this post was submitted on 24 Jul 2023
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For those that don't know in the US even if you use a third party system the final settlement of the money still has to go through the Fed and it's usually as either a Wire or an ACH transaction. ACH is slow and batch processes which can be daily. Wire can be quicker but more expensive. Some banks give you access to funds sooner but it's still not settled until that NACHA batch file goes through the Fed.
Anyway there are two instant payment systems coming to the US: RTP (by the Automated Clearing House (ACH)) and FedNow.
Outside the US they've already had other instant payment systems.
Yes after a decade of living in Europe I can only say, "fucking finally!"
Thank you for this, because as an Australian I was quite confused. We have had "instant" payment systems for as long as I can remember between banks. The US banking and payment system seems stuck in the dark ages.
This didn't kill things like PayPal though, they're completely different services.
If the money is going from a PayPal account to a PayPal account, why would it have to clear at all?
Word to the wise: if you are buying a house in the USA, make sure that the transfer of funds to the closing attorney/settlement agent is done by WIRE transfer, not ACH. ACH is reversible, and in many jurisdictions, the closing shop is not allowed to accept ACH transfers. Wire transfers are more of a pain in the ass, but you don't want to find out on closing day that your money is no good because you could make it disappear from the closing shop's trust account two days after closing.