4 ms·
The fact that ACH takes 3 days is actually because the original protocol was file and FTP based, where one bank would upload the transfer as a file to another's
by gleenn 4y ago
The fact that ACH takes 3 days is actually because the original protocol was file and FTP based, where one bank would upload the transfer as a file to another's, and the other would return a file with exceptions or something within 3 days. If the first bank didn't see a file with exceptions in 3 days the first would actually wire the money. Money can move way faster and fraud can be detected, obviously some time for human intervention is good too but that wasn't baked into the solution on purpose as much as it was just a terrible protocol to begin with.
- nrmitchi 4y ago> because the original protocol was file and FTP based As if that's not largely how it still works today? :sad-face:
- kylehotchkiss 4y agoNow the 3 days is beneficial to banks since whichever bank is holding the funds can claim the interest due on it.
- nrmitchi 4y agoBy that logic it works the other way too. They miss out on interest on funds that were delayed in being sent to them.
- notch656a 4y agoPrisoner's dilemma. slow-slow is the stable equilibrium point, even though fast-fast is just as good or better. The other 'prisoner' can always beat your fast by going slow, so they pick slow so they can't lose.
- nrmitchi 4y agoBut ACH isn't an ungoverned system where parties get to just behave in their own best interest. It, and the timing/behaviour, are governed by the NACHA Operating Rules. If you are being a bad party and failing to submit transactions on time so that you can collect a bit of extra interest, you are going to get a very large hammer brought down on you.
- xboxnolifes 4y agoNobody said anything about not being on time. Just not fast.