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What I've never understood is why the US system relies so much on ACH Pulls rather than Pushes? For example, most banks allow you to pull money from an external

What I've never understood is why the US system relies so much on ACH Pulls rather than Pushes? For example, most banks allow you to pull money from an external account (by verifying you own the external account using something like Plaid Identity or microdeposits) but don't always offer the ability to push funds. It seems pulling is much more open for abuse than pushing funds. Perhaps it has something to do with the originator having liability for a potential returns. In Europe, I've never seen any bank allow customers to pull funds (something like a SEPA I guess) but its extremely common to push funds very easily to another account just by entering their IBAN (not so in the US though).

jsmith45 4y ago
The ACH system was based on older check (cheque) clearing systems. In those systems the bank in which the check was eventually deposited was basically pulling funds. The US never had a Giro system. The main push based payments have generally been "wire transfers", which have significant cost, or ACH-based Direct Deposit, which is pretty much only used for payroll situations. Even payment cards are fundamentally a pull based system. Only Paypal, Venmo, CashApp, or other similar services have a push model, and those pretty much always wrap an under the hood ACH pull.
- mousetree 4y ago
  Interesting to learn about the history but why aren't they pushing funds today? It's technically all possible and presumably would have less fraud? Or in other words, why do most of the rest of the world favor pushing funds through their ACH-equivalent systems?
  - hx833001 4y ago
    This requires a new payment system. That’s why there’s RTP from The Clearinghouse and upcoming FedNow. US is late to the game on instant payments.
    - mousetree 4y ago
      No, my point is that it doesn't require a new payment system to enable this. ACH very much supports pushes.
  - deleted 4y ago
    [deleted]
cybersol 4y ago
Maybe I am missing something, but isn't pushing this way usually possible by one-time BillPay?
- mousetree 4y ago
  In my experience, some banks offer ACH pushing through Bill Pay but often an ACH is only made if the recipient is on a master list of known institutions (like for paying your electricity) and if the recipient is not on this list then a check is sent by mail. YMMV though
- adrr 4y ago
  Bill pay on the backside is ACH push but users never see it. Bill pay will send physical checks as well. ACH push isn’t that common at the consumer level. Very common for other things like payments/payroll.
- lxgr 4y ago
  It is, but assuming that GP is from Europe, the confusion will be around the distinction between bill payment and P2P payments, which seems arbitrary to bank customers in many other countries: With SEPA credit transfer (and other similar systems), bank customers can send mony to any other account directly and automatically by only stating the recipient's account number and amount. There is no list of well-known/trusted(?) payees; businesses and individuals can receive money from other businesses and individuals alike. In the US, for reasons that I don't fully understand yet, this type of P2P push ACH payment is generally only offered between accounts that have been verified to belong to the same person. I suspect that it's largely a question of money transmission licenses, the recipient's unwillingness to freely hand over their account number (due to concerns about unauthorized ACH pulls!) and/or fraud liability.
L3viathan 4y ago
SEPA Direct Debit, which works on the pull profile and is very similar to ACH, is extremely common at least in Germany. You can only use it (as the puller, not the pullee) if you're a business though.
- mousetree 4y ago
  Yeah, that's what I mean, doing a SEPA Direct Debit is not really available to an end consumer, at least not in any of the banking apps I've used. But in the US, pulling funds from another account is fairly common.
smoe 4y ago
At least in Switzerland pretty much all the banks offer a service called LSV+ trough which you can authorize a third party to pull money from your account. Supposedly (personally I don't know anyone using it) it is often used for recurring bills like utilities, credit card, internet etc. But as far as I understanding you have to submit a form with a wet signature to the bank for each third party you want to authorize before they can withdraw. Also, you have 30 days after a transaction to dispute it.
- Symbiote 4y ago
  That's what GP meant by "consumer". Direct debits are available only to C2B and B2B payments, and with the string guarantees.
chrisgoman 4y ago
We use ACH Pushes to pay our contractors
blitzar 4y ago
Well US banking is slow. Third world slow. ACH pull allows the person being paid to verify the money is inbound, rather than I sent you the money, honestly, now i would like the keys to that car please. In the UK (almost europe) the pull version is direct debits and standing orders, or card transactions.

