Small Bank In Kansas Creates the Bank Account of the Future 156
HughPickens.com writes Nathaniel Popper writes at the NYT that the Citizens Bank of Weir, Kansas, or CBW, has been taken apart and rebuilt, from its fiber optic cables up, so it can offer services not available at even the nation's largest bank. In the United States the primary option that consumers have to transfer money is still the ACH payment. Requests for ACH transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits. ACH technology was created in the 1970s and has not changed significantly since. The clunky system, which takes at least a day to deliver money, has become so deeply embedded in the banking industry that it has been hard to replace. CBW went to work on the problem by using the debit card networks that power ATM cash dispensers. Ramamurthi's team engineered a system so that a business could collect a customer's debit card number and use it to make an instant payment directly into the customer's account — or into the account of a customer of almost any other bank in the country. The key to CBW's system is real-time, payment transaction risk-scoring — software that can judge the risk involved in any transaction in real time by looking at 20 to 40 factors, including a customers' transaction history and I.P., address where the transaction originated. It was this system that Elizabeth McQuerry, the former Fed official, praised as the "biggest idea" at a recent bank conference. "Today's banks offer the equivalent of 300-year-old paper ledgers converted to an electronic form — a digital skin on an antiquated transaction process," says Suresh Ramamurthi. "We'll now be one of the first banks in the world to offer customers a reliable, compliant, safe and secure way to instantly send and receive money internationally."
Unless it has support for Bitcoin... (Score:3)
This is the same tech refresh upgrade every big bank is in flight doing.
Re:Unless it has support for Bitcoin... (Score:5, Informative)
Re: Unless it has support for Bitcoin... (Score:5, Insightful)
Silly Americans making news amidst fanfare when one of their companies provides a service that was available elsewhere in the world for 5-10 years.
Re: Unless it has support for Bitcoin... (Score:5, Interesting)
This is just the tiniest fraction of what we can do with our banks over here; I just can't get over how backwards US banks are and how they can't seem to get into the modern world. Not only do we have instant free transfers (and to Americans: the ability to conveniently or easily pay absolutely anyone, anywhere, any time with just a computer or smartphone is a much bigger deal than you're thinking... it's so easy that it's to the point that when people want to collect money for a gift for a coworker, rather than going around asking for cash, they just put the destination account in the email).
The banks are also connected more closely to other major billing systems. For example, there's a page in your bank account to let you add credit to pay-as-you-go phones. Not just your phones, but anyone's in the country, all in one system, so I can fill up a friend's phone or what not.
All our bills come straight into our bank accounts. Not most of them - ALL of them, everything from rent to the gardener. All payable with a single select-and-submit interface (with delay pay options, of course). There's a page for charity listings, too, to make it easier to give - heck, there's even a stock trading section built in and the like.
All of your documents associated with the bills are automatically filed into your bank account, you just click on the documents section and you can view, say, your wage slips or bills, from many years in the past if you want. Not like you typically need them, everything is automatically submitted through to our taxes - for most people, taxes are just a log-in to the tax site and click through a couple pages, and they're done, it just takes a couple minutes.
Single system (despite competition in the banking industry). Everyone's on it. Everyone uses it. And it works really, really well. To give an example: checks have become so rare that cashiers in banks look at them funny and often have to get their managers to figure out what to do with them ;)
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Over here? Where is it where your banks work so well?
So much of America is in a legacy mode. And the false "we are #1" blind patriotism means that we're simply gonna stay there. Others leapfrog and innovate while 1/2 the country praises Jesus and corporate largess while denying scientific realities due to dogmatic and ignorant reasoning. Sometimes, it pays to be smaller and hungrier as opposed to being large and entrenched in old fashioned infrastructure.
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Iceland, but you'll find that other parts of Europe are pretty similar.
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Thanks man.
Give my regards to your geologically active nation.
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Sounds pretty much the same as the Canadian system. We stopped getting paper bills and using cash for anything a couple years ago. Only thing I haven't enabled yet is NFC payments on my phone.
It's really just the poor Americans to the South who are still in the banking dark ages, not North America in general. :)
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What gets me is that unless they've lived elsewhere, most Americans don't even realize that they're in the banking dark ages. They assume that everyone else still has the same stupid broken kind of system that they manage their money with.
