in a certain way to unlock that money, tell us how much to
unlock.
Casey Hingtgen
So it's all, you know, very regulated, very secured. But, but our brokerage partner is handling things like sending
annual 1099s for any interest, like they're handling all of those aspects of, you know, for the custodial parts of the
account.
Konstantin Dubovitskiy
Right. So my question honestly still remains. I'm still not sure why you need to be fnra verify, for example, Or FINRA
accredited. For this to happen, since you already have the banking and the brokerage partners.
Casey Hingtgen
Well, because we are basically opening a brokerage account on behalf of our customer. And so to be able to do that,
you have to be a registered investment advisor for them.
Konstantin Dubovitskiy
I see. Okay, now that makes sense. Okay, now I see where it's coming. Perfect. We cleared that out. Understood. All
right. In that case, that's the system. Now the funds are in, let's talk about pushing them out. I mean, that one is my
favorite parts. Checkbooks, bread and butter, and of course, my bread and butter. So let's talk about that. What
happens there? Let's say that the tenant is moving out. They've damaged a bunch of walls because they like hanging
stuff like myself.
Casey Hingtgen
Yeah.
Konstantin Dubovitskiy
Half of their deposit goes to the landlord, half of it goes back to them.
Casey Hingtgen
Good question. So similarly to the move in process, our integration with the property manager's system allows us to
see when the move out has been processed. Right. So we see their move out date, we know what date they vacated
the unit, and then what we do is we wait for the landlord to fnalize their move out statement. So sometimes it takes,
you know, a couple days after the tenant actually leaves for them to go and inspect the unit to see the holes in the
wall, as you said, and determine, okay, well, how much is this going to cost me to patch and paint? Right. And so, you
know, let's say it's a thousand dollars deposit. They determine it's $500 in damages and they have no other kind of,
you know, missed rent or anything like that owed.
Casey Hingtgen
So the landlord fnalizes their move out statement just like they normally would. They already do this process for
every single move out that they do. The difference is we see that amount and rather than, you know, them have to
kind of refund the extra $500 to the renter, you know, print check, mail it to them, get their forwarding address, deal
with the return check if it goes to the wrong address. Like all the headaches that come with handling that, the magic
with us is that the money's already in the renter's account. We just have to unlock it. And so what we do is we see
that amount, we see how much needs to be unlocked, and we unlock that instantly in the renter's account so they
have immediate access to those funds.
Casey Hingtgen
The 500 for the landlord, we pull that out of the renter's account and we ach that into the landlord's operating bank
account. And so that's part of the onboarding process is we kind of securely collect the account information for the
landlord for that property. Oftentimes landlords have different bank accounts for different properties, so we allow
them to confgure it property level, but we have that information stored. So we just send over that ach. You know, it
takes one to three business days to arrive. As soon as it hits their account, we send a notifcation to the property
letting them know that the funds are there. And we apply that credit to the resident's balance immediately so they
know that they don't need to go after that person for that $500 because it's paid, it's just in progress and pending.
Casey Hingtgen
And so that's, it's really magical for landlords. Oftentimes other solutions, the landlord has to go and fle a claim, they
have to wait to get paid, they're waiting for a check. Then they have to apply that check and apply it to the resident.
We're able to do that automatically, directly via our API integration.
Konstantin Dubovitskiy
That is lovely. That is a beautiful system. And yes, I do like it very much. That is amazing. All right, now about the
tenant themselves, once they move out, do they just end up having you said yourself, you know, you're unlocking
their bank account essentially. Do they just get that bank account period, or does it get locked out at some, at certain
points or what happens to the renter?
Casey Hingtgen
Yeah, great question. I mean that is their bank account and they can kind of do with it what they wish. They can keep
the money in there. It continues to earn interest for as long as it's in there. They can add more. They can pull it all out
back to their other bank account if they'd like and close their account. It's really up to them. What we really hope to
get to eventually when Whale is on more and more properties is you move to your next property and you already
have your money in your Whale account and that landlord just locks down whatever portions do for that security
deposit. And so you can continue to build this kind of nest egg for a security deposit. Right. Maybe you upgrade to a
better unit and that unit has a higher security deposit.
Casey Hingtgen
Well, now you have interest that you've earned that will help you cover that new security deposit. And so we really
hope that this becomes kind of a, you know, a long term, you know, investment vehicle for these renters so they can
continue to build wealth on the security deposit. Right. You know, most Americans have almost nothing in savings.
And so this is a huge of Their net worth, that's just being locked away. And the landlord's getting full beneft of that.
Yeah, really, the renters money, they should be the one to beneft. And that's really why Whale is trying to step in here
and help them earn money that's. That's rightfully theirs.
Konstantin Dubovitskiy
That is lovely. I'm honestly looking forward to living in a place that has to pay me the interest.
Casey Hingtgen
Tell your landlord we're happy to take a meeting and tell them a little bit more about Whale.
Konstantin Dubovitskiy
My. My landlord once threatened to evict me because I had a bike hanging off the railing of my Belgian. So I don't
think I will.
Casey Hingtgen
Maybe your next landlord, Correct?
Konstantin Dubovitskiy
Yeah. Yeah. We're not gonna go into the discussion of my landlord here, but yeah, no, certainly not them. Great. That
all sounds lovely. The system is amazing. It sounds straightforward. I know for a fact it took, like, half a year to
develop. What was the most complicated part for you personally or. Well, for the team in general. What was the thing
that maybe looked easy and turned out to be as painful as it gets?
