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CTO of Modern Treasury here. Banks are actually starting to setup a new payment system between themselves called Real-Time Payments (RTP) which has a lot of the
by saarons 7y ago
CTO of Modern Treasury here. Banks are actually starting to setup a new payment system between themselves called Real-Time Payments (RTP) which has a lot of the same benefits as wire transfers. RTP is 24/7, instant, and (from our experience) much cheaper than wire transfers. It's starting to roll-out across more banks and currently ~50% of bank accounts can receive RTP transfers [1]. I just cashed out on Venmo the other day and their instant transfers are going over the RTP system. Other than coverage not being complete, one of the main downsides is the $25,000 cap which means that for higher dollar volumes people will likely choose a wire. If you're sending $1mil, then the $35 wire fee doesn't seem like so much in comparison.
[1] https://www.theclearinghouse.org/payment-systems/rtp/institution https://www.theclearinghouse.org/payment-systems/rtp/institu...
- itcrowd 7y agoThank you for the RTP information! Had not heard of it yet. The fees look very reasonable ($0.01-$0.045 depending on type of transaction) and they provide a level playing field (flat-fee, no discounts for volume) I also heard someone say at some point that Americans are very wary of having people transfer money to their bank account. Not sure what the rationale is (maybe taxes or afraid of criminal money?) but I was wondering if you have heard this and if so, whether RTP has some protections or safeguards against this?
- saarons 7y agoHistorically Americans have been wary of handing out their bank account information because that's all the information needed for a bad actor to issue an ACH debit and pull money from your account. The NACHA guidelines have very strict rules around this and the payment protections are rather strong but it's still a pain to deal with as a consumer. RTP itself is non-reversible so when someone sends you an RTP payment it clears instantly and can never be pulled back as it can with Check and ACH payments.
- dexterdog 7y agoYou hand out your bank account information every time you give somebody a check
- zippergz 7y agoAnd indeed that's one reason (of many) I don't like to write checks. But I'd still argue that the threat model from giving a physical check to someone you know or do business with is different from linking your bank account with some online service like Venmo, where any mass breach or vulnerability might result in a wide array of people now having access to my banking information. And even if my bank covers me in the case of fraud, they don't compensate me for the domino effect problems that can come from having bill payments bounce because the account was emptied. To be clear I'm not arguing that this is a good system, but as long as it is the system we have, it's wise to limit who you give your banking account information to, regardless of channel.
- rifung 7y agoThis is exactly why Donald Knuth doesn't give out checks https://en.wikipedia.org/wiki/Knuth_reward_check https://en.wikipedia.org/wiki/Knuth_reward_check
- r00fus 7y agoMany banks have different values for the check MICR account numbers vs ACH routing purely to avoid easily spoofed ACH requests.
- mgkimsal 7y agomy bank prints out paper checks but they seem to xfer the money through another company. money leaves my bank account, but the checks, when delivered, have a completely different routing and account number. doesn't matter to me, but I had a paper check payment I needed to return and the local branch couldn't help me at all - the floor guy there couldn't even understand my situation. there was an 800 number on the check to call and I explained and they cancelled that check.
- Freak_NL 7y agoYou can't transfer money between banks in US Dollars within the US for free? We really are blessed with SEPA¹. Still, a few cents sounds at least reasonable. 1: https://en.wikipedia.org/wiki/Single_Euro_Payments_Area https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
- jacobush 7y agoI had this random thought, I wonder if it holds water: The EU states are (fairly) confident in their status as independent countries, and thus dare subject themselves to and implement such things as SEPA. While the U.S. is a single country, the states within are not independent countries and, very aware of that, try to defend their independence within the union at every turn.
- pjc50 7y agoI'm not sure it's the independence being defended so much as local grift of one form or another.
- mynameisvlad 7y agoMost times, the financial institution will eat the ACH fee, so to the customer it looks like it's free. SEPA also doesn't mean that the transactions are free, either. According to a third party transfer service (https://transferwise.com/help/15/paying-for-your-transfer/2956754/what-are-sepa-transfers https://transferwise.com/help/15/paying-for-your-transfer/29...) there might still be some fees from banks.
- zaarn 7y agoIf you do commercial SEPA Transfers, yes there are fees. If you only do push transactions (ie, customers sends SEPA transaction to you), it's largely account management fees. The pull transaction (SEPA Debit) isn't free, you can buy transaction packets (usually around 5-15€ per 1000 transactions) as well as paying a fee on monthly cash inflow (usually around 0.1-0.3%). Honestly, it's peanuts.