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While true, I was quite surprised at how expensive banking seems to be in Canada. Almost nowhere in the US do you actually have to pay for a bank account, let alone have such onerous transaction count limits or savings account transfer limits. I do wish we had the electronic transfers to inidividuals, but its not worth $10/mo to me.
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It's only expensive if you want it to be, or don't know any better.
ING Direct (now Tangerine) offers free banking.
PC Financial offers free banking, and access to all CIBC ATMs.
Valley First Credit Union offers free banking, and access to all credit union ATMs.
There's a few others that offer free banking, but I stopped paying attention awhile ago.
I also stopped banking at the big banks a long time ago (RBC, Scotia, TD, BMO, etc) when they started nickle-and-diming their customers. There's a lot of other bank
Re:Unless it has support for Bitcoin... (Score:5, Interesting)
Unlike the US, banks in other parts of the world aren't in the dark ages. Sending and receiving money via your bank account can be done instantly...
All banks can do this, of course. However, when the money leaves an account, there is an interval when the interest on it can be harvested, legally, until it enters the target account. Given enough bank transfers every day, that adds up to enough profit to give a bank manager an erection (ie. more than $1), and that is why they keep pretending it has to take a whole day or whatever. It used to be the same in Europe, but the evil communists in government forced the banks to give it up.
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Unlike the US, banks in other parts of the world aren't in the dark ages. Sending and receiving money via your bank account can be done instantly...
All banks can do this, of course. However, when the money leaves an account, there is an interval when the interest on it can be harvested, legally, until it enters the target account. Given enough bank transfers every day, that adds up to enough profit to give a bank manager an erection (ie. more than $1), and that is why they keep pretending it has to take a whole day or whatever. It used to be the same in Europe, but the evil communists in government forced the banks to give it up.
Please read what I wrote again. The transfer between sender and recipient up here in Kanuckistan is a few seconds - not "all day", and the last time I looked at a map, Canada was not part of Europe. As others have pointed out, Mexico has the same thing, and they're also part of North America. Nor are we "evil communists."
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The grand-poster (in your quoted section, even) said "U.S.", not "North American". I presume the parent post was referring to the same, I would also presum that the parent poster simply wasn't very good with geography and confused Europe with "everywhere but the USA".
As for "evil communists", if you're anywhere to the left of the U.S. that's simply what you are. If you're anywhere to the right of the U.S. it's another goal on the to-do list. As far as I can tell, the phrase "too conservative" doesn't exi
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Cheer up, mate :-) I was boldly attempting a joke. Alas, once again I fail....
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Re:Unless it has support for Bitcoin... (Score:4, Interesting)
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Why is ACH cheaper? What fee is involved in the A2A? I'd expect at the very least that they could eliminate a middle man and save money there.
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Bank 1 Core -> Bank 1 gateway -> EFT network interchange -> EFT network interchange ->bank 2 gateway -> Bank 2 Core
The number of EFT interchanges depends on the routing of the transaction's account number (the first six of the card number). S
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Unlike the US, banks in other parts of the world aren't in the dark ages.
To the typical American, for whom a Caribbean cruise is exotic world travel, it is utterly unfathomable that we are a full ten years behind the rest of the developed world in banking and internet technology. It simply doesn't compute that the median American earns less and has less purchasing power than the median Canadian, Brit, or Norwegian. We just assume that if it's not available in the US, it doesn't exist. Tell them the number of people in the world with access to symmetric gigabit home internet f
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They have less savings and lower incomes and fewer social services.
It isn't quite that simple. I would give you less savings but they consume much more. The size of cars/houses and consumption of resources is simply higher in America than most other places I have travelled (admittedly, mainly Europe.) It is an open argument which is better.
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Was the "dark ages" slam really necessary?
Well, considering that cheques have been in use since well before the dark ages ... ;-) (Joking, joking, even if it's true)
Electronic payments now supercede cheques in terms of usage, for good reason.
The problems with paper cheques are manifold. Cheque kiting, bounced cheques, cheques that "are in the mail", fund holds, etc.
By contrast, electronic transfers between people are quick and easy, available immediately (no hold period, don't bounce, etc.), you can even pay the babysitter if you don't have cas
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Eh, you're not on the hook for paying taxes with a babysitter if it's under $1900/yr. or $1000 per quarter
http://www.forbes.com/sites/an... [forbes.com]
So I guess if you have a pool of different babysitters, you're all set.
