[tibbon]

This is awesome, and I'm glad to see them innovating around it. I've scratched my head for years now around clearing time of payments and digital payment systems. It isn't like you have to load gold coins on a ship, or manually have people verifying checks these days. There's realistically little reason for the entire system to be so slow- except for the fact that it is.

For years payment processors have been more than happy to just be fine with things being slow. Paypal has been around how long, and they don't seem to be pushing for it to go faster. This doesn't seem to be a problem bound to Moore's Law or the speed of the internet, just something that needs to be taken care of.

[spellboots]

Not sure how PayPal could be faster - money is transferred instantly to my bank account after receiving it through PayPal. Is that a UK only thing?

[DrJokepu]

The kind of near-instant, cheap money transfer provided by the Faster Payments Service system in the UK is actually fairly uncommon elsewhere in the world. If PayPal still used BACS it would take 3 working days even in the UK for PayPal payments to clear on your bank account.

[lucaspiller]

Just to clarify for anyone who isn't familiar: With Faster Payments you can make a transfer between any two accounts of different banks and it will arrive within 4 hours. It's usually free too and works 24/7.

[tibbon]

Yea, in the US its a vague 3-5 days.

[TomGullen]

I don't understand why it has to be anything longer than 5 seconds, is there any reasonable explanation for this?

[sentenza]

It might not be reasonable, but there is an explanation. It's been a while since I heared the podcast but Planet Money explained something along the lines that all the American banks are invested in an old, inefficient system of processing these transfers and there is no incentive to change. Here's the episode: http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...

In Europe, the EU recently established the rule that all money transfers within the entire EU must be concluded within one business day. Thus most Europeans are surprised when they hear that it takes so much longer in the US.

EDIT: Another commenter pointed out that the EU directive is actually still somewhere within the legislative process. My misconception arose from the fact that I can't remember the last bank transfer that took longer than one business day.

[notastartup]

Same in Canada, usually 4~5 days.

[gambiting]

Yes. In Poland it takes 3-4 days for the funds to actually arrive in my bank account when sent from paypal.

[smackfu]

Isn't this 7-day hold just an internal Stripe policy though? The new faster transfers are just the normal ACH speed.

[jhoon]

You're correct -- Stripe self-imposed the seven-day delay early in its development.

While we may have chosen the seven-day delay, there are still a number of real challenges in moving to a faster transfer schedule. For example, we need to make sure funds are received from our banking partners in time to transfer them to our users.

(I work at Stripe)

[praxeologist]

I don't see why Square can start the ball rolling the next day but you need anything near 7 days delay. I figured it was just a way to make more money.

[tibbon]

The standard ACH process however just seems slow. Maybe I've been playing with Crytocurrency too much, but it seems in the era of sub-millisecond stock trading... we should be able to figure out how to move $100 one account to another in 5 minutes or so...

[smackfu]

Yeah, it's pretty terrible in an e-commerce context. Get a payment, wait seven days to see if it actually gets settled. The only auth you can do up front is that the numbers look correct.

[seanmccann]

It all comes down to risk. The longer they can sit on the money, the less risk. Stripe's entire business revolves around risk management, hence why it's 7 days, which is longer than others (their banking partners).

[jlees]

Is this the only reason bank transfers take so much longer in the US than UK? Why are UK banks happy to take the risk? (I'm genuinely curious and don't know much about why the US is slower.)

[seanmccann]

It's the risk of the credit card charge, not necessarily the actual transfer of money itself to the merchant. It takes likely takes Stripe a few days to get the money, and in order for them to operate the way they do (sign up and charge cards right away), they eat the risk of rogue merchants and other issues like chargebacks.