Casey Hingtgen
Yeah, great question. I mean, honestly, one, it took a lot longer than a half a year because so much of the kind of
investigation and research really went into fguring out, is this legally compliant? Is this. Does this comply with the
laws in all 50 states? The district of Columbia municipalities have their own rules, like, how do we make sure that
Whale is really compliant? And that took a lot of research. It took a lot of time and a lot of expenses with lawyers to
really kind of dig into the law, to make sure that were going to build something that would stand up to all the
regulations that are out there. And that was probably the hardest part and the most complicated and the most
nuanced because the laws are somewhat vague. In some cases, they're not super straightforward.
Casey Hingtgen
So we spent a lot of time really crafting the design of the product to make sure that it would work. The other kind of
challenging part as we started to build this thing was understanding how all the money movements would work in a
way that would be satisfactory to our partners. You know, there were. There were some kind of challenges with
some partners we had where they, you know, weren't willing to facilitate this kind of moving in and moving out of
funds as regularly as we needed to be able to kind of process this. And so, you know, lots of challenge in terms of,
like, getting both, you know, landlords comfortable with this new idea and the legality of it. But also, like the banking
partners, it's a totally different fnancial instrument that we've really created.
Casey Hingtgen
I mean, it's a play on an existing high yield savings account. But you know, the idea of this kind of, you know, this
lockable portion was something that took a lot of time to really get others comfortable with and then work with them
to kind of build a solution knowing that their systems weren't fully built to handle that. And so a lot of kind of custom
development went into that.
Konstantin Dubovitskiy
I can imagine that yes, it is kind of rare that you have a system like this that actually generates any amount of yield,
any. Not even talking about high yields. And you got the high yields. So that is props to you people. Good fnd, good
work that I can imagine. Yeah, did take a lot of work. Talking about work, what do you think is the main thing that you
are looking to improve within that system? Specifcally when it comes to moving funds, making more accessible to
the renters, to the landlords? What's your next target?
Casey Hingtgen
Yeah, great question. I mean, I think that there's some improvements we can make to further streamline some of the
edge cases. So if you think about when someone fails a KYC verifcation process, how do we handle that in a
smoother way so they can really prove their identity? Are there things that we can do with that information to help
the landlord better understand who they're renting to in case it's maybe someone that they might not want to lease a
unit to? Right. For whatever reason? We also want to make it easier for people to add more funds to their account.
We've had people asking us more and more like, how do we take more advantage of this? This is great. I've never
had a high yield interest account before.
Casey Hingtgen
So imagine kind of introducing a program like Roundup Rent where they could commit to saving, you know, another
$25 and round up their rent to an even 1500 each month. So, so give them more opportunities to invest more. And
that really leads into kind of some of the other products coming down the line for renters. You know, think of a kind
of a robo investment product that we're thinking about called Whale Grow, where they could, you know, take other
money and invest it in a, you know, Vanguard type ETF fund and they're at a higher rate of return on that than they
can their savings account. So really trying to teach renters the principles of investing and teach them that, you know,
small amounts of money invested consistently over time is really the way to build wealth.
Casey Hingtgen
And so how do we get them started with that early? Well, let's Help them take that nest egg that they already have
that's being locked away as a security deposit and show them the power of investing that.
Konstantin Dubovitskiy
That is a solid plan. That's exactly where I thought you're gonna go. I'm glad to hear that. It makes a lot of sense.
Yeah, I mean you're in banking.
Casey Hingtgen
It's.
Konstantin Dubovitskiy
Financial products on top of banking tend to be the most high yield services out there for a good reason. All that
being covered, let's go to the rep question of the episode, which is the education. If there was one thing in the
payment space that you could teach everyone in the entire world, you just get planted into people's brains. Eight
billion people can learn something from you about payments, what would it be?
Casey Hingtgen
Yeah, I mean this might be a little off of what you're looking for, but I was thinking about this and we've seen in the
news recently what government uncertainty can do to fnancial markets. Right. Businesses to conduct business.
Right. And I was thinking about one of the things that really helped us build trust and confdence with both
properties and our fnancial partners. And it's really the importance of government programs like FDR establishing
the Federal Deposit Insurance Company ability for us to insure our deposits up to $1 million backed by the US
government, you know, really puts landlords at ease knowing that hey, this is, this money is going to be safe, it's
insured. It allows companies like us to spring up and innovate. Right. Without that kind of backdrop for us, hard to
earn the trust of our landlords.
Casey Hingtgen
And so the fact that we can work with the banking partners and offer savings accounts to people without having to
spend decades building up trust that we're going to handle people's money appropriately and safely goes a really
long way. And so I think like, you know, the regulations can be such a headache in complying with them, but they are
built there for a reason. And that's why Wells invested so much time in becoming SEC approved investing in
products that allow us to FDIC insure our accounts and taking kind of the handling of this money really seriously. But
the, you know, government programs like that allow us to do that much faster than we otherwise would have by
ourselves.
Konstantin Dubovitskiy
100% huge fan of DSE. Fun fact. That was my very frst attitude I ever gotten. So certainly a good point. And yeah,
people take a look at fdic. I mean with the government uncertainty. By the way, for the record, we are recording this
on April 10, which is a day after the tariffs were once again paused after being in place for about a day or less. So,
yeah, uncertainty is certainly here. So take a look at FDIC and some other, you know, government programs that still
exist that could actually help run your business. With all that being said, we are going to wrap here. My call to action
is going to be take a look at the description of this episode.
Konstantin Dubovitskiy
I'm going to leave Casey's LinkedIn there, so if you have additional questions about how the system was built, shoot
it over to him. And of course, I'm going to leave the whale website. So if you are a landlord in one of those regions,
which is, you know, not our target audience, but the world is small, so chances are at least a couple of people are
Take a look at whale sounds. Amazing. I'm sure you gathered that from the past 25ish plus minutes. So my call to
action is go check out the description of this episode and then go check out our substack where we describe things
like that in greater details. And as always, have a great day. Ciao. All right, let me move the frefies.