Though more likely what will happen is that we'll go back to the dark ages and live with family members who can take care of our kids for us instead of entrusting them to near-total strangers, and, like, maybe learn how to get along while living in close proximity of our in-laws and stuff. You know
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Wow. You don't understand what a payday loan is.
The 'Payday' in payday loans describes both the method and timing of payments. Most people taking out payday loans do so intending to make payments when they get their money, which is usually payday. These are generally secured loans, title loans secured by the borrower's car most common, though some are not. The loan company regularly imposes limited payment options, for instance requiring payment in cash, in person, at the specified office. If your car b
Re: Unless it has support for Bitcoin... (Score:2)
It's bad where you are, you just don't see it. Unless you live where banks aren't a big deal
Re: Unless it has support for Bitcoin... (Score:2)
cuz we broke.
Payday loans aren't intended to circumvent the normal processing period between banks. They're intended to bridge the gap between rent is due today, and I don't get paid till Friday.
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Not every bank. Unlike the US, banks in other parts of the world aren't in the dark ages. Sending and receiving money via your bank account can be done instantly, even from your smart phone (no Apple Pay or NFC software required, just email or whatever other system you choose to use from the various options the banks offer).
When I (living in an EU country) need to transfer money to someone, I
* start up my bank's app (for me, it's an Android app, but it's available for iPhone as well) and log in
* ask the person for their bank account number (or pick it from a list of previous transfers)
* enter the amount
* press "send" and validate with my electronic ID.
It takes all of ten seconds, and there's no fee involved. The money usually shows up in the receiver's account immediately.
When I get a bill, I use the same app to OCR it (using
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It takes all of ten seconds, and there's no fee involved.
Ahh. There's the reason it's not in the US.
Seriously though, our ability to screw up security is the other reason. It has led to distrust, which leads to low or slow adoption rates.
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No, you had it right.
I'm having a tiff with my tap-to-pay, prepaid card, and credit union all unable to offer me the services they each still advertise.
My tap-to-pay app is linked to a prepaid card. This can be loaded by ACH, debit card, credit card, or cash. All of which worked until this fall.
I noticed my automatic debit loads were failing, and asked my credit union. It took some time, and they initially pointed me to the prepaid card provider. Who claimed it was being declined, despite funds available
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In Norway, you can just go online to the bank website, use an authentication system based on a username, password and your mobile phone.
Then you just use the IBAN/SWIFT system to transfer the money to the account anywhere else in the world, and you can download your transaction history as a spreadsheet file.
Other banks in the UK require you to go into a branch, and have a clerk use a quill pen to fill out an entry in a giant leatherbound ledger book.
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Thanks for oversharing.
About the letter t? Keep it to yourself. No one wants to know.
Seriously.
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Why does my signature bother you so much that you feel the need to comment negatively on it? :-)
Three quick and easy alternatives, if it's that much of a concern for you:
1. Turn of signatures in your preferences.
2. Don't log in to read (signatures don't show up for non-logged-in users).
3. Ignore it.
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Much of the problem is this is encoded into law in US banking regulations, including money laundering laws, the USA PATRIOT act, and the Check 21 Act [wikipedia.org] that defined the now-antique process of electronic checks, and happens to make US checking horribly insecure without any legal fix (a very good example of why not to encode technical standards into law).
Banks wouldn't get any particular advantage over repeal of much of this regulation (except maybe the PATRIOT parts, which directly makes banking less accessibl
Yey (Score:1)
Sounds like Interac in Canada (Score:5, Interesting)
Except that Interac has been doing realtime debit transactions for many years, across all Canadian banks, both at point of sale and at ATMs. It's good news if the US is moving in this direction, because it is an excellent system, but it would be a stretch to call it the bank account of the future when it has existed for years.
Re:Sounds like Interac in Canada (Score:5, Interesting)
Same goes for Europe. We've been working on SEPA [wikipedia.org] for years now. I can already transfer money from my account to a different *country* in a matter of hours; within 2 years I should be able to pay online, with my own bank account, in a webstore in any SEPA country.
However, as I have recently had to deal with some of the, uhm, idiosynchronies of the American banking system, I can see that this system sounds as a radical improvement. But it's not the future, it's already here. Sorry.
Re:Sounds like Interac in Canada (Score:4, Informative)
SEPA is not the same. SEPA only guarantees international transfers in the SEPA area must be made in the same time frame as a national transfer. This is not instantly as the bank in the article is doing. For example here in Germany a transfer to another bank in Germany takes one day and usually the same to another SEPA country. Also, this is done on a batch basis. We check our accounts twice daily as transfers to us show up usually around the same time twice a day.
