Dwolla is going to eliminate ACH

Who owns ACH? The banks do.<p>Who owns Dwolla's replacement? Dwolla.<p>Banks are smarter than that. Adoption of this will be zero.<p>Instant transfers mean that someone can bankrupt an entire bank - instantly. If someone hacks this brand-new untested system and issues 100% withdrawal orders for every customer account, B of A and Citibank and Wells Fargo and HSBC can all be bankrupted between 10:32:24 and 10:32:25. Ooops!<p>ACH is slow and revocable <i>on purpose</i>.

Just moved to the Bay Area from the Netherlands and I feel like I took a few steps back in time when I received _checks_!? from the bank I signed up to here.<p>People pay each other through bank transfer in the Netherlands and can expect to receive the money on the same day (if sent before noon). On top of that it doesn't cost money to do a transfer.<p>I've already gone to a bank more often here than I would in the Netherlands in a whole year. Setting up recurring transfers for example, or transferring to someone in another state is just difficult via online.<p>In other words: there is definitely room for improvement here, America has been held back in banking

Most of the comments on the first page here are about how Dwolla can't possibly succeed because either the banks won't let them, they don't understand what they are trying to do, or there will be some sort of financial event which will ruin everyone's day and destroy the company.<p>I don't know if that is true or not, but I do know that these are their problems to attack and I'm glad they are attacking them. Having known people who were victims of ACH Fraud it makes you wonder where all those billions of fraud dollars/euros/etc go.<p>So unlike PayPal, these guys have investors/partners that are in fact financial institutions. Further, those institutions can no doubt provide things such as an account that is 'plugged in' to the financial infrastructure that is the world.<p>I can see no barrier at all to someone opening up an account with Viridian, depositing some money in it. And then using the Dwolla payments system to make payments too it and get money from it. That is all you need for one seller on Ebay, or Etsy, or whatever to set up their store.<p>Now if that person has any success at all, and I see no reason that the payment system would be any more of a barrier than the original use of PayPal with Ebay before Ebay sanctioned them was, then the payment stream will grow.<p>If Viridian goes from having 1.4B$ in assets to have 10 - 20 - 30B$ in assets because folks are creating accounts there to hold money for their endeavors, the other banks <i>will</i> notice, and the world <i>will</i> respond. I could be a negative response like they did against Discover Card but again that is a challenge that Dwolla apparently has signed up for.<p>So I'm interested in the ways instant payments can be used usefully. In game purchases? Kickstarter like funding? Etc.

This is the kind of thing that legislation <i>does</i> help with. Here in the UK the faster payments[1] system was introduced about 5 years ago, providing near real time payment services between banks. It's fairly common for British people to pay each other with an instant bank transfer rather than paypal o similar when buying stuff online.<p>[1]: <a href="http://en.wikipedia.org/wiki/Faster_Payments_Service" rel="nofollow">http://en.wikipedia.org/wiki/Faster_Payments_Service</a>

I actually worked on mobile and online ACH payments system for one of the largest Banks in the United States. The entire mentality of startups of "get it going and refine it later" does NOT work with banking. Before you even launch you have to get your risk of fraud and security breaches down to 0.001% or less. The bank I worked with had risk on the order of 0.00001% (1 dollar was at risk or suspicious for every 10 billion dollars transfered).<p>On top of that take into account integrating into existing payment and collection systems and you've got a whole lot to overcome at a relatively high price.<p>This is not a place I would even WANT to disrupt. The banks have established, high quality, insured, and regulated ways of handling ACH (you can even do it on your mobile).<p>The whole instant transfer thing seems downright crazy to me, as the banks still would have to do eMoney/Fed verification on the transfers which has mandatory delay times. I don't know what Dwolla is thinking...

Wow, so many Cassandras and hostile comments here on HN about what seems like a courageous idea to me.<p>Does anyone here believe that the <i>current</i> system of ACH, checks, Visa, and Mastercard is good?<p>Anything involving banks and credit cards (in the US at least) is choked with government regulation (steadily worse every year), entrenched players, and big built-in fees. We pay probably 3% more for every single consumer item thanks to credit cards.<p>What Dwolla is proposing is not <i>impossible</i> -- it's not like a perpetual motion machine. At least they are heading in the right direction: trying to bypass some of the regulation, oligopoly, and fees.<p>Assuming the status quo in direct payment sucks--we can agree it sucks?--then, why beat down someone who's trying to do something about it? Especially if no one is offering a good alternative.

