[yason]

If I understood correctly, the whole damn scam is only possible because this Venmo's terms of service prohibit something called "merchant transactions" and allow for reversing or cancelling transfers if they deem or someone reports a payment to fall in "merchant" category?

If so, then the problem is only a completely artificial one and made of mere policy decisions. Venmo could just act as a blind intermediary, no questions asked, completing any transactions once both parties have verified their intention to transfer money.

That's generally how banks work for at least any reasonable sums of money: I can send or receive thousands of euros to whoever and from whoever without worrying that the transfers might be cancelled by some vague policy. With tens of thousands, I'd have to ask my bank to lift the daily transfer cap beforehand, but still no questions asked. I assume that it goes in a relatively similar way in the USA.

Thus, any mobile money transfer service ought to be at least as trustworthy as that. There needs to be a point where the transaction is either complete or discarded, after which both parties can trust it. The service also shouldn't discriminate, it shouldn't matter if it's a private transfer or a merchant transfer. If they want the money they could sell transaction history imports for bookkeeping at a higher price to merchants or something.

Venmo could still do their instant transfer magic and add value there, but them considering whether a transfer is ok or not is akin to an internet service provider who would want to consider which web pages I can view before letting me download them.

[reality_czech]

Banks don't work the way you think, at least in the US. ACH transfers are slow (take a few days to complete), and often expensive. Up until 5 days later, they can be reversed even after both banks agree that they've happend if the sender decides that the payment was "erroneous."

The government can and does impose "some vague policy" on what you can and can't do with your money. If they decide that you have been "structuring" your payments to avoid triggering various reports being generated, that is considered a crime. So making several payments of 9,000 might be illegal even if you've done nothing wrong (you should have done 11,000 so that all the reports could be generated, didn't you know?)

Oh and by the way people can just take money from your account via ACH transfer if they have the correct numbers. You won't get any kind of confirmation, the bank just assumes that nobody would be unwise enough to make an ACH transfer without the consent of the other party. The US generally believes in insecure infrastructure and the 500-pound surveillance and police gorilla to keep everyone in line. It works surprisingly well, to be honest.

[yason]

Oh and by the way people can just take money from your account via ACH transfer if they have the correct numbers.

Is the ACH an internal network between banks or something that regular people could use, either directly online or by dropping wiring orders to some box in the bank? If the latter, it sounds so crazy I almost don't believe it. Where is ACH used and who actually uses it if it implies that your money could be just taken away by someone who knows your account number (and hopefully some other information that you wouldn't normally share anywhere) ?

[mukyu]

http://engineering.zenpayroll.com/how-ach-works-a-developer-...

[klipt]

> I assume that it goes in a relatively similar way in the USA.

Hahaha no. Banks here charge $30 to send money instantly via "wire". ACH is cheaper but takes days to clear.

[yason]

The latency could be what it is but to clarify the core of my assumption is that:

1) sending money to anyone or receiving money from anyone happens mechanically (nobody will step in and say sending $200 to your friend will be cancelled because it looks like a merchant transfer); and

2) when banks do clear the transfer it is cleared for real, and if you see the money on your account it's yours for real by that time.

This would be in opposition to what Venmo does, i.e. lies to you that you've received the money and you haven't. Or can it happen in US accounts that you see a fresh deposit on your account but the next day it won't be there anymore?