While I agree that in general the European banking systems are more advanced in general regarding the aspect of transferring money this is a different case.
My background, I'm an American who has lived the last 20+ years in Germany, Italy and the UK and I use SEPA for our international dealers on a daily basis. While better as a whole SEPA is not the same as what this bank is doing.
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And via e-mail (person to person transfers). The list of participating banks is still fairly small, but covers all the major Canadian banks, most of the regional banks, and several credit unions, with more joining all the time.
You don't realise just how powerful and pervasive the Interac system is, until you try to do anything banking related in the US. It really is like the banking dark ages down there.
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The thing is, in most places in the world, Canada included, there aren't that many banks, credit unions and other financial institutions. The number is small enough that they all can r
Some parts Pickens missed ... (Score:5, Informative)
The UK has Faster Payments processing across all its national banks, which allow instant payments between bank accounts. Maybe the US is married to a daily batch processing paradigm but CBW is most certainly not the first bank in the world to move away from it.
But that's the national part. There is also a claim about instant international payments at the end, but this is done via Ripple.com which uses an internal pseudo-currency for operations, and is comparble enough to similar Bitcoin-based systems that maybe there's some "News for Nerds" here, but Pickens completely fails to mention this part at all, instead putting the glory onto a bank that uses Ripple.com.
Overall, some very confused reporting; in future Mr Pickens might want to read all the links he's posted and then summarize them for the audience. C minus.
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I find this odd (Score:5, Insightful)
I live in Chile and we have free instantaneous wiretransfers which are required by law to be protected by 2 factor auth, Banks still make boatloads of money, not sure how the US can still be in the dark ages in this regard.
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I live in Chile and we have free instantaneous wiretransfers which are required by law to be protected by 2 factor auth, Banks still make boatloads of money, not sure how the US can still be in the dark ages in this regard.
this is just the tip of the iceberg.
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I live in Chile and we have free instantaneous wiretransfers which are required by law to be protected by 2 factor auth, Banks still make boatloads of money, not sure how the US can still be in the dark ages in this regard.
You answered your own question. Banks may make boatloads of money, but they always want bigger boats and more of them. Anything not required that costs money is simply not going to happen unless it is pretty sure to generate more money than it costs or is mandated by government action (wish is pretty unlikely, since big banks pretty much own that part of the government here).
The big banks got most of the minor restraints on risky investments put into place after the 2008 collapse removed last week. Legislat
Is IP address = SketchFactor? (Score:5, Insightful)
So is using the IP address the banking equivalent of the SketchFactor app? You just happen to have an ISP whose pool of addresses contains a bunch of scammers. Will this banking software decide that you too are also a scammer? What are the other "risk" factors? ACH made no judgements on the transaction.
Re:Is IP address = SketchFactor? (Score:4, Insightful)
I think they use multiple weighted factors. I doubt you'd get flagged on one factor alone unless it was a pretty severe anomaly.
Do they tokenize account information? (Score:3)
Hopefully they have some kind of one-time/vendor-specific account number rather than the actual account! Risk-based assessments are nothing new; hopefully knowing what the factors/algorithms are doesn't kill the effectiveness.
Congratulations you've invented the credit card! (Score:3, Insightful)
>> business could collect a...card number and use it to make an instant payment...real-time, payment transaction risk-scoring
Congratulations you've invented the credit card!
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Congratulations you've invented the credit card!
I've always kind of wanted a bank account with built-in credit-card functionality. No overdraft fees possible, rather you pay credit-card style interest when your balance is negative, and earn bank-style interest when your balance is positive.
Of course, this is unlikely to be offered for just that reason... to the banks, overdraft fees are a profit center :(
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Look at Capital One 360 (formerly ING Direct, but Capital One hasn't managed to totally mess it up just yet).
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I've always kind of wanted a bank account with built-in credit-card functionality. No overdraft fees possible, rather you pay credit-card style interest when your balance is negative, and earn bank-style interest when your balance is positive. Of course, this is unlikely to be offered for just that reason... to the banks, overdraft fees are a profit center :(
That's fairly common here in Norway if you apply for it, they call it "account credit" though you typically don't get the 30 day free delay, you pay credit interest from day one but at least your payments don't bounce. With most terminals being online it's actually pretty hard to overdraft a debit account these days, if there's no money in the account the transaction will usually be refused.
