My first job out of university was working for a debt collection firm that made its own ACH engine in Perl. I remember all the 99999s and headers and stuff. I didn't work very much on the engine though (thankfully).
I was pretty shocked at just how far behind the American banking system was when I lived overseas for a bit. I wrote about it here:
It's even further behind. I still live overseas and use a US bank account for paying taxes, etc. I'm still shocked that it costs me, my family, or someone money to send money instantly. Here when we go out to dinner with friends, someone pays the bill and we settle it with bank transfers within moments.
It's worse than that if the amount is non-trivial. Wells Fargo won't allow you to send an amount over $10k instantly without physically entering a branch.
ive banked with wells forever and never had a problem. Practices like this are mostly designed for security reasons and will be similar across the big banks
This is typical around the world. This is probably because it's a very practical way to limit losses if someone did gain access to your online banking.
When I lived in Australia, which I believe has a very modern banking system, I couldn't instantly send more than $5k a day. The one time I needed to send more money, I was fine with going into a branch.
FWIW the app for my ING bank account in the Netherlands allowed me to move up the slider allows me to move up the slider for daily transfers up to 50k euros. A little scary, but thought it could be handy if I need to move money around one day. Probably a different regulatory context, though.
The $10K limit is a federal regulatory requirement. You have to fill out paperwork and provide identification that is turned over to law enforcement for review.
Your blog article is startlingly incorrect pretty early on. Individuals can and do use ACH between each other all the time. It is literally how paper checks work in the US. And I’ve been able to use a routing number and account number to send money to someone else online via ACH for decades...
In the UK if I want to send someone money to anyone in the UK I open the mobile app and input their sort and account number, type in the amount of money and hit send. Done.
Similarly in the NL if I want to send someone money to anyone in the EuroZone I open my bank app type in their IBAN type in the amount of money and hit send. Done.
Back in 2017 when I lived in the US this just wasn't possible. If I wanted to send money to someone I had to use Paypal, TransferWise (or similar), Venmo, etc. Some banks had direct access to ACH but far from all, then if they do support it it takes two days to arrive. Some banks allowed easy instant payments between accounts within the same bank. Much of my family purposefully keep an account with a small west coast credit union to facilitate moving money amongst ourselves.
Maybe things have gotten massively better in the US in the last 3+ years, but it was light years behind the UK and NL. In terms of speed, ease of use, and adoption.
Those transactions always make me nervous - is there a reason they don't have a step of showing the account name when you input the number? Like, I type 31-45-76 0452768934 and it says "Mr & Mrs Y O Mama" or "Notafraud & Co. Ltd." or whatever, as a confirmation?
That does exist now in the UK, I had it last time I sent money - I put in the name I expected and then it showed me the name on their account because they were a bit different.
For companies there are present lists so I don't need to know most company details to send say gas bill payments.
In the interm there's been unfortunately little progress. Zelle is supported 'natively' by all major banks, although it has horrible UX (starting with "each bank is different"), and allows for pseudo-instant transfers of small amounts (up to $x,000) between individuals in the US. (It is instant for the user, but on the subject of replacing ACH, it's more correct to say that it's pseudo-instant, same as credit cards - it seems instant to users, but until ACH is replaced, settlement will still happen in nightly (possibly half-day-ly) settlement batch files.)
It's mostly functional, the problem is that it doesn't work for anything more than trivial amounts, for various reasons, so the choices are either to wait 2 days, or physically walk to a bank location, authenticate, get them to give you a magical piece of paper, and then walk to the other location. (And then sometimes you still have to wait a few days more if it's not something you normally do "while the check clears".)
It's a byzantine system, but at least it doesn't (as a customer - it still does in places on the backend) involve me having to find a fax machine to send a fax, or send a picture of a check through a sketchy "free" online service.
> In the UK if I want to send someone money to anyone in the UK I open the mobile app and input their sort and account number, type in the amount of money and hit send. Done.
Apple / Google Pay? this isn’t as complicated as you’re trying to make it out to be. get a number, find out if they’re google or apple, use the appropriate app. This has been possible for years now.
