> And reality is complicated, filled with reasonable disputes over terms and deals (in the best case) and outright fraud and theft (in the worst case).

Yep, and also methods to bring forward and rectify those disputes, as in the courts. I always wonder how many court orders each day need to go through the banks for enforcement, through wage garnishment, sheriff's auctions, power of attorney, etc.

What about international ACH transfers? What if an overseas bank just claims they didn't receive your transfer when they did?

ACH is a US dollar bank transfer system between US registered and regulated banks.

"Overseas ACH" isn't a thing; anything which looks like it is fronted by a US institution

Am I misunderstanding the Wikipedia article?

>There are various ACH systems around the world. The World Bank identified 87 systems in their 2010 Survey

Seems to me like there are many different ACH systems, but perhaps the one referred to colloquially as ACH is specifically FedACH, the American system.

https://en.wikipedia.org/wiki/Automated_clearing_house

ACH is a US-centric term that seems to be used for both the general concept of netted/batched customer-facing interbank transfers, as well as the US-specific set of agreements, rules, participants, and regulating body that together implement one such network.

There are many national and international equivalents, but the linked Wikipedia page gets many of the examples pretty wrong, listing e.g. card acquirers/processors and central banks as examples for other such networks.

Direct equivalents would e.g. be SEPA Credit Transfer (but not SEPA Instant) and SEPA Direct Debit in the Eurozone or FPS (credit push only) in the UK.

> Seems to me like there are many different ACH systems, but perhaps the one referred to colloquially as ACH is specifically FedACH, the American system.

Giro might be the other, possibly broader term for something similar:

https://en.wikipedia.org/wiki/Giro_(banking)

Moreover, not even overseas transfer exists in the "ACH sense". Money is moved between ledgers of the same currency so what you will have is a correspondent bank holding your position in that currency.

There's this.

https://www.nacha.org/content/international-ach-transactions...

It still Nacha which is a US institution as you mention. However, I don't see how that protects in the case of a fraudulent overseas transaction. What recourse do you have if an overseas bad actor tricks you into sending money to his overseas account via international ACH?

I worked for a NACHA processing backend for some years, the mechanism of protecting overseas transactions from bad actors is usually based on sending additional information contained in the IAT transaction, which includes some extra data from both the origination and the receiver[1]. When the bank process it, it could either:

1) settle the transaction in the next few days (3 usually).

2) ask for additional information on the next few days.

3) deny (return) the transaction if it looks too suspicious according to the bank.

[1] https://www.nacha.org/system/files/2019-07/IAT-Specific-Data...

What if an overseas bank just claims they didn't receive your transfer when they did?

Others have covered the overseas part, but for the bank claims they didn't receive you're transfer part, I would expect that to show up on the settlement process. If there is a disagreement between banks, when they later check how much each bank owes each other, there should be a discrepancy the banks need to work out.

Note: not an expert in how ACH works or how settlement is done.

Usually there's a 3 day window for the money to settle, if the bank claims that it did not receive the transaction on this time window, they will "deny" the failed transaction and send to the originator a "return"[1] which contains the type and explanation of why did it failed, and the money won't be transferred to the receiver.

If it surpass the 3 day window a "late return" will be sent to notify the origination that the transaction failed, however, the money may already have been transferred to the receiver.

[1]: https://www.moderntreasury.com/learn/ach-return-code-referen...

International money transfers are typically done through SWIFT.

https://en.wikipedia.org/wiki/SWIFT

IATs are a pretty niche thing, but I think they're still to a correspondent bank in the US. Not common, and most banks won't allow you to originate them without special arrangement.

> crypto is still completely non-viable as a real medium of exchange

There are some projects which are attempting to fill in the "TradFi" gaps and support clawback at the protocol level.

I am aware of at least this project but I believe there are others.

https://developers.stellar.org/docs/glossary/clawback

(disclosure: I have like $10 of XLM).

Maybe that explains why Moneygram, Stripe and many others have ignored Bitcoin, and Ethereum for their use case in payments and remittances and instead have chosen cryptocurrency technologies and chains like Stellar. This tells me that there are some that are more useful than others and will survive regulations and there are some that won’t.

So the regular outcry about “crypto is still completely non-viable as a real medium of exchange” is just complete nonsense; parroted here once again.

I'd say it's mostly a lack of understanding. Cryptocurrency != (bitcoin || ether).

Problems that have been solved in a "Traditional Finance" setting (eg. clawback, chargeback, dispute resolution) are either solved or being worked on by many different cryptocurrency projects.

The question which remains to be answered is whether or not cryptocurrency can solve problems that TradFi can't solve or can it solve them in a better way, or more efficiently, etc.

> The question which remains to be answered is whether or not cryptocurrency can solve problems that TradFi can't solve or can it solve them in a better way, or more efficiently, etc.

The Stellar Network (and to some extent Algorand) seems to be more efficient than the current system and they aim to work with it as their solution(s) works faster, globally and cheaply, hence why Moneygram chose Stellar for its new product and why Stripe removed Bitcoin payments and re-entered again until regulations were clearer and more cryptocurrencies were available.