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It's called Overdraft Protection by my bank. Bank-style interest today is what, 1.35%? Nope, more like 0.45%. CDs are going for 1%APY.
There is a scheme here.
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More like the inverse debit card. When I pay with a debit card, money is withdrawn online there and then. Why can't we do the same for deposits and transfers? I just checked here in Norway and money only transfers between banks four times a day, 05.35, 11.05, 13.35 and 15.35. I guess that's fast enough for my uses, but if I pay a buddy at 4 PM why can't he buy a beer with it at 7 PM? It's not like it takes three hours to make a transaction. I understand that settling balances is hell when things change 24x
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We can do that here in Canada, using Interac via e-mail. Money leaves your account, goes into the Interac escrow account, the recipient gets an e-mail. They login to the Interac website, put in the password you gave them offline (or over the phone, SMS, whatever), and the money is transferred into their account.
It's not instantaneous, but nearly so. The recipient chooses when it's most convenient to receive the money. And the sender always has the option of revoking the transfer.
AFAIK, there's no reason
Could be nice (Score:2)
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For this exact type of thing, check out Dwolla. Paypal-style transactions (unique id is your email, but that's where the similarities end). It's run by a REAL bank (Veridian Credit Union, that's been around since 1934), and they do bank to bank transactions for 25 cents.
Disclaimer: I'm not in any way affiliated with Dwolla and don't gain anything by this post! Actually, as a business owner who accepts Dwolla payments, it would be nice to see this thing grow and become a standard thing people have to make
Sounds like a great idea! (Score:1)
Until you think about it. So now the IRS/FBI/NSA will have our financial data in real time. Seems like just another way for the government to track us and look for violations of structuring payments.
Welcome to the 21st century guys (Score:3)
This sounds like it's till a bit hacked together (risk scoring?), and only available for business transactions, but it's a step in the right direction. Another ten or twenty years and you might be enjoying something like Europe and Australia's transfer system, or Canada's debit system.
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We already use 'risk scoring' all the time; it's a fundamental part of our ATM software, and nowhere near as magical as it sounds. They're usually just fixed rules, like "no more than $500 dollars a day, or $200 per transaction" etc.
As for being available for business transactions, I didn't see that specified. If this is a replacement of ACH transactions, then it's likely that it works fine for people too. You know, most banks implement billpay via ACH transactions from a person (when they don't have to
Float? (Score:1)
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The banks love float. That's why they had to be bludgeoned into shorter float times.
Personal users, not so much. When I transfer money, I'm usually counting on the money to go where it needs to be ASAP rather than gumming up my accounts. If I wanted "float", I'd simply delay when I did the transfer.
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rather than gumming up my accounts
Or maybe that just means you don't reconcile your transactions and count on your bank balance to always be correct. The downside of that is that it's very difficult to spot a transaction that posted incorrectly or to the wrong account.
This is why I always take receipts into a budgeting system and reconcile against my downloaded transaction data. Don't trust anyone but yourself with something that important.
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I have an accounting system. Doesn't mean I like my online account reports to be out of sync with them.
Nor does it mean that when I want to transfer money from one account to another that that money is effectively useless until the float period has passed.
Sometimes I'm in a hurry.
Don't you need other banks? (Score:2)
So other, international banks must already have a similar system then?
Scoring? (Score:1)
What the heck would you need to impelemt scoring and risk assesment for a simple money transfer? That is what you have the trusted 3rd party for.
If I (Alice) want to transfer money to Bob, I instruct my bank to remove the sum from my account. (That's the step that needs to be authenticated, but not assessed by any credit score). Then my bank transfers that to the target bank. (I doubt credit score would help to safeguard that step and it should NOT be over public networks - if you can do an IP check at this
Bob is a Nigerian prince. real world fraud (Score:3)
> and as a last step, they give the money to Bob (or his account) and I don't think either that for that it is neccessary or even helping, to check Bobs credit score or IP address. He is going to RECEIVE money.
Remember we're trying to fight real-world fraud, where people do dumb things, malware exists, etc. There is a request to empty Alice's bank account and send all her money to Bob. We happen to know that Bob is a Nigerian prince. What are the odds that this transaction is fraudulent?
The next day
Misleading article - you must use ACH (Score:5, Informative)
Disclaimer: I used to write banking software for a living, including implementing ACH management on both the customer-facing and backend processing systems.
