Faster Transfers Beta (US only) | Hacker News Reader

Faster Transfers Beta (US only)

support.stripe.com

47 pointsjhoon39 comments

I just don't get why banking in the US is still so far behind. I recently did a wire transfer from Turkey to Germany between two people's accounts at two different banks. It settled in a mere morning. Same day.

Wire transfers in the United States are immediate as well. This has nothing to do with wire transfers.

The last time I did a wire transfer in the US (admittedly a couple years ago now) it was anything but instant. IIRC there was a lot of manual work that had to be done behind the scenes to complete the transaction. And you have to do into a branch to do it as well - no internet banking!

Its all about risk. My accounts are cleared to do small wire transfers instantly. But when I received a wire over $100,000 once, it took about 24 hours to verify before clearing. From what I've heard from bankers I've asked about this, they said that wire transfers are indeed instant, but the banks (on either end or both) may hold the transfer for any reason they want.

I've sent many wires online before in the US. They were definitely not instant and took up to a few days to clear but could be sent online.

Exactly what I meant. I have done many transfers in the US as well. I think the fastest was three days for me. The average more like 4-5 biz days (which ended up being a whole week as the weekend was in between).

ulfw,

I believe you did an ACH transfer instead of an American wire transfer. Wire transfers do not take multiple days in America, but they cost a lot of money ($10-30).

So there are ACH transfers, which are much slower, and there are wire transfers, which are somewhat slower and expensive.

You are very right about that. They were ACH transfers.

This is awesome, and I'm glad to see them innovating around it. I've scratched my head for years now around clearing time of payments and digital payment systems. It isn't like you have to load gold coins on a ship, or manually have people verifying checks these days. There's realistically little reason for the entire system to be so slow- except for the fact that it is.

For years payment processors have been more than happy to just be fine with things being slow. Paypal has been around how long, and they don't seem to be pushing for it to go faster. This doesn't seem to be a problem bound to Moore's Law or the speed of the internet, just something that needs to be taken care of.

Not sure how PayPal could be faster - money is transferred instantly to my bank account after receiving it through PayPal. Is that a UK only thing?

The kind of near-instant, cheap money transfer provided by the Faster Payments Service system in the UK is actually fairly uncommon elsewhere in the world. If PayPal still used BACS it would take 3 working days even in the UK for PayPal payments to clear on your bank account.

Just to clarify for anyone who isn't familiar: With Faster Payments you can make a transfer between any two accounts of different banks and it will arrive within 4 hours. It's usually free too and works 24/7.

Yea, in the US its a vague 3-5 days.

I don't understand why it has to be anything longer than 5 seconds, is there any reasonable explanation for this?

It might not be reasonable, but there is an explanation. It's been a while since I heared the podcast but Planet Money explained something along the lines that all the American banks are invested in an old, inefficient system of processing these transfers and there is no incentive to change. Here's the episode: http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...

In Europe, the EU recently established the rule that all money transfers within the entire EU must be concluded within one business day. Thus most Europeans are surprised when they hear that it takes so much longer in the US.

EDIT: Another commenter pointed out that the EU directive is actually still somewhere within the legislative process. My misconception arose from the fact that I can't remember the last bank transfer that took longer than one business day.

Same in Canada, usually 4~5 days.

Yes. In Poland it takes 3-4 days for the funds to actually arrive in my bank account when sent from paypal.

Isn't this 7-day hold just an internal Stripe policy though? The new faster transfers are just the normal ACH speed.

You're correct -- Stripe self-imposed the seven-day delay early in its development.

While we may have chosen the seven-day delay, there are still a number of real challenges in moving to a faster transfer schedule. For example, we need to make sure funds are received from our banking partners in time to transfer them to our users.

(I work at Stripe)

I don't see why Square can start the ball rolling the next day but you need anything near 7 days delay. I figured it was just a way to make more money.

The standard ACH process however just seems slow. Maybe I've been playing with Crytocurrency too much, but it seems in the era of sub-millisecond stock trading... we should be able to figure out how to move $100 one account to another in 5 minutes or so...

