5 ms·

The answer is yes. We need instant settlement and instant bank transfers, and we needed them 20 years ago.

u678u 6y ago
Instant is a bug not a feature. If I want to transfer a big number like 10k, its good to take a while to settle in case there was fraud or a mistake. The last thing I want is to leave my phone unlocked and someone can empty my account immediately with instant settlement.
- rblatz 6y ago
  Zelle and Venmo are instant.
  - deleted 6y ago
    [deleted]
  - creato 6y ago
    They only look instant. Behind the scenes, settlement is taking more time, and if settlement fails, the transaction could be reversed. They do this by taking on the settlement failure risk, which is exactly what Robinhood does, and is exactly why Robinhood ran into potential trouble when GME became so volatile.
  - taude 6y ago
    Also, Zelle is limited to moving ~$3K/day USD depending on your bank.
    - rblatz 6y ago
      Zelle does have a B2C solution which has significantly different limits. Also it was my understanding that Zelle was a multi bank collaboration to provide a better transfer mechanism than ACH and to avoid a lot of the legacy cruft built into the ACH standard.
- vinay_ys 6y ago
  Banks should have velocity limits to prevent such huge transfers from happening on a personal savings account.
- tobmlt 6y ago
  This is apologetics for the status quo, which by design benefits the financial sector at the expense of consumers. Give me safety over freedom, says every hegemonist when putting words in our mouths. Your corner case scenario should not determine behavior for the market. That it is used to excuse behavior that is rammed down our throats anyway is, well, inexcusable.
  - u678u 6y ago
    Maybe banks & brokers could add an extra delay. I'm kind surprised how you can be so passionate about 2 day settlement though, does it really affect your life so much? I can't see how it really helps the financial industry.
    - tobmlt 6y ago
      Nah, your right - it does not affect my life that much. It is the principle. The financial system is set up to have a power asymmetry that I find abhorrent. Guess I studied Econ under “the wrong professors” for to long as a kid. I tried to be generic about who was adding the delay. I’m always short on time. Sorry if I missed a detail there.
  - egwor 6y ago
    In the UK we have instant transfers between bank accounts. For larger quantities there can be a bigger delay.
    - oarsinsync 6y ago
      Banks presenting Faster Payments as instant is also just an appearance. Settlement of FP actually only occurs three times daily (https://www.bankofengland.co.uk/payment-and-settlement https://www.bankofengland.co.uk/payment-and-settlement).
      - someguydave 6y ago
        three times daily is better than three days like the US
- KingMachiavelli 6y ago
  I would say the fraud protection from T+2 is very minimal and there are better ways to implement reversible transactions. Nearly all of the large banks have their own instant payment methods to send cash to friends. If you receive alerts on withdrawals & transfers those happen nearly instantly so if you are going to notice a suspicious transaction it will either be the same day or at the end of the month when people log in to their bank account. Plus, you have to hope that the bank/etc. is going to actually use the T+2 delay to your advantage. A fairly easy way to add fraud protection would be to have T-0 or instant settlement only for previously used accounts/routing numbers. A lot of services already implement this on their end such that new bank accounts take a few days or a week to transfer but future transfers appear instant or within a day. Other options include allowing the first $X-thousand to be instant and the rest settles in T+2. This is pretty common if you get automatic deposits over a certain amount or use a phone check scanning feature. I guess my point is that a lot of edge services (services that people interact with) already cover the T+2 delay in their own manner but that leads to confusion when some middle service provider decides to change the rules. Making the system itself adopt those strategies would just distribute the risk not increase it.
  - jfim 6y ago
    There's also settlement and reversibility of transactions. A check might be cleared and settled, but later discovered to be a fraudulent check, reversing the transaction.
    - maratc 6y ago
      The issue is what to do when you can't reverse the transaction because the other end (goods, stocks, etc.) is already gone.
      - jfim 6y ago
        The same way any other contractual dispute is resolved: try to solve the issue with the other party, otherwise go through the courts.
- ska 6y ago
  Settlement isn't an effective fraud mitigation, or even operating in the right part of the system for it. By all means allow users to set such delays if they want them, but the technology enforcing T+N really isn't a feature for customers so reframing it as such is probably a bad approach.
  - someguydave 6y ago
    Not only that, settlement delay can cause fraud or the appearance of fraud. In the robinhood case (if they are telling the truth), then the exchange had to front its own cash for unsettled transfers. Furthermore, if there was instant settlement the idea of “shorts” changes: you could still borrow a stock but it is super clear who is holding it at a given moment, and how many are held by whom.
kgwgk 6y ago
I don't want instant bank transfers. I want bank transfers with a progress bar like in the movies. And if you interrupt the transfer before it's completed only part of the funds will be transferred.
- einpoklum 6y ago
  I think this is a bit silly but +1 for the dramatic effect. The progress bar should also have ominous music like those films where the infiltrators download the contents of the secret stash of info from the computer onto some driver while the clock is running out on them being discovered.
  - toast0 6y ago
    There also needs to be a display of the account number that locks in one by one. This should finish locking in about halfway through the progress meter.
    - selimthegrim 6y ago
      Should it be like in The Jackal where they just press CTRL to transfer the money or in Independence Day where the aliens are wished a nice day at the end of the on0the-fly implemented GUI - https://twitter.com/JeKalifa/status/1096709404710309889 https://twitter.com/JeKalifa/status/1096709404710309889
t0mas88 6y ago
Europe has SEPA which is still not instant but a lot better than it used to be. Now the money appears in your account (for banks that support it) immediately and the official transaction date is the next working day. So the speed is technically 1 business day, which is a lot better than it used to be, and 0 business days for a lot of practical purposes.

