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The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's
by ketralnis 13y ago
The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's account. It's up to your bank (or whatever ACH proxy) to keep you from doing that, not to the interchange, both legally and technically. ACH also takes several days to work, and has a wide window for either bank to declare the transfer fraudulent, so many banks stretch the time out longer to account for that. Most stock brokers will credit your account long before the ACH transaction completes (with some restrictions of course).
There are also wrappers around this here like Chase's Quickpay or Ally's Popmoney but most require that both people use the same bank, or that you give your ACH details to a bank that isn't your own.
Paper cheques just have the routing/account numbers along the bottom, and AFAIK essentially work via ACH anyway, so they have all of the same downsides, plus taking longer to complete.
Also, the window for fraud with ACH is so great that when you tell one bank about another account's ACH details so that you can transfer money, they "authenticate" this by making small, sub-$1 deposit amounts, and asking you what the amounts were, to prove that you can see the target account. So this "linking" process takes the entire ACH transaction time as well the first time you do it. Some banks have taken to using a service called Yodlee which asks you for the target accounts' username and password. That's right, Wells Fargo asks for your username and password on Scottrade to authenticate the transfer because they don't trust the way ACH's liability lies. So this won't work to send $8 to your buddy anyway.
Moving money without a service like paypal/venmo/square/google wallet is really quite difficult, especially if you don't want to trust an organisation with a history of taking people's money (Paypal) or if you don't want to pay a transaction fee.
- bti 13y agoIf anyone is interested more about the state of transferring money and ACH in the US, there was a good Planet Money episode [1] about it recently. [1] http://www.npr.org/blogs/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
- virtuz 13y ago> ACH also takes several days to work, and has a wide window for either bank to declare the transfer fraudulent Still some catching up to do with the UK/EU. Transfers within 15 minutes (99%) with fraud checking etc. is awesome.
- jervisfm 13y ago> The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's account Interesting. I had come to a similar conclusion myself. I noticed that in paying my school fees all I needed was those two numbers (banking routing #, bank acct #) for payment with no further verification. As you have observed all of these details are readily available on paper checks. One way to mitigate the issue of someone potentially wiping your account is to have two accounts. One public and one private. The private one would contain (most of) your actual funds whilst the public account, which you would share freely as needed would contain just enough funds to complete whatever transactions that you need to do. Sure, it is not as convenient because you have to manage two accounts but at least that way you reduce your exposure to your funds being completely depleted.
- kevinpet 13y agoI use checking and savings in this way. I think it's pretty common to do so that checking is a revolving fund and doesn't hold any significant money, but it's also common to just have all your money in the one account. Anyway, good description of ACH above. Very few people understand how it works.
- bloopletech 13y agoAre you serious? Why would _anyone_ design a system like this? In Australia, the equivalent is EFT (Electronic Funds Transfer). You can deposit money to anyone's account by telling the bank their BSB (Bank/State/Branch number) and their account number; however this is not sufficient information to withdraw money. To withdraw money: 1. at a physical bank branch: a. you put your credit/debit card in a POS terminal and enter your pin/sign to authenticate. b. provide yous credit/debit card and photo ID to the teller. 2. at an ATM: credit/debit card + pin number. 3. online banking: either the credit/debit card number and a password and often a pin as well, or a separate number and password. All of these use an independent authentication source to the bank account number. Also the delays quotes here are insane: In Australia, there are essentially 2 ways to pay for something (excluding cash): 1. EFT (Electronic Funds Transfer) 2. Credit card (possibly using a debit card) transaction. On POS terminals, you can choose either; the differentiator being whether you want to use a savings account (EFT) which goes via your bank, or a credit (or savings account accessed via debit card) account, which goes via MasterCard/Visa. All forms of EFT take 1-2 business days between banks, pretty much all the time; and they're universally free for the payer. Credit/debit transactions seem to take 1 day universally. We have a fairly stagnant banking system, with 4 major banks having basically the entire consumer market (and the vast majority of the nonconsumer market as well). Why, in a small, stagnant market like ours, do we fare much better than the US system? [edit: I forgot to mention, checks are dead here, they're now almost only used for large transfers of money where: 1. you don't want to use EFT; 2. they're over the daily online maximum for EFT transfers, and you can't be bothered to go to a bank branch (although you can only get bank checks at a branch AFAIK); 3. You want an immediate guarantee that the ammount was paid and the date/time/payer/payee (as opposed to waiting 1 day for the payment to come through).]
- ketralnis 13y ago> Are you serious? Why would _anyone_ design a system like this? Because it's descended from writing simple letters of credit (and by this I literally mean a letter that says "Hey bank, pay John here $15 out of my account kthx"), and giant ancient heavily regulated institutions are terrified of change. The system wasn't designed exactly, it just sort of evolved
- woah 13y agoCould just use bitcoin.
- user24 13y agosurprised to see that this is the only mention of XBT in this thread. Seems to me like square cash is comparable to the extremely low friction nature of XBT to XBT transactions, but with fiat currency. I'm not saying square did this in response to bitcoin, just that it's scratching the same (or a similar) itch.
- andygates 13y agoNow, if only I could Square my BTC into somebody's fiat account without friction...
- pa5tabear 13y agoIt's bad. One time I mistakenly reversed the source/destination when sending my roommate two months of rent money and I over drafted his account because it took the money without asking his permission. Once the accounts are linked, either party can pull/push money without the other's approval.
- kamjam 13y agoSeriously? That's insane!
- BHSPitMonkey 13y agoThat sounds like whatever user interface allowed you to use the remote account as a source was equally to blame.