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Where I work we move a lot of money around via ACH (which might as well be via cheque). We treat the account number as a secret and encrypt it because here in
by __MatrixMan__ 7y ago
Where I work we move a lot of money around via ACH (which might as well be via cheque). We treat the account number as a secret and encrypt it because here in the US the extent to which a bank needs to authenticate the source of an ACH transaction is largely left to the discretion of that bank.
We're integrating with a company in Germany that is confused by our request for their public key (so we can encrypt the account numbers on capture for their eyes only). As it turns out, in Germany it's common to share your account number on your web site so that your customers can more easily pay you. They have an authentication step that is separate from the account number.
This of course makes our system look pretty silly. We give account numbers to everybody we write a cheque to, but then treat them like private keys in other contexts.
Maybe this is to be expected, as ACH and SEPA (which is the equivalent-ish system in the EU) are separate systems after all, but further research shows that there are other regional differences within the SEPA network re: whether the account number is a secret.
If we had a competitor trying to do the same thing with a system where authentication and addressing were both separate and part of the protocol (e.g. any cryptocurrency), they'd be done by now and making money. We've been at this for more than a year and we're getting nowhere.
The moral of this story is that cheques may not be obsolete yet, but the protocol that backs them will probably soon be. It has fundamental flaws that open the door for fraud and incur other overhead costs as well. Once there is a viable competitor it doesn't stand a chance.
- clintonb 7y agoACH will eventually be replaced by real time payments (RTP)[1] [1] https://www.theclearinghouse.org/payment-systems/rtp https://www.theclearinghouse.org/payment-systems/rtp
- Gunax 7y agoIn the finance world 'eventually' is a long time. This is an industry that I am sure will 'eventually' eliminate mainframes from its tech stack. My guess is that ACH systems will be maintained for a few decades as a legacy payment rail with countless promises of phasing it 'inn the next five years'.
- __MatrixMan__ 7y agoMaybe. Technical integrations in the payments space go painfully slowly. It'll be interesting to see what the payments landscape looks like by the time RTP has sufficient saturation for two randomly selected parties to be able to use it.
- pfranz 7y agoSame day ACH had phase 1 in 2016 (amazingly recent). It's now "completely rolled out" and in practice still not very "same day" in most cases. The same day ACH expansion adds 2 hrs and a third daily transaction and isn't scheduled until March of 2021. Sure, technically, banks can have more than one initiative going on at the same time, but I'm pessimistic about seeing RTP or seeing ACH go away. https://www.nacha.org/rules/same-day-ach-moving-payments-faster-phase-1 https://www.nacha.org/rules/same-day-ach-moving-payments-fas... https://www.nacha.org/rules/expanding-same-day-ach https://www.nacha.org/rules/expanding-same-day-ach
- hyperman1 7y agoThe system you describe is normal for Europe since the '80ies. The protocol you describe is already obsolete for 30 years. I have in my life seen exactly 1 cheque - for buying our house. Bank brought it straight to the realtor.
- lawn 7y agoCredit cards still use the same system where the public key is the same as your private key and all you need is to copy it. Things are improving with chips and online verification via BankID here in Sweden, but everyone still doesn't use it.