Why do machines take bankers’ hours? So bankers can make more money.

Planet Money asks why it takes 5-7 business days to send money – which is a purely digital transaction – while we can now have diapers, books, and even appliances delivered to our door within 24 hours.

They conclude that the ACH money transfer system is “so slow because it was designed in the 1970’s.”

But the more interesting question is why hasn’t it been updated?  Are the financial institutions benefiting from this glacial system of ACH money transfers?  

At another point in the story, Alex Blumberg admits that he has paid lots of money in overdraft fees, due to transfers that didn’t go through as fast as he expected them to.

And the banks won’t answer any questions about ACH.

And then the other shoe drops. They reveal that the banks have voted down potential upgrades out of fear that a faster ACH system will cannibalize other forms of transfers, like wires, that are fast but expensive. So this is good old-fashioned collusion.



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