
A (shallow) dive into the American banking system - woodruffw
https://blog.yossarian.net/2019/12/25/A-shallow-dive-into-the-American-banking-system
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generalpass
Your analysis on the time for transactions to be completed seems just
marginally inadequate, if it is only covering the logistical communication
concerns.

About 10 years ago I looked into creating my own ACH system so I wouldn't have
to use an intermediary (this was because I was going to be doing high dollar,
low quantity transactions).

Because I was going to be setting up an import operation, I wanted to
understand what my liabilities might be if a customer either didn't actually
have funds in their account or they were fraudulent.

A key concern was the amount of time my company would be liable for the funds
transferred to it, because even a single reversal would cause a serious
problem for the company.

I learned that the receiving institution can initiate a reversal, and there is
no time limit to establish when they can no longer do this. So, theoretically,
they could just reverse all transactions for a year, or however long, and my
company is on the hook for all of this cash.

Worse, my institution is what's actually on the hook, because they
automatically send the money that the reversal is requiring. It seems you are
doing a more technical analysis, but the issue comes that if you are a small
business unable to deposit $1,000,000 in a CD as a security against such
misfortunes, then you are locked out of getting such a service.

Or at least this was the case ~10 years ago.

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woodruffw
Great points! You’re absolutely right: NACHA says that there are limits on how
late a transaction can be revoked, but enforcement is entirely legal and
procedural and not encoded in ACH itself. My guess is that things like that
_really_ get resolved with a Rolodex and a quick call to the relevant FDI.

