8 ms·

>> Modern settlement and clearing is efficient. If this is true, why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two di

>> Modern settlement and clearing is efficient. If this is true, why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two different banks? Why does it take 5-15 days (including multiple "fraud" verification emails, calls etc) to send money from the US to my Indian bank account? >> ...it is certainly the easiest to upgrade. It is 2018... why are these systems not upgraded yet?

deleted 9y ago
[deleted]
JumpCrisscross 9y ago
> why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two different banks? Wire transfers are instantaneous [1]. They cost pennies a transaction, a fee banks often cover if you have more than ~$15,000 with them. For smaller transfers, real-time P2P was recently rolled out across most American banks [2]. This was a result of competition from Venmo, which one could think of as a lightning network over ACH [3]. (The latter being Fedwire's net settled and thus slower but cheaper cousin.) [1] https://en.wikipedia.org/wiki/Fedwire https://en.wikipedia.org/wiki/Fedwire [2] https://www.zellepay.com https://www.zellepay.com [3] https://en.wikipedia.org/wiki/Automated_Clearing_House https://en.wikipedia.org/wiki/Automated_Clearing_House
- BeetleB 9y ago
  The only thing you have done is emphasize the need to answer his question. When he does an inter-bank transfer, why does it take 3 days for to clear? I did something similar a few days ago, and while it didn't take 3 days, it did take over a day.
  - JumpCrisscross 9y ago
    > When he does an inter-bank transfer, why does it take 3 days for to clear? They chose the cheap, safe option over the fast, risky one. I talked about the difference between net and real-time gross settlement in an earlier comment [1]. TL; DR There is a fundamental trade-off between mutability, speed and cost. [1] https://news.ycombinator.com/item?id=16154956#16155708 https://news.ycombinator.com/item?id=16154956#16155708
  - bluetwo 9y ago
    That is 1) to prevent fraud (see "check kiting") and 2) so the holding institution can collect the interest for the day. This is not a technology problem. Blockchain won't change either of these.
    - nawitus 9y ago
      A blockchain certainly change that. If a bank does something for non-technological reasons, it's possible that a blockchain does something else.
k8si 9y ago
In any case, public chain cryptocurrencies are not the solution/upgrade you are looking for.
literallycancer 9y ago
The bank is getting an interest free loan from you, because they can. Why would they want to change anything?
lukeschlather 9y ago
You can certainly have instant funds transfers, if you are comfortable with a single security lapse instantly leading to the loss of your life savings. I'd imagine international transfers are slower proportional to the risk of security lapses when working with disparate organizations (and the difficulty in reversing mistakes.) Blockchains might be more secure in principle than traditional banks, but blockchains are pretty much all designed so that a single key compromise amounts to a catastrophic failure. Now you can manage this by having manu wallets and many keys to some extent, but at the end of the day it's still much less reliable than just having a bunch of bankers who are paid to take their time and ensure sure all transfers are authorized.
kernelPan1c 9y ago
Agreed. Bitcoin solves some problems with current forms of payment that shouldn't be unique to blockchain. Credit cards and checks are the equivalent of giving vendors your wallet's private key.
tedeh 9y ago
In my native Sweden people can send money to each other directly from their own bank accounts via a mobile app instantaneously for free over the Swish network. The limits are up to a temporary maximum amount of approx. 18 535 USD (150 000 SEK) and down to a minimum amount of approx. 12 cents equivalent (1 SEK). More than half the population are using it already [1]. Bank wire transfers within the entire EU is regulated by the SEPA framework which basically means that banks are not allowed to charge more for a intra-EU transfer than a transfer within the same country. This allows me to send money between my EU bank accounts for a fee that is usually between 1-3 EUR and never more than that. The transactions take one bank day to clear in my experience. Currently, the EU equivalent of Swish is being rolled out. It's called "SEPA Instant credit transfer" [2] and will work pretty much the same as Swish, except with coverage over the entire EU. The money is insured [3] and faulty transactions can be reversed with due process in many cases. [4] It's unfortunate you have to have these experiences with your banking system - it does not work like that all over the world, however. Also: Can someone please enlighten me on what we need "the blockchain" here for? [1]: https://medium.com/@etiennebr/swish-the-secret-swedish-fintech-payment-company-created-by-nordic-banks-and-used-by-50-of-swedes-cfcf06f59d6f https://medium.com/@etiennebr/swish-the-secret-swedish-finte... [2]: https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta... [3]: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-supervision-and-risk-management/managing-risks-banks-and-financial-institutions/deposit-guarantee-schemes_en https://ec.europa.eu/info/business-economy-euro/banking-and-... [4]: https://www.metro.se/artikel/det-h%C3%A4r-g%C3%A4ller-om-du-skickar-iv%C3%A4g-en-felaktig-betalning https://www.metro.se/artikel/det-h%C3%A4r-g%C3%A4ller-om-du-...