&#62; IT’S FREAKING REAL-TIME!!!<p>Nothing inspires confidence in a brand new replacement for the fundamental backbone of our global financial system like the use of the word "FREAKING".

FYI, in India NEFT (<a href="http://en.wikipedia.org/wiki/NEFT#National_electronic_fund_transfer" rel="nofollow">http://en.wikipedia.org/wiki/NEFT#National_electronic_fund_t...</a>) and RTGS (real-time gross settlement) offers instant free* fund transfers and all large and most small banks are members.<p>I wish them luck, but Dwolla probably doesn't realize that banking systems change only by Government &#38; regulatory mandates. The amount of money that flows through the system and regulations are not trivial.

There is the Check 21 Act[1] which does not need ACH and is not subject to any of NACHA rules, regulations or fees. Banks already use it and if it is integrated well, it brings down the payment time to 24hr.<p>Check 21 describes a file format that is used by banks and service providers to upload payment information to FRB.<p>[1] <a href="https://en.wikipedia.org/wiki/Check_21_Act" rel="nofollow">https://en.wikipedia.org/wiki/Check_21_Act</a>

I think this note from June, 2010 about same-day ACH payments is relevant (note: this project has been stalled as far as I can tell):<p><a href="http://www.americanbanker.com/issues/175_123/same-day-ach-1021567-1.html?zkPrintable=1&#38;nopagination=1" rel="nofollow">http://www.americanbanker.com/issues/175_123/same-day-ach-10...</a>

I really like dwolla, but I think this particular innovation should have been implemented differently. Instead of giving this product away for free to banks, et al. It should have been release open source for everyone to use for free, with support costing banks, et al. No requirement to use Dwolla as the vendor between banks and consumers. This would really have been disruptive. As it stands, Dwolla has just figured out how to be a better Mastercard. Still some progress is better than no progress, so I extend a heartfelt thank you to Dwolla.

One of the few instances where you can use the word "disruption" seriously. Holy cow if this takes hold.

Entrenched interests aside, the fact that is costs nothing worries me.<p>They are asking financial institutions to abandon (or at least partially switch) from the 40-year old ACH to a brand new system that has no means to support itself outside from the host financial institution, namely Dwolla. So, you're asking the banks to make the stability of Dwolla their concern. Is that really a good way to gain confidence?<p>If they wanted to make this a serious effort, they would have to charge some kind of membership fee, or transaction fee, just to make it an independently viable business. The fees could be as low as possible, but without them, you're left with banks relying on a "free" system. No one is going to take that risk.

I recently wrote a bit about why I think Dwolla doesn't understand their problem and what the core of their business really is. I have a strong doubt that a central entity is the best way to approach the problem of money transfers and after talking to Dwolla representatives don't feel comfortable ever giving them access to my bank accounts.<p>Popmoney is already partnered with many banks and I believe they are in a better position than Dwolla at this time to provide such services if they put an API on top of their system.<p><a href="http://www.shtylman.com/archives/319" rel="nofollow">http://www.shtylman.com/archives/319</a>

I've heard that these guys (YC S11) are doing something very similar in the UK. <a href="https://gocardless.com/" rel="nofollow">https://gocardless.com/</a>

Trying to replace ACH has quite a few interesting elements that you must solve. A decent ACH must offer guarantees that payments are final and will be settled - even if the sending customer was banking with Lehman Bros, and the payment was received the day Lehman went down. Otherwise your system would go bankrupt with the first financial crisis; and since it's obvious, then no bank would use your ACH.

I really like what Dwolla is trying to do, but it's completely useless to me until I can:<p>a) Use a credit card to make instant payments on Dwolla<p>b) Get a Dwolla debit card to make payments online or at stores<p>I know they are trying to get rid of those ideas, but until they can make the transition easier I have to stick with PayPal (even though I hate them).

All of this awesome US payment stuff makes me sad to not be in the US :-(<p>Please make Dwolla available for HK customers. Pwetty please. Heck, we've seriously considered incorporating in the US just to be able to use Stripe/Dwolla...

I am excited for this. Very very excited. This is exactly the kind of disruption we need.<p>It is a bitcoin economy without the awkwardness of the bitcoin.

Here's a question for those in the banking world:<p>How would near-real-time payments impact a bank's reserve requirements?

i dont know much about this industry, but I am guessing the delay works to some organizations' advantage. Don't they get to keep the money longer in their accounts and thus have better cash-flow (on paper, at least)?

Epic disruption going on.

Naive hype.

I am fine with banking being boring.