Not all cryptocurrency technologies are the same.

> a reasonably good explanation of why, at least in my opinion, crypto is still completely non-viable as a real medium of exchange). The key is that there is a process for reconciliation. It IS NOT ENOUGH to simply have a ledger - you also need a mechanism for enforcing that the ledger matches reality. And reality is complicated, filled with reasonable disputes over terms and deals (in the best case) and outright fraud and theft (in the worst case).

You do realize crypto can be wrapped up in a settlement layer, right?

Cash has the same problems until you introduce a settlement system.

> careful, protect their reputation, and avoid taking on obvious risks

what you say is true, but system-wide, this gate-guarding by reputable parties costs unimaginable numbers of dollars in fees and delay. Everything you list is obviously desirable except.. it has gone far in the other direction -- disproportionally expensive, too much gatekeeping.

For the two billion new customers in global trade that have emerged in the last twenty years, for commodity transactions.. why pay? For those that want to tie together dubious foreign agenda with market regulation (oil & gas markets), keep your own credit records and regulators.. but dont hold the rest of the world hostage.

crypto is inevitable with these networks, so make some interesting and useful ones. Of course the old system will object.

There are valid use cases for both types of transactions: those that require an option for chargeback as well as those that must be settled with finality.

The difference is that while crypto can do both, the legacy finance system cannot.

Yes, there are valid use cases for irreversible payments, like closing on a home. Banks do have solutions for this: wire transfers. Which is what you’ll use if you buy a house in the US.

Wire transfers are just as reversible.

Nothing in banking is un-undoable. Some just require more effort to undo.

Only in the case of a mistake or fraud. So if the recipient got the right amount in their account: it’s a done deal, same day.

As opposed to ACH which could bounce or you could issue a stop payment.

The definition of mistake is quite broad. Not all parties may agree to what is and isn’t, requiring litigation, but the transfer itself isn’t a done deal until a very lengthy process has been exhausted.

Zelle can't be undone if it's done from your account. They just take the money.

Of course it can. Zelle and your bank may not be keen on doing it, but it’s no less reversible than any other transfer.

And for fraudulent transfers, Zelle’s trying to pin them on the customer is them hoping you’d give up rather than remind them that regulation E governs it as well, and they used to acknowledge that on their web site.

I was going to suggest “cash” as the other option.

How do you do a chargeback with Bitcoin? Or is that a different cryptocurrency feature?

There is a feature in bitcoin called replace-by-fee (https://en.bitcoin.it/wiki/Replace_by_fee). But that is not completely analogous to a refund because vendors will wait many blocks before accepting a transaction (to prevent finney attack).

If you want to have a third party mediate the exchange, you can use a multi-signature transaction (https://monerodocs.org/multisignature/). For example you send the cryptocurrency to a 2-of-3 address where the mediator, the vendor, and the customer each hold a key and two of them are needed to move the funds (the mediator sides with either vendor or customer, or the vendor and customer both side against the mediator). Or you can send the cryptocurrency to a 2-of-2 address, which allows the customer to permanently withhold the funds from the vendor at the cost of withholding some funds from themself that they put down ahead of time, like an escrow that is locked in case of dispute.

One way to get something like chargeback is 2-of-3 multisig. The transaction has to be signed by any two of: sender, receiver, and a neutral arbitrator. If sender and receiver agree, the arbitrator never has to hear about the transaction.

That is nothing like chargeback. It would be like chargeback if you could rescind a signature, once you notice a mistake.

That wouldn't be chargeback either. You have to get the bank to do the chargeback, you can't just do it yourself.

If you wanted something more like that, you could pay via a smart contract that holds the funds in escrow for a while, with the arbitrator key able to refund the money to you.

You cannot, which is what grandparent was complaining about.

You can, with script. Most of us don't want that particular "feature".

Can you share some examples or use cases of transactions that must be settled with finality?

Twice I've sold an old car to somebody who answered my ad. I wanted cash on collection only, because I was selling the car to someone I didn't know, couldn't reliably trace and therefore could not trust. If they'd reversed the payment afterwards, I'd have been down a car.

Both parties to this kind of transaction understand why finality is required, and don't have a problem with it. It's a second hand "sold as seen" transaction. The buyer knows where the seller likely lives. The seller doesn't know anything about the buyer. Neither party typically carry that kind of cash around, so there are two trips to the bank (with their own risks) that could be saved if there were some sort of easier digital equivalent.

If they'd have turned the corner to see the engine fall out from underneath the car, while you'd have already strolled off the scene with the money, they suddenly wouldn't be so happy with finality. I think finality in transactions is more something about "the nominal case". If I'm a transaction processor with significant volume, I would like to reach some final state without too much intervention, but I can still handle the exceedingly-rare exceptions with (expensive) humans. Where that point lies differs per application, also dependent on what kind of service I'm wanting to deliver.

> If they'd have turned the corner to see the engine fall out from underneath the car, while you'd have already strolled off the scene with the money, they suddenly wouldn't be so happy with finality.

