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Because Venmo is willing to float you the money despite the risk it might not go through
by darkerside 3y ago
Because Venmo is willing to float you the money despite the risk it might not go through
- pbreit 3y agoFew understand that the movement of money and information about the movement of money happen on different schedules.
- rodgerd 3y agoBanking is an eventually consistent system. People outside banks often find this surprising.
- lxgr 3y agoIn ACH, they generally happen together, and with at least a few hours of delay. That's why instant generally usually doesn't use it.
- pbreit 3y agoThey absolutely do not. That’s the whole point.
- lxgr 3y agoCould you maybe elaborate instead of just disagreeing without references or even explanation? In ACH, as soon as you get the notification about an inbound credit transfer, it's effectively final. Whether it ultimately settles on the same day or 1-2 days later is irrelevant, since what matters is finality. ACH credit transfer clawbacks are very rare compared to ACH debit rejections (due to e.g. insufficient funds or fraud).
- pbreit 3y agoSome recipients might consider a valid initiation sufficient to fulfill. Others may way for settlement. Some may wait longer to see if there's a return. And then posting times and amounts can vary quite a bit.
- lxgr 3y agoHow can Venmo be the one floating anything in GPs scenario when they are the sending entity? If anything, it's the receiving bank that would have to bear the risk of the payment never arriving after being notified about it out-of-band, somehow. There's no such mechanism that I'm aware of, though – instead instant deposits usually use debit card rails.
- scrollaway 3y agoVenmo is sending money from Venmo bank accounts to your bank, through a direct integration. The receiving bank doesn’t bear any risk, Venmo is taking the risk. You are the person who is the beneficiary on the accounts this money sits on. So you are responsible for it. If an entity sends money on your behalf, they take the responsibility for the money you send. That means they are the ones with the processes that will trigger if money doesn’t clear as expected. Processes which may involve anything from reminder emails and push notifications, all the way to debt recovery companies, lawyers and thugs showing up at your door. Both entities have float. The question is who is taking legal risk.
- lxgr 3y ago> The receiving bank doesn’t bear any risk, Venmo is taking the risk. What risk? Venmo is the sender here. Almost by definition, the sender doesn't have any risk: They either send money they have (in which case all is well), or promise to send money they don't have (which is the recipient's problem). If you're talking about the transaction that originally funded the to-be-paid-out balance, that's a completely different story. > Venmo is sending money from Venmo bank accounts to your bank, through a direct integration. Yes, and that "direct" integration is typically ACH (for transfers "in 3-5 days") or debit card rails (for "instant payouts"). It might also be RTP these days, and maybe soon will be FedNow, which are both cheaper than debit card push payments (although I don't see payment app providers stopping their very lucrative business of charging ~1% for instant payouts any time soon). For ACH, there is no risk to the recipient. since nobody is floating anything: It takes 3-5 days. For debit cards, there is also no risk since these payments are effectively final immediately after they're announced to the recipient, even though they don't settle instantly.
- pests 3y agoThey don't mean Venmo-to-Venmo rather Venmo-to-Bank. A lot of apps like CashApp, Venmo, Uber Driver, Lyft Driver, etc give you two options for getting your money out of their app. Instant and Delayed. Delayed is usually free and deposits into a linked bank via ACH. Instant is immediate and is a reverse transaction on a linked debit card.
- jqpabc123 3y agoInstant is immediate and is a reverse transaction on a linked debit card. This is RTP and it usually isn't free.