Yeah, it's pretty terrible in an e-commerce context. Get a payment, wait seven days to see if it actually gets settled. The only auth you can do up front is that the numbers look correct.

It all comes down to risk. The longer they can sit on the money, the less risk. Stripe's entire business revolves around risk management, hence why it's 7 days, which is longer than others (their banking partners).

Is this the only reason bank transfers take so much longer in the US than UK? Why are UK banks happy to take the risk? (I'm genuinely curious and don't know much about why the US is slower.)

It's the risk of the credit card charge, not necessarily the actual transfer of money itself to the merchant. It takes likely takes Stripe a few days to get the money, and in order for them to operate the way they do (sign up and charge cards right away), they eat the risk of rogue merchants and other issues like chargebacks.

Actually just read a few talks by danes in the financial council in Denmark. They are currently reconstructing the entire payment infrastructure to allows realtime transfers of payments. For payments under $100.000, transfers are done three times a day, as is seen with services such as MobilePay (Venmo wannabe) that i believe are considered a e-money institution. If anyone is interested then i can provide the links to the slides. They are, however, in danish.

Not to sound pedantic, but three times a day is not realtime. In the United Kingdom at least, transferring money from one bank account to another at the same bank is instant (pretty much sub-second) transaction and from one bank account to another at a different bank is generally processed within fifteen minutes, nearly all UK banks support Faster Payments[0].

[0] http://en.wikipedia.org/wiki/Faster_Payments_Service

Youre right. Real time tranaction is simply what The bankers here in denmark called it. Shows the level of mis-mash between expectations from consumers and the financial sector (in my country at least)

EU is currently working on changing that, inside eu at least.

Their proposal can be read here: http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?...

I just signed up for the beta and was approved in about ~15m. It's not material to my business but still cool to see Stripe improving the experience across the board.

Got an email from Stripe about this this morning. Our accountant was ecstatic!

As a non-accountant, why? Doesn't this mean a single infusion of five days worth of transfers and then back to a transfer-a-day coming into the account?

How does this work?

Stripe is trialling faster transfer schedules for US-based users, meaning you'll get your money in two business days instead of waiting one week.

If you'd like to be part of the beta, you can visit https://manage.stripe.com/faster-us-transfers and if you're US-based, you'll automatically be registered to participate in the beta. We're incrementally adding users to the beta, so we'll let you know as soon as you've been added.

(I work at Stripe.)

I should have written a more clear question. I read the page, and I understand that now you're doing two-day instead of seven-day transfers.

What I'm wondering is, "how is this possible?" How is Stripe now moving the money faster than before? What change made this possible? Did the stewards of the ACH system make a change that allows this? Is Stripe advancing funds ahead of time based on some kind of credit? Was the seven-day policy basically arbitrary before, and so changing it to two-day basically involves changing an integer somewhere in the codebase and updating documentation? Or is it something else happening at a different layer? More generally, what are the pieces at play in transferring money that influence transfer time? And which of these pieces has Stripe interacted with in order to transfer funds faster?

This is how most businesses have been funded for the past 30+ years AFAIK. Merchant account transactions are batched and settled nightly, then ACH'd to the merchant the next day. You get the money 1-3 banking days after charging someone. Stripe was the exception to the norm, and now they're doing what everyone else does. Holding onto your money before transferring it to you is something other merchant account providers only do on a case-by-case basis for accounts they consider at high risk for fraud.

Wild ass guess here: keep funds at all the major banks and do intra-bank transfers which are instant. We've considered something similar. You need enough cash to keep a pool at every bank large enough to cover transfers and you need a big enough customer base that the net flow into or out of your account at a particular bank is small enough that you can rebalance periodically.

I got an email like 2 weeks ago saying I was auto-enrolled in the two day transfer. I guess I'm just special where I don't have to fill out beta signups?

What about Canada? Seems like we live on the same region yet we are always left out.

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