- nawitus 9y ago
  One thing I dislike about wire transfers in Finland (and I would assume similar regulation applies in EU) is that banks will ask the purpose of transactions over certain amount, or the origin of cash when depositing it. I want to use my money however I see fit and I shouldn't need to disclose anything to the bank. This is something that a blockchain could offer me.
- lnino 9y ago
  Try scaling that model the whole world. How do you get some random country to join it? The costs of maintaining all that regulation framework are astronomical and depend on political circumstances that might change quite quickly (Brexit for an instance). There's just no way that the whole world will have something like that in the next 25 years. So, if you love your banking system, don't switch to bitcoin. It doesn't mean blockchain doesn't have any value for other people/use cases.
toomanybeersies 9y ago
Because the USA has an antiquated banking system, resistant to change. My bank in New Zealand has instant clearing to accounts within the same bank, and hourly clearing to other banks. I can transfer money from my Australian account to my New Zealand account using TransferWise within 3 hours, or 2 working days if I use the international transfer service offered by my bank. One problem with America is that you have so many small banks and credit unions, a small town might have its own bank, that nobody is willing to standardise and agree on new standards. This is why Americans still use cheques, and why adoption of contactless payment using debit/credit cards, as well as chip+PIN (or even swipe+PIN) has been so slow. Contactless payment is so ubiquitous in Australia and New Zealand that I've had to insert my card literally once all year. Australia only has half a dozen main banks, which service >90% of the population. For whatever economic implications that has (too big to fail etc.), it has been great for encouraging innovation.
- Theodores 9y ago
  It is also a service culture where they have extra people to help you pack your bags. Meanwhile, Japan, Scandinavian countries and plenty of other first world places are going big on automation. You don't even get bags or a checkout assistant, it is all self-scan and pay by chip and pin (or contactless). Against this back drop of US service culture the idea is to make it as easy as possible for the customer - they don't have to enter a complicated four digit pin number, they can just sign their signature and if the cashier thinks it looks like the scrawl on the back of the card then the sale is done. I currently do not have millions of credit card details from a client database on my computer but that has happened before now. If I was criminally minded then I would have been able to sift off a lot of money, however, I have yet to steal a penny, despite also knowing some flaws in the 'double entry system' that I could have hacked to cover my tracks. I am sure that there are many millions of developers out there that have had such data on their laptop at some time. How many go rogue and steal? Not many. But in crypto-land it seems that this situation is reversed, everywhere there is a scam. The good actors are as rare as the bad actors in regular accounting/book-keeping. So ten years ago when I did have many millions of credit card numbers that could be used (no 3D secure back then), I was trusted but not expressly by a single one of those named in that 'Sybase' database (as it was then). The system then very much worked entirely on trust and generally all those in the chain were trustworthy. I don't feel that banking has moved on in the USA from this trust way of working, things are much more locked down in the rest of the world. This is good for many reasons, I prefer today's customer databases where all the bits you would want to hack are hashed and salted if at all present. This flakiness of banking in the USA - where a bank is not really any more likely to stick around than a company - means people do flock to the crypto coins precisely because of the 'store of value', there is chance of getting more than 2% return and the perceived risk is not much 'worse'. Hopefully the net result of this fantasy blockchain nonsense is that we do build out better banking systems that do have a better 'trust model'. The article does point out the absurdity of pushing around a whole copy of the database to every user and keeping it synced...
zanny 9y ago
Planet Money had an episode about this just last month. https://www.npr.org/sections/money/2018/01/10/576879734/episode-489-the-invisible-plumbing-of-our-economy https://www.npr.org/sections/money/2018/01/10/576879734/epis...
wilde 9y ago
Because prior to 2001, it was illegal to clear the money without the physical check present. [0] There’s an effort to modernize ACH, but it’s still years away from wide rollout. [0] https://payment21.com/blog/paper-check%E2%80%99s-death-began-september-11-2001 https://payment21.com/blog/paper-check%E2%80%99s-death-began...