The article is blatently misleading regarding realtime transfer of funds, but it takes some knowledge to understand why. Let's talk about ACH transactions.
ACH, or Atomated Clearing House, is the network that the majority of electronic funds in the US use. As the article points out, it's ancient and horrible, basically a 1:1 translation of the paper funds reconciliation to electronic format. In essence, a customer creates an ACH transaction, which is sent to two endpoints; the federal reserve a.k.a. The Fed, and an ACH operator. Just like a credit processor, the ACH operator is then responsible for delivering the funds to the destination financial institution (FI) and they make their money by charging the originating FI. The transfer only goes through once both The Fed and the operator finalize the transaction, which can take a day or more, and most of them are held for additional days to provide for reversals (effectively, cancellations).
Here's some important takeaways:
- To perform bank-to-bank transfers, you must either engage a third-party processor, or you must have an agreement (and process) with each individual bank you wish to transfer to.
- These transfers are subject to some very specific banking regulations, some of it relating to reporting to the Fed, who can block the transactions.
- Laws provide for effective reversal (issuing a reciprocal transaction, not necessarily a reversal) for 2 days for corp-to-corp transaction (CCD) and up to 60 days for transactions involving people (PPD).
- Just like most retailers, these are batch processed, not in real time, though the banks will reserve funds and adjust your balance accordingly. No one minds because legal protections result in at least a 2-day processing window anyway.
Okay, so what do we need to perform this transfer in realtime? Well, first, you'd have to get every bank in the US and the federal reserve to switch to a new system that actually supports real time transfers, instead of the ACH. Then we'd have to completely overhaul the 40+ years of recent laws that were written with a batch-based system in mind, including removing many of the funds reservations activities (and the legal protections that require them) in favor of a realtime system.
So how does this bank do it?
Based on the info from the article, it sounds like the bank is managing two accounts per individual account; the customer-facing one which serves the 'realtime' aspect, and the actual one that is used for the ACH transaction. The risk comes in when the bank accepts a credit or debit prior to it being authorized and completed, and thus the need for 'risk management' software, identical to the sort that ATMs use, especially when configured as a local authorizer (for branches too far from the main branch and others).
They just don't show the end user the reservation of funds like most FIs, and they assume the risk directly so there's no odd 'processing' credits or debits in their statement.
So, it's just smoke and mirrors. They have to use ACH if they want to talk to other banks, and they're not doing manual wire transfers. They just aren't telling their customers. Though if they hit the anti-terrorist check (I wrote the software that matches against the government list too, at one time), their customer is going to find out really quickly that it's really just an ACH after all, and they ~don't~ have those funds - it's illegal for the bank to provide them!
Re:Misleading article - you must use ACH (Score:5, Informative)
Side note: There are many other notes about realtime money transfers in other countries. In most cases, those are again, time delayed at some point, and subject to reversal, it's just hidden from the customer. In fact, even wire transfers/money orders are reversible! The countries involved simply have laws pushing the risk elsewhere than the customer - usually the FI, I'd bet. This is especially true of large international exchanges, like SWIFT. You might even be able to pay more to such an exchange to expedite your transfers, or even cover the risk - for a good customer.
Though, that said, there's no reason a bank in country A might not have an agreement with country B, to automatically honor requests, assuming both countries have lax or non-existent financial regulation laws. In reality though, all countries have those laws, and that's why we have international exchanges.
This is not just a semantic difference either; there appears to be no difference to the customer in most, but not all circumstances.
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Perhaps I'm missing something, but why isn't ACH ("Automated", by the way, even though I like "Atomated" better!) up for this task? Even if the upgraded ACH isn't instantaneous, it could at least be faster. Increase the polling rate and the transaction handling and the whole system is faster.
We already have a system in place to handle money transfers. It could use some tweaking, sure, but kludging a replacement based on debit cards isn't the right way to get to a better system.
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You don't AI to implement an automated system. As you said, it all works fine with the debit card system. The problems are not so much with ACH itself as they are with the implementation (manual processing and infrequent polling).
The advantage of sticking with ACH is that it's already widely implemented. Rolling out truly automated backend handling and increased polling rate can be done gradually, bank by bank, while not interrupting the operation of banks that haven't upgraded yet.