- 7y ago
- coldpie 7y ago> I also heard someone say at some point that Americans are very wary of having people transfer money to their bank account. All it takes to extract money from my bank account is the routing and account numbers. Print a fake check with that info, take a couple crappy photos with one of those mobile deposit apps, and boom my money is gone. This happened to me just a couple years ago. The signature on the check was literally "John Hancock." Perhaps things have improved in the past couple years, but I doubt it. As for replacement programs, I trust banks no further than I can throw them. You want me to sign up for Zelle, or whatever new money transfer program is? What's the catch? No way I'm trusting any program introduced by a bank.
- edubs25 7y agoSad part that I've seen... worked on an implementation of Visa push payments at a TPA/ISO (I think it was formally called something else by Visa [Visa Direct?]) - it was designed as a real time payment system to make small payments to vendors or contractors. In order to settle everything at the end of the day, we were using ACH and wires behind the scenes to re-balance the source accounts. It was really comical IMO . I know progress has to start somewhere but it just felt like we were adding layers of complexity.
- deleted 7y ago[deleted]
- thro_away_n 7y agoIs this the same thing as Zelle?
- djsumdog 7y agoI don't think Zelle is real time. I'm curious if it's the same working group for RTP that was behind Zelle.
- danielmg 7y agoit is not
- souterrain 7y agoThe times I’ve used Zelle to send money, it has been real-time.
- xur17 7y agoOnce I've sent money to someone a few times it's typically instant, but it isn't always.
- Qworg 7y agoZelle is roughly real time. It is owned by the same company doing RTP.
- thepinkelefant 7y agoNot correct . RTP is from theclearinghouse and Zelle is from clearexchange. Zelle came from a mix of banks trying to address only P2P scenarios. RTP goes beyond to B2C and all other combinations .
- Qworg 7y agoZelle is owned by Early Warning Systems, a wholely owned subsidiary of the top 7 banks in the US. The Clearing House is a joint venture by the top 25 banks in the US. Clearexchange was purchased by EWS a few years ago.
- ohyeshedid 7y agoDoes RTP bypass Fedwire?
- danielmg 7y agoYes and no. Banks reconcile funds via Fedwire.
- bernardom 7y agoIf I wanted to use RTP for my business- do any third-party processors offer it already?
- moftz 7y agoPaypal (and subsequently Venmo) offers it. I've "instant transfered" money from eBay sales right to my account. They do charge a 1% fee (up to $25) versus zero fees for classic ACH transfer. If I need the money right away, I'll pay the 1% but I usually can wait the couple days.
- GhettoMaestro 7y agoYup. Just transferred $2K from my PayPal account (ebay sales) to my checking account. Slight clarification: PayPal caps the transfer fees at $10.
- pbreit 7y agoFolks do realize that paying 1% to speed up a transfer by 1-2 days is equivalent to a 180%-365% interest loan?
- patio11 7y agoIn many cases they’ll be paying 1% of e.g. $40 either to avoid having to think about this any more or because they have extremely toothy consequences to not having the cash today. e.g. The implicit interest rate on an NSF fee if they don’t fund the $10 overdraft currently happening on their checking account due to the rent check being deposited, which they have 3 hours to cover before the cutoff, is on the order of 3.8e200%. ($35 interest to borrow $10 for a day.)
- pbreit 7y agoMy sense is that's the vast minority. I think most of the % fee-based "instant withdrawals" are done without understanding the effective APR. "It's only 1%!"
- js2 7y agoThere's same day ACH, but I have no idea how widespread it is yet: https://www.nacha.org/same-day-ach-resource-center https://www.nacha.org/same-day-ach-resource-center Anecdotally, I recently moved my banking to a discount broker and my paycheck is now credited to my account the night before. I don't know if that has anything to do with same-day ACH. Also anecdotally, Ally takes 5 business days (!) to open a CD via ACH even for an already verified bank. Definitely faster to have a checking/savings account with them, wire in the funds, then open the CD from checking/savings which is instant.
- pbreit 7y agoBusinesses use ACH extensively to pay each other same-day (and debit consumer bank accounts). But it has never caught on for consumer "push" payments.
- kevin_thibedeau 7y agoFor the better since ACH is woefully insecure.
- pbreit 7y agoSecure enough to process $50 trillion in 2018.
- vageli 7y ago> Secure enough to process $50 trillion in 2018. How is that any indication of its security?
- evgen 7y agoIt is an existence proof that the security is good enough to get the job done and keep losses to an acceptable level. If it was truly "woeful" enough to actually matter then an alternative with better security would have displaced it by now.
- nullc 7y ago> main downsides is the $25,000 cap I suppose this isn't inflation indexed, so RTP will become increasingly useless over time? -- halving in 35 years per fed plans and much sooner under monetary policy twitter-proposed by the president?
- saarons 7y agoWe've heard (unofficially) the cap will be raised over time.
- Aeolun 7y ago$35! No wonder everyone pays with credit cards and cheques...