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Joshua Street

Money Transfer Inefficiencies


With Venmo and other similar money transfer services seeing strong spikes in usage in recent years, the demand for nearly instant money transfers at low or no-cost finally appears to be on the rise in the US.  The vastly outdated system of Automated Clearing House (ACH) transfers, sometimes referred to as electronic checks, is in serious need of update.  If it only takes people a few seconds to transfer money between banks in the UK, and we’ve got just as good of infrastructure regarding physical wires that connect banks together, it only makes sense that we can improve the speed of ACH transfers here in the US.  It’s unclear why exactly the improvements to our outdated ACH system haven’t already been made, whether due to cost, pushback from banks, etc.; however, few would argue that the current ACH system that originated in the 1970s should still have the same practices as following bankers’ hours or waiting for ‘batch’ processing, which ultimately could result in taking multiple days to process the transfer.

I found the history of the ACH system fascinating.  If you’re interested in hearing about this in more detail, check out this NPR’s Planet Money podcast episode that does a fantastic job of researching and telling the history of the ACH electronic network: The Invisible Plumbing Of Our Economy

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The broader finance industry is constantly evolving and providing new challenges for practitioners and end users alike. Acknowledging this fact, the best way to effectively manage your own finances and the finances of others is to become a lifelong student of finance. Josh Street created the Student of Finance blog to share relevant and timely topics that are related to financial planning, investments, and managing wealth.

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The commentary on this website reflects the personal opinions, viewpoints and analyses of Joshua Street and should not be regarded as a description of services provided by his employer or its affiliates. The opinions expressed in this website are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide general education about the financial industry. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Any indices referenced for comparison are unmanaged and cannot be invested into directly. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.