Instant is a bug not a feature. If I want to transfer a big number like 10k, its good to take a while to settle in case there was fraud or a mistake. The last thing I want is to leave my phone unlocked and someone can empty my account immediately with instant settlement.

rblatz 6y ago
Zelle and Venmo are instant.
- deleted 6y ago
  [deleted]
- creato 6y ago
  They only look instant. Behind the scenes, settlement is taking more time, and if settlement fails, the transaction could be reversed. They do this by taking on the settlement failure risk, which is exactly what Robinhood does, and is exactly why Robinhood ran into potential trouble when GME became so volatile.
- taude 6y ago
  Also, Zelle is limited to moving ~$3K/day USD depending on your bank.
  - rblatz 6y ago
    Zelle does have a B2C solution which has significantly different limits. Also it was my understanding that Zelle was a multi bank collaboration to provide a better transfer mechanism than ACH and to avoid a lot of the legacy cruft built into the ACH standard.
vinay_ys 6y ago
Banks should have velocity limits to prevent such huge transfers from happening on a personal savings account.
tobmlt 6y ago
This is apologetics for the status quo, which by design benefits the financial sector at the expense of consumers. Give me safety over freedom, says every hegemonist when putting words in our mouths. Your corner case scenario should not determine behavior for the market. That it is used to excuse behavior that is rammed down our throats anyway is, well, inexcusable.
- u678u 6y ago
  Maybe banks & brokers could add an extra delay. I'm kind surprised how you can be so passionate about 2 day settlement though, does it really affect your life so much? I can't see how it really helps the financial industry.
  - tobmlt 6y ago
    Nah, your right - it does not affect my life that much. It is the principle. The financial system is set up to have a power asymmetry that I find abhorrent. Guess I studied Econ under “the wrong professors” for to long as a kid. I tried to be generic about who was adding the delay. I’m always short on time. Sorry if I missed a detail there.
- egwor 6y ago
  In the UK we have instant transfers between bank accounts. For larger quantities there can be a bigger delay.
  - oarsinsync 6y ago
    Banks presenting Faster Payments as instant is also just an appearance. Settlement of FP actually only occurs three times daily (https://www.bankofengland.co.uk/payment-and-settlement https://www.bankofengland.co.uk/payment-and-settlement).
    - someguydave 6y ago
      three times daily is better than three days like the US
KingMachiavelli 6y ago
I would say the fraud protection from T+2 is very minimal and there are better ways to implement reversible transactions. Nearly all of the large banks have their own instant payment methods to send cash to friends. If you receive alerts on withdrawals & transfers those happen nearly instantly so if you are going to notice a suspicious transaction it will either be the same day or at the end of the month when people log in to their bank account. Plus, you have to hope that the bank/etc. is going to actually use the T+2 delay to your advantage. A fairly easy way to add fraud protection would be to have T-0 or instant settlement only for previously used accounts/routing numbers. A lot of services already implement this on their end such that new bank accounts take a few days or a week to transfer but future transfers appear instant or within a day. Other options include allowing the first $X-thousand to be instant and the rest settles in T+2. This is pretty common if you get automatic deposits over a certain amount or use a phone check scanning feature. I guess my point is that a lot of edge services (services that people interact with) already cover the T+2 delay in their own manner but that leads to confusion when some middle service provider decides to change the rules. Making the system itself adopt those strategies would just distribute the risk not increase it.
- jfim 6y ago
  There's also settlement and reversibility of transactions. A check might be cleared and settled, but later discovered to be a fraudulent check, reversing the transaction.
  - maratc 6y ago
    The issue is what to do when you can't reverse the transaction because the other end (goods, stocks, etc.) is already gone.
    - jfim 6y ago
      The same way any other contractual dispute is resolved: try to solve the issue with the other party, otherwise go through the courts.
ska 6y ago
Settlement isn't an effective fraud mitigation, or even operating in the right part of the system for it. By all means allow users to set such delays if they want them, but the technology enforcing T+N really isn't a feature for customers so reframing it as such is probably a bad approach.
- someguydave 6y ago
  Not only that, settlement delay can cause fraud or the appearance of fraud. In the robinhood case (if they are telling the truth), then the exchange had to front its own cash for unsettled transfers. Furthermore, if there was instant settlement the idea of “shorts” changes: you could still borrow a stock but it is super clear who is holding it at a given moment, and how many are held by whom.

kgwgk 6y ago

I don't want instant bank transfers. I want bank transfers with a progress bar like in the movies. And if you interrupt the transfer before it's completed only part of the funds will be transferred.

einpoklum 6y ago
I think this is a bit silly but +1 for the dramatic effect. The progress bar should also have ominous music like those films where the infiltrators download the contents of the secret stash of info from the computer onto some driver while the clock is running out on them being discovered.
- toast0 6y ago
  There also needs to be a display of the account number that locks in one by one. This should finish locking in about halfway through the progress meter.
  - selimthegrim 6y ago
    Should it be like in The Jackal where they just press CTRL to transfer the money or in Independence Day where the aliens are wished a nice day at the end of the on0the-fly implemented GUI - https://twitter.com/JeKalifa/status/1096709404710309889 https://twitter.com/JeKalifa/status/1096709404710309889

t0mas88 6y ago

Europe has SEPA which is still not instant but a lot better than it used to be. Now the money appears in your account (for banks that support it) immediately and the official transaction date is the next working day. So the speed is technically 1 business day, which is a lot better than it used to be, and 0 business days for a lot of practical purposes.