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ACH is a cheap way to send money too. Not much in the way of rewards if that's your thing though.
by smarri 7y ago
ACH is a cheap way to send money too. Not much in the way of rewards if that's your thing though.
- clintonb 7y agoACH is cheap, but many banks don’t support sending transfers to random accounts owned by other entities. You typically have to do deposit verification because most banks’ offerings are intended for personal transfers. Few companies will dig into their records to find the micro-deposit amounts for you.
- vxNsr 7y agoAlso ACH allows two way transactions. If a company we’re to complete the deposit verification that would give you the ability to withdraw money from their account without any recourse on their part. Many banks only allow you to add ACH accounts for which you are the account holder.
- smarri 7y agoIs that really the case? If I have made an ACH payment to a company they then have a unilateral right to withdraw funds from my account? A valid authorization is required for this to happen. [Edit] Plus there is recourse via disputing an unauthorized transaction, the process is well established.
- vxNsr 7y agoACH is a two-way street. when you give your routing and accounting number to your employer for direct deposit they can pull money out of your account. There have been multiple public instances of this happening due to bugs or bad software. The most recent case involved an HR startup whose founder embezzled his company's funds and thus the banks pulled back the money from the client's employee accounts. My employer's bank recently mistakenly did the DD 3 times and pulled back two of them. ACH doesn't come with two-factor auth or any sort of real safeguards, I would be very careful who I give access to.
- smarri 7y agoInteresting I wasn't aware of these cases. Thanks
- smarri 7y agoAs I understand it in 2021 these micro deposits or a similar control will become mandatory (date delayed from Jan 2020), but for the time being it's optional. I don't see why a bank won't allow an ACH payment from one account to another - that's what the system is made for right?
- clintonb 7y agoThe new rule only applies to debuts (e.g., you pull money from my account, rather than I push money to yours). See https://www.nacha.org/rules/supplementing-fraud-detection-standards-web-debits https://www.nacha.org/rules/supplementing-fraud-detection-st.... Most banks have some form of P2P transfer such as Zelle or Popmoney. If you want to pay a business, they push you toward a bill pay service that often mails a physical check. My guess is that ACH cuts into fees earned from wire transfers. Additionally, giving everyone the ability to send funds to any other random account increases the bad outcomes of a login being compromised, or someone inputting the wrong account number.
- smarri 7y agoI think you're right on the ACH Vs Wire Fees earned by banks - from what I've seen the banks earn many many multiples on Wires. Although I understand that real time and faster payments are being explored as an alternative to Wires which may take some of this share if the schemes get the network effect via all banks signing up to it.
- clintonb 7y agoYep! The big banks are signed up for RTP. We consumers should start seeing it sometime this year. https://www.theclearinghouse.org/payment-systems/rtp https://www.theclearinghouse.org/payment-systems/rtp Edit: Some customers have had access since last year: https://www.jpmorgan.com/country/US/en/detail/1320572715530 https://www.jpmorgan.com/country/US/en/detail/1320572715530.