Your quote and your response seem to be rather disconnected.
I guess my point is: in Europe sending money from one person to another is easy and easily done with no third parties. All I need to know is the other person's account info, access to my own account either by app or website, and done. Almost instant transfers between people.
In the US a third party is required. Be that Paypal, Apple/Google Pay (I didn't know they had launched this as a thing for person-to-person), square, facebook, etc. Not only does it require a third party it requires two people to be using the same third party.
My mother-in-law is fairly technophobic. She doesn't do online banking, doesn't use apps, etc etc. Yet despite that I can still send her money without an issue, because the infrastructure is basically universal. Unless they are doing something very strange anyone who has an account can receive money. Plumber comes over to fix a pipe, send him some money digitally, buying a car, send some money, etc etc.
Thanks for the feedback! I’m aware that checks (and “instant” payments like PayPal, Venmo, Zelle) are settled via ACH; as other commenters have pointed out for me, the claim was that individuals can’t make “raw” ACH transactions.
As for sending money via routing and account number: I’ve received conflicting information from different banks on how acceptable this is. The university I went to allowed it as a way to pay tuition (you could give them your account number and they would debit you), but every bank that I’ve privately banked with has told me that I need to own or be responsible for both accounts in order to do a “direct” (i.e. non-cheque) transfer. But I don’t know whether that’s just a policy thing among financial institutions.
I think the distinction being made there is that, while individuals can request that banks or businesses perform an ACH on our behalf, as in your funds transfer example or to pay a bill without incurring payment card fee overhead, we can't generate and submit our own batches directly to any clearinghouse.
Which is just as well! In that circumstance, there would be nothing structurally to stop anyone who knows your routing and account number from performing ACH debits against your account. That's actually an already extant attack vector - and the reason why I never pay bills via ACH; I don't trust most payment processors to be very secure and fraudulent payment card transactions are easier to claw back - but without the barrier to entry inherent in the attacker having to subvert or convince some third party to act on their behalf, I think it'd be a much more common occurrence.
> I think the distinction being made there is that, while individuals can request that banks or businesses perform an ACH on our behalf, as in your funds transfer example or to pay a bill without incurring payment card fee overhead, we can't generate and submit our own batches directly to any clearinghouse.
Is that possible in any country? I've never heard of a banking system where ordinary people directly submit a transaction to the national clearing house. They always tell their bank to send their funds, right?
As far as I know, yes, and UPI/"FedNow"/Cashapp-and-friends don't change that.
That being so, if I'm honest I'm not really sure where the prior commenter's objection originates. Maybe they know about some directly accessible clearinghouse that I don't? I'd be surprised for several reasons to learn such a thing exists, but I've been surprised plenty of times before.
Unless this is actually possible in some country, I think they're both confused. But I'm guessing the objection was probably intended to convey "this is just as 'direct' in the US as it is in Australia", which would seem like a valid objection to the article.
Most country’s bank systems have a “receiving only” number which can be shared and then used by a 3rd party to directly enter an instant money transfer into the system.
Because America doesn’t have the equivalent of a “receive only” code, every service has to build that functionality themselves “on top of” ACH, and prevent direct access to ACH debit and credit functionality.
That being said, for $10/month any business can get direct access to ACH including debits and credits, and then whatever gateway you use is supposed to do some level of fraud detection against your transactions.
A few days ago someone here point out the numbers aren't actually "receive-only" for IBANs either, but anyway, the point you're making is a separate point from the one being made here. If anything, it's the opposite -- it's arguing that the US system is too capable, rather than insufficiently capable.
In the article author's defense, he did pretty much disclaim any detailed or experiential knowledge right up front. That said, while my own relevant experience is now many years past and was in any case mostly refracted through the payment card industry, I didn't spot any obvious howlers.
I was pretty shocked at just how far behind the American banking system was when I lived overseas for a bit. I wrote about it here:
https://battlepenguin.com/tech/the-american-banking-system-i...