jsmith45 4y ago

The ACH system was based on older check (cheque) clearing systems. In those systems the bank in which the check was eventually deposited was basically pulling funds. The US never had a Giro system. The main push based payments have generally been "wire transfers", which have significant cost, or ACH-based Direct Deposit, which is pretty much only used for payroll situations. Even payment cards are fundamentally a pull based system. Only Paypal, Venmo, CashApp, or other similar services have a push model, and those pretty much always wrap an under the hood ACH pull.

mousetree 4y ago
Interesting to learn about the history but why aren't they pushing funds today? It's technically all possible and presumably would have less fraud? Or in other words, why do most of the rest of the world favor pushing funds through their ACH-equivalent systems?
- hx833001 4y ago
  This requires a new payment system. That’s why there’s RTP from The Clearinghouse and upcoming FedNow. US is late to the game on instant payments.
  - mousetree 4y ago
    No, my point is that it doesn't require a new payment system to enable this. ACH very much supports pushes.
- deleted 4y ago
  [deleted]

cybersol 4y ago

Maybe I am missing something, but isn't pushing this way usually possible by one-time BillPay?

mousetree 4y ago
In my experience, some banks offer ACH pushing through Bill Pay but often an ACH is only made if the recipient is on a master list of known institutions (like for paying your electricity) and if the recipient is not on this list then a check is sent by mail. YMMV though
adrr 4y ago
Bill pay on the backside is ACH push but users never see it. Bill pay will send physical checks as well. ACH push isn’t that common at the consumer level. Very common for other things like payments/payroll.
lxgr 4y ago
It is, but assuming that GP is from Europe, the confusion will be around the distinction between bill payment and P2P payments, which seems arbitrary to bank customers in many other countries: With SEPA credit transfer (and other similar systems), bank customers can send mony to any other account directly and automatically by only stating the recipient's account number and amount. There is no list of well-known/trusted(?) payees; businesses and individuals can receive money from other businesses and individuals alike. In the US, for reasons that I don't fully understand yet, this type of P2P push ACH payment is generally only offered between accounts that have been verified to belong to the same person. I suspect that it's largely a question of money transmission licenses, the recipient's unwillingness to freely hand over their account number (due to concerns about unauthorized ACH pulls!) and/or fraud liability.

L3viathan 4y ago

SEPA Direct Debit, which works on the pull profile and is very similar to ACH, is extremely common at least in Germany. You can only use it (as the puller, not the pullee) if you're a business though.

mousetree 4y ago
Yeah, that's what I mean, doing a SEPA Direct Debit is not really available to an end consumer, at least not in any of the banking apps I've used. But in the US, pulling funds from another account is fairly common.

smoe 4y ago

At least in Switzerland pretty much all the banks offer a service called LSV+ trough which you can authorize a third party to pull money from your account. Supposedly (personally I don't know anyone using it) it is often used for recurring bills like utilities, credit card, internet etc. But as far as I understanding you have to submit a form with a wet signature to the bank for each third party you want to authorize before they can withdraw. Also, you have 30 days after a transaction to dispute it.

Symbiote 4y ago
That's what GP meant by "consumer". Direct debits are available only to C2B and B2B payments, and with the string guarantees.

chrisgoman 4y ago

We use ACH Pushes to pay our contractors

blitzar 4y ago

Well US banking is slow. Third world slow. ACH pull allows the person being paid to verify the money is inbound, rather than I sent you the money, honestly, now i would like the keys to that car please. In the UK (almost europe) the pull version is direct debits and standing orders, or card transactions.