This whole thing reads li
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I think the biggest obstacle is actually the bankers. They do not like adopting new functionality, especially new functionality that causes their processes to change. They have no problems with tech that lets them do exactly the same thing they were doing before, like say, mobile apps, but new = scary. For example, in the ACH file description, there are two file format types: One is called 'DISK' and the other is called 'LINE' - for dial up. They just send the disk format now, over the net.
In short, th
Sigh. (Score:5, Interesting)
Welcome to the 20th Century. Oops, we're not there any more!
I deliberately wasted several hours of my bank manager's time once. When he sussed what I was doing, he asked why. Because it had taken four days for a cheque to clear - a cheque I had received every month from the exact same employer, for many years, and paid in immediately using their fast-track cheque machines that take a photo of the cheque for you, then wrap it in an envelope and send it on.
And because of the delay, for a fraction of a second, my bank account went overdrawn by a few pounds even though the cheque was in the bank's possession. They delayed and delayed it, further than necessary or normal, in order to ENSURE I was charged for going overdrawn. The cheque was an amount enough to clear the transaction they bounced several hundred times over. They then charged me £50 on top as an administration fee.
I'm an IT guy. I know that transaction takes milliseconds to process. The fraud selection? That's in place 24 hours a day on CC transactions anyway - there's nothing special about that. This is just an extension.
The antiquated system of "it has to arrive at the other branch for the cheque to clear"? Nonsense and zero justification when you have the cheque in your possession. This stuff is chicken feed on the bottom of the banking balance sheets, but they can play it and make money by making it slow and cumbersome. Because most people will just keep quiet and pay it.
The only question I really wanted an answer to? Has four hours of your time cost the bank more or less than the (unfair, I would posit) overdraft fee you charged? What about the loss of my banking business? How much has that cost you?
Happened to run into the same guy at another branch when I was going in with my ex-wife to sort out her account. He ran a mile.
Sorry, guys, you can make all the excuses you want, but that transaction system is slow BECAUSE YOU MAKE IT SO, not because it needs to do. The real-time clearing is already in place - try using a blocked credit card and see how long the gap is between you reporting it missing and all your vendors saying they couldn't charge you card for your usual monthly payments. The same applies to Direct Debits (in the UK) and myriad other banking technologies.
I once recorded a 3 minute interval between my phoning my bank to cancel a Direct Debit and the company that it was paying phoning me up to threaten a lawsuit over non-payment (long story short, they "agreed to overlook the matter", including the complete refund they'd had forcibly taken from their bank account, after I offered to initiate the lawsuit for them).
It's all nonsense. Banking systems do nothing special nowadays, especially not the personal / small business banking sector of the industry. They don't need tons of supercomputers and overnight batch processing - they just do that to eke out to the last second how long your money is with them.
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I'm an IT guy. I know that transaction takes milliseconds to process.
And like a typical IT guy, what you "know" is beyond question. No way you could possibly be wrong.
If, someday, you work with enterprise systems, you might come to realize that very large systems are often riddled with inefficiencies. When multiple parties are involved, or legal compliance, those inefficiencies can become powerfully entrenched.
Take a look at some of the high rated comments on this article for explanations as to why and how banking is not as efficient as you imagine.
Re:Sigh. (Score:5, Insightful)
I'm an IT guy. I know that transaction takes milliseconds to process.
And like a typical IT guy, what you "know" is beyond question. No way you could possibly be wrong.
If, someday, you work with enterprise systems, you might come to realize that very large systems are often riddled with inefficiencies. When multiple parties are involved, or legal compliance, those inefficiencies can become powerfully entrenched.
Take a look at some of the high rated comments on this article for explanations as to why and how banking is not as efficient as you imagine.
Off topic, but related. When I first started in IT, we were given problems to solve. Now, we're given solutions to implement. Now you implement an idea that a middle manager came up with to solve a problem he (or she) will not tell you about in any detail. Their solution is generally out of date. So you write to their specification and it doesn't work. You, as the IT guy, are to blame--despite not being briefed on the problem to be solve.
So when someone talks about inefficiencies, you have realize that nowadays everyone thinks they can design software. For the most part, that's why so much stuff is in IT is antiquated. How I miss working for people who had ideas that needed solutions.
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Gee, how innovative! (Score:2)
Requests for ACH transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits. ACH technology was created in the 1970s and has not changed significantly since.
Jesus Christ. How much do we pay these people?