deleted 9y ago

[deleted]

JumpCrisscross 9y ago

> why oh why does it take 3 days (in the US) to transfer funds between my own accounts in two different banks? Wire transfers are instantaneous [1]. They cost pennies a transaction, a fee banks often cover if you have more than ~$15,000 with them. For smaller transfers, real-time P2P was recently rolled out across most American banks [2]. This was a result of competition from Venmo, which one could think of as a lightning network over ACH [3]. (The latter being Fedwire's net settled and thus slower but cheaper cousin.) [1] https://en.wikipedia.org/wiki/Fedwire https://en.wikipedia.org/wiki/Fedwire [2] https://www.zellepay.com https://www.zellepay.com [3] https://en.wikipedia.org/wiki/Automated_Clearing_House https://en.wikipedia.org/wiki/Automated_Clearing_House

BeetleB 9y ago
The only thing you have done is emphasize the need to answer his question. When he does an inter-bank transfer, why does it take 3 days for to clear? I did something similar a few days ago, and while it didn't take 3 days, it did take over a day.
- JumpCrisscross 9y ago
  > When he does an inter-bank transfer, why does it take 3 days for to clear? They chose the cheap, safe option over the fast, risky one. I talked about the difference between net and real-time gross settlement in an earlier comment [1]. TL; DR There is a fundamental trade-off between mutability, speed and cost. [1] https://news.ycombinator.com/item?id=16154956#16155708 https://news.ycombinator.com/item?id=16154956#16155708
- bluetwo 9y ago
  That is 1) to prevent fraud (see "check kiting") and 2) so the holding institution can collect the interest for the day. This is not a technology problem. Blockchain won't change either of these.
  - nawitus 9y ago
    A blockchain certainly change that. If a bank does something for non-technological reasons, it's possible that a blockchain does something else.

k8si 9y ago

In any case, public chain cryptocurrencies are not the solution/upgrade you are looking for.

literallycancer 9y ago

The bank is getting an interest free loan from you, because they can. Why would they want to change anything?

lukeschlather 9y ago

You can certainly have instant funds transfers, if you are comfortable with a single security lapse instantly leading to the loss of your life savings. I'd imagine international transfers are slower proportional to the risk of security lapses when working with disparate organizations (and the difficulty in reversing mistakes.) Blockchains might be more secure in principle than traditional banks, but blockchains are pretty much all designed so that a single key compromise amounts to a catastrophic failure. Now you can manage this by having manu wallets and many keys to some extent, but at the end of the day it's still much less reliable than just having a bunch of bankers who are paid to take their time and ensure sure all transfers are authorized.

kernelPan1c 9y ago

Agreed. Bitcoin solves some problems with current forms of payment that shouldn't be unique to blockchain. Credit cards and checks are the equivalent of giving vendors your wallet's private key.

tedeh 9y ago

In my native Sweden people can send money to each other directly from their own bank accounts via a mobile app instantaneously for free over the Swish network. The limits are up to a temporary maximum amount of approx. 18 535 USD (150 000 SEK) and down to a minimum amount of approx. 12 cents equivalent (1 SEK). More than half the population are using it already [1]. Bank wire transfers within the entire EU is regulated by the SEPA framework which basically means that banks are not allowed to charge more for a intra-EU transfer than a transfer within the same country. This allows me to send money between my EU bank accounts for a fee that is usually between 1-3 EUR and never more than that. The transactions take one bank day to clear in my experience. Currently, the EU equivalent of Swish is being rolled out. It's called "SEPA Instant credit transfer" [2] and will work pretty much the same as Swish, except with coverage over the entire EU. The money is insured [3] and faulty transactions can be reversed with due process in many cases. [4] It's unfortunate you have to have these experiences with your banking system - it does not work like that all over the world, however. Also: Can someone please enlighten me on what we need "the blockchain" here for? [1]: https://medium.com/@etiennebr/swish-the-secret-swedish-fintech-payment-company-created-by-nordic-banks-and-used-by-50-of-swedes-cfcf06f59d6f https://medium.com/@etiennebr/swish-the-secret-swedish-finte... [2]: https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta... [3]: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-supervision-and-risk-management/managing-risks-banks-and-financial-institutions/deposit-guarantee-schemes_en https://ec.europa.eu/info/business-economy-euro/banking-and-... [4]: https://www.metro.se/artikel/det-h%C3%A4r-g%C3%A4ller-om-du-skickar-iv%C3%A4g-en-felaktig-betalning https://www.metro.se/artikel/det-h%C3%A4r-g%C3%A4ller-om-du-...

nawitus 9y ago
One thing I dislike about wire transfers in Finland (and I would assume similar regulation applies in EU) is that banks will ask the purpose of transactions over certain amount, or the origin of cash when depositing it. I want to use my money however I see fit and I shouldn't need to disclose anything to the bank. This is something that a blockchain could offer me.
lnino 9y ago
Try scaling that model the whole world. How do you get some random country to join it? The costs of maintaining all that regulation framework are astronomical and depend on political circumstances that might change quite quickly (Brexit for an instance). There's just no way that the whole world will have something like that in the next 25 years. So, if you love your banking system, don't switch to bitcoin. It doesn't mean blockchain doesn't have any value for other people/use cases.

toomanybeersies 9y ago

Because the USA has an antiquated banking system, resistant to change. My bank in New Zealand has instant clearing to accounts within the same bank, and hourly clearing to other banks. I can transfer money from my Australian account to my New Zealand account using TransferWise within 3 hours, or 2 working days if I use the international transfer service offered by my bank. One problem with America is that you have so many small banks and credit unions, a small town might have its own bank, that nobody is willing to standardise and agree on new standards. This is why Americans still use cheques, and why adoption of contactless payment using debit/credit cards, as well as chip+PIN (or even swipe+PIN) has been so slow. Contactless payment is so ubiquitous in Australia and New Zealand that I've had to insert my card literally once all year. Australia only has half a dozen main banks, which service >90% of the population. For whatever economic implications that has (too big to fail etc.), it has been great for encouraging innovation.

Theodores 9y ago
It is also a service culture where they have extra people to help you pack your bags. Meanwhile, Japan, Scandinavian countries and plenty of other first world places are going big on automation. You don't even get bags or a checkout assistant, it is all self-scan and pay by chip and pin (or contactless). Against this back drop of US service culture the idea is to make it as easy as possible for the customer - they don't have to enter a complicated four digit pin number, they can just sign their signature and if the cashier thinks it looks like the scrawl on the back of the card then the sale is done. I currently do not have millions of credit card details from a client database on my computer but that has happened before now. If I was criminally minded then I would have been able to sift off a lot of money, however, I have yet to steal a penny, despite also knowing some flaws in the 'double entry system' that I could have hacked to cover my tracks. I am sure that there are many millions of developers out there that have had such data on their laptop at some time. How many go rogue and steal? Not many. But in crypto-land it seems that this situation is reversed, everywhere there is a scam. The good actors are as rare as the bad actors in regular accounting/book-keeping. So ten years ago when I did have many millions of credit card numbers that could be used (no 3D secure back then), I was trusted but not expressly by a single one of those named in that 'Sybase' database (as it was then). The system then very much worked entirely on trust and generally all those in the chain were trustworthy. I don't feel that banking has moved on in the USA from this trust way of working, things are much more locked down in the rest of the world. This is good for many reasons, I prefer today's customer databases where all the bits you would want to hack are hashed and salted if at all present. This flakiness of banking in the USA - where a bank is not really any more likely to stick around than a company - means people do flock to the crypto coins precisely because of the 'store of value', there is chance of getting more than 2% return and the perceived risk is not much 'worse'. Hopefully the net result of this fantasy blockchain nonsense is that we do build out better banking systems that do have a better 'trust model'. The article does point out the absurdity of pushing around a whole copy of the database to every user and keeping it synced...

zanny 9y ago

Planet Money had an episode about this just last month. https://www.npr.org/sections/money/2018/01/10/576879734/episode-489-the-invisible-plumbing-of-our-economy https://www.npr.org/sections/money/2018/01/10/576879734/epis...

wilde 9y ago

Because prior to 2001, it was illegal to clear the money without the physical check present. [0] There’s an effort to modernize ACH, but it’s still years away from wide rollout. [0] https://payment21.com/blog/paper-check%E2%80%99s-death-began-september-11-2001 https://payment21.com/blog/paper-check%E2%80%99s-death-began...