How Do You Obtain Your Money? The Time Difference Between Instant and ACH Payments in the U.S. Automated Clearing House
Imagine you open your Venmo balance on a Friday night to move $500 to your bank account. You can choose between a free transaction that will take one to three business days, or a fee that will be charged if you tap the Transfer Balance button. The “instant” option travels via credit card networks, while the free deposit will travel via ACH rails—that’s Automated Clearing House, a computer system developed in the 1970s that still serves as the default for most people and businesses who bank today.
ACH is very slow. The way in which banks work and money in the U.S. are influenced by how people are accustomed to this system. It has been a hard battle to bring this system into the 21st century.
Towards Legal Reform: The Case of Two Silicon Valley Entrepreneurs: Eduardo Almaguer, Miguel Akula and the Man of the People
This need to innovate can be lost when you have something that isn’t really bad. He described this phenomenon where in developed markets, things already “kind of work”—innovation would just be two or three steps forward on top of an established system or service. But startups in emerging markets have to start from scratch or create new infrastructure. If governments want to modernize, then they have to provide legal changes for startups to contend with. The change will be decided by the innovation in the end. Without even realizing, what they create is a place better than maybe anywhere else in the world.”
“Everything has to be built from scratch, and there is a high need for very simple tools,” says Sergio Almaguer, the CEO and cofounder of Yaydoo, a Mexico City-based B2B software and payments company. Building a solution to automate payments and invoicing between companies was predicated on the Mexican government’s implementation of an electronic invoicing system in 2004 called CFDi (Comprobante Fiscal Digital pro internet) for its federal tax code, following in the footsteps of Chile. Digital payments became a mandatory requirement by the year 2002. Many American businesses still use paper checks and PDF attachment in emails only to be printed out again, because of the cost. American financial services company Intuit attempted to enter the Mexican market, but it is shutting up shop at the end of this year. The US Federal Reserve and Business Payments Coalition are about to start an e-invoice exchange market pilot.
The similarities between FTX and SKS go beyond the rebel-with-a-cause personal trajectories of their founders. Like Robin Hood and his followers’ noble cat-and-mouse game with the tyrannical Sheriff, both men operated on the fringes of the law in the liminal extralegal space between legal and not, with SBF working in the unregulated crypto industry and Akula in the mostly unregulated South Asian microfinance sector. (In 2010, Akula, too, had an arrest warrant issued against him, although with “sheriffs” in India being what they are, he was never arrested.) And both were motivated, notionally—much as “man of the people” Robin Hood—by the democratizing zeal of giving power to the people.
The answer is a way of describing another ethical crusader who, ten years ago, was experimenting with his own philanthropic fantasy on a different side of the globe. Microfinance refers to institutions that provide financial services, especially small (“micro”) loans, to people not normally able to access credit from conventional banks—typically poor women, often in rural areas. In Bangladesh, the Grameen Bank, which was established in the 70s, eventually became the first and only microfinance bank that helped millions of borrowers across the world.
The models of microloans and crypts had something in common. Crypto is a decentralized digital currency (including, for instance, Bitcoin, Ethereum, Tether, Binance Coin, and Dogecoin) traded on crypto exchanges (like Coinbase, Kraken, Gemini, and, until recently, FTX, as well as some brokerage platforms like Robinhood, Webull, and eToro). Unlike conventional “fiat currencies” issued by governments, crypto isn’t backed by any physical assets: Its value is conjured entirely by common consent. Transactions are recorded and verified in a continuous link in code known as aBlockchain, meaning it is considered open, diffuse, and consensus-driven.