Manifest silliness (Score:3)
I've often wondered how it is that banks get away with plastering account numbers on every check or who in their right mind would want a credit card tied directly to their bank account.
Slowness of international transactions is a feature affording banks an excuse to sit on the money day(s), collect interest and then charge exorbitant wire fees on top. Who knows it might also give them some time to review transactions but I doubt it.
The fundamental security problem with many electronic systems is they operate more like credit cards and less like paypal. Until the equation is changed such that only operation possible is "giving" rather than "taking" fraud detection algorithms don't have a prayer in hell and any "progress" is limited to deck chairs of the Costa Concordia.
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I've often wondered how it is that banks get away with plastering account numbers on every check
Since we're not quite done writing them, what, instead, do you propose we put on paper checks other than the routing number and account number so that the receiving bank can figure out what bank, and what account, to request funds from?
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Since we're not quite done writing them, what, instead, do you propose we put on paper checks
Other than the routing number and account number so that the receiving bank can figure out what bank, and what account, to request funds from?
I won't pretend to know best approach yet half baked ones appear to be easily reachable.
Something as simple as printing random numbers instead of bank account... The numbers get registered with your account when new checks ordered.
Or instead of signing check one presses a bank provided magical stamp like thing against check to "bless" transaction.
It could be as trivial as a challenge response scheme where checks come printed with challenge codes and bank provided stamp writes cryptographic response.
Long waits? (Score:2)
Requests for ACH transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits.
In the US, the law says most funds must be available within, I believe, 2 business days. How is this a "long wait"? I know that in this day of zero-length attention spans, where people cannot go ten minutes (on a date) at Starbucks w/o checking their smartphones, that might *seem* long, but seriously it's not.
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It can be disastrous! The ACH delay screwed me on more occasions than I can count, and banks use it to maximize the fees they can hit you with.
Can you not think of an instance where a two day delay would be too long? Because it has cost me hundreds in ridiculous fees over the years.
Sorry about your misfortune with bank fees. I'm 51 and I've never had an issue as I always keep more than enough funds in my account. I may help that I have never used a Debit card (they're evil) and rarely write checks, paying for most things with a CC and paying that off in full every month. Most household bills are manually paid electronically each month - no auto pay.
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I always thought CC's were evil.
Debit cards are basically "checks" that clear immediately, (with some, supposed, safeguards), and so are good for people who have trouble managing their money and/or living within their means as the funds are withdrawn directly from their bank account. The downside is that the funds are withdrawn immediately directly from your bank account. If the funds are spent fraudulently, then you have to ask (beg) the bank for your money back and deal with any hassles about short funds, should your account be that
The current wire payment system is... (Score:3)
... I apologize for my somewhat undiplomatic language, but the current wire payment system is a cluster-fuck of fail.
My company is based in Canada and accepts wire payments from Canada, the US, Europe, Australia, South Africa and the Middle East. Half the time, we see mysterious deposits appearing in our account without any useful identification. We ask our customers to specify invoice numbers when they make a payment. Sometimes that comes through. Mostly it does not. Sometimes we don't even get any indication as to who the money is from.
So then we need to phone our bank and they take days to track down who just paid us. It's a total nightmare.
I'd welcome wholeheartedly anything that can improve the situation.
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Its on your customers not giving enough information in their wire transfers. That's something thats chosen when you initiate the wire, there is plenty of space for the information you request.
There are several ways to reduce the problem at least, all by accounting and billing methods. On accounting, there should be amounts sitting out there in an account waiting to clear for the incoming payments. The ambiguous payments are a small subset of the total and will likely be identifiable simply by amounts out
i thought it was a scam (Score:2)
I always though this was another one of those banking scams they got away with. You transfer money, and for a day it is neither on your or on the receivers account. Where is it then? In the bank's pocket, making them money somehow.
Re:That's good (Score:5, Insightful)
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I think what GP might be referring to is having a proxy configuration. If somebody wants their traffic to appear from an IP address in a specific geographic location, it isn't very hard. Most people who would be the types that are hacking a bank would probably already have a sizable botnet, and if they do, chances are they'll have one particular node residing either in or close enough to the desired subnet, and then they simply proxy through it.
Re:That's good (Score:4, Funny)
I learned all my skills from "Sneakers".
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Meh, I upgraded my 7.2 kbps modem to a 14.4 kbps modem instead of watching War Games.
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...But my new computer has a 28.8k modem and an active matrix display!