Maybe, but since I also wouldn't be too happy if they reversed the transaction after taking the car, we both agree in advance that the sale will not be reversible. For the payment, that's done by using cash (and the possession of it), and for the car, also just possession. I give the buyer the opportunity to inspect the car before committing to the sale, and then it is "sold as seen". Unless I committed fraud, the engine falling out from underneath the car will be the buyer's problem, including in law.

It is always possible to seek redress through the courts whether the financial transaction itself was reversible or not, so that's not relevant here. Neither is the fact that to do that knowledge of identity and evidence is required; those concerns also exist regardless of transaction reversibility.

That's why you test-drive a car and/or have it inspected. If it is a clunker and the price of the inspection approaches the price of the car you can just take the risk. In any other case an hours worth of time of a competent mechanic will tell you all you need to know. After that the risk is yours if you decide to go through with the purchase. If something does turn up that wasn't disclosed the seller will usually be happy to adjust the price. And if not you are only out the inspection fee. Typically $50 to $150 so well worth it on any vehicle purchase that is in the price range where 'engine fell out' feels like it isn't on the menu of expected events.

> If they'd have turned the corner to see the engine fall out from underneath the car, while you'd have already strolled off the scene with the money, they suddenly wouldn't be so happy with finality.

Which is exactly the point of the finality of the transaction. Private party car sales in the US typically are not warranted. The risk of maintenance on a used car is non-zero, and the buyer accepts this risk when buying a vehicle with no warranty.

The Silk Road.

But in all seriousness, if you are a vendor then any purchase by a customer that is not associated with a legally accountable entity must be settled with finality, because you have no way of preventing charge-back fraud yourself.

In cryptocurrency marketplaces, the customers vet the vendors, not the other way around. This is because the vendors have a higher upfront investment in their business and reputation. The customers are not expected to maintain a reputation (for sake of their privacy) or an investment (outside of an multisig escrow) so any attempt to vet them is prone to sybil attack.

The process of vetting customers is usually assumed by some monopolistic intermediary like PayPal. These companies are able to vet customers by implementing a mass surveillance system.

If you are a merchant selling goods and services for money, and had the choice between transactions with finality and without, you will always chose transactions with finality.

If customers demand reversible transactions, you will choose reversible transactions or you will not have customers.

There are, for instance, no longer many mainstream online merchants who accept only irreversible transactions. There once was a time when online transactions were primarily paid via money order, but PayPal and credit card processing has made that obsolete.

> If customers demand reversible transactions, you will choose reversible transactions or you will not have customers.

I think most customers pay with credit cards more because of convenience (or rewards, where applicable).

There's a myriad of QR payment systems popping up around the world (e.g. WeChat, UPI, PayNow) that are getting considerable adoption — and those aren't reversible. They're popular because customers don't have to worry about carrying enough cash with them.

You can't compare in-person and e-commerce payments in that way. The risk for the merchant and the customer is completely different:

A physical merchant usually has a storefront in a public place that they can't abandon on a whim, a reputation to lose etc, whereas the customer is usually anonymous and mobile. This is why customers are generally ok with paying using a (to them) irreversible/final payment method, and merchants will insist on it.

In e-commerce, the risk lies almost exclusively with the customer: An online store's reputation is not easy to judge (and brand impersonation is its own risk), and even at reputable merchants, the time between order and delivery is much longer, goods can usually not be inspected ahead of time etc.

Not coincidentally, the various card schemes' rules reflect this circumstance by assigning default liability for online payments to the merchant (or their acquiring bank, in case of a fraudulent or bankrupt merchant), whereas for in-person payments it lies with the cardholder (or in case of fraud with their issuer, in some circumstances).

And you typically get your product immediately when purchasing at a physical storefront.

In the early days of eBay, it wasn’t unheard of to send out a money order in the mail, wait a month, and never get the item.

That’s why I said

> if customers demand

Rather than

> customers demand

The landscape of trust online is varied. Someone is likely to have lower trust for random website you’ve never heard of (which was most stuff in the early days) than an established business or one with a physical presence.

Now that online retail is mature and trust is high, credit cards are more for convenience, but this wasn’t the case in the early days… and still isn’t the case for lesser established sellers or marketplaces.

When was this time that online payments were done with money orders? Some of the earliest online merchants that were associated with AOL and Prodigy accepted credit cards. Amazon definitely accepted credit cards from day one.

In the mid to late 90s many retailers online operated like mail-order catalogs with catalogs delivered via http. Many of them were mail-order businesses first, and so they accepted payments for online purchases the same way they did for their majority of their customers.

This was also normal for eBay payments at the time.

There were, of course, a few that did accept credit cards, but many people were weary about using those features because very little of the web used HTTPS at the time. Even Amazon accepted money orders (and personal checks!) for this reason.

Not always. If customer fraud is low and customer wariness is high, you might well find that providing customers the safety of the option to reverse the charge gets you enough more money that it nets you more overall. Even more so if "finality" of the technology means that users instead turn to the courts to dispute your charges.

There is a narrow sense in which the merchant "always prefers finality" but it isn't the relevant sense.

Buying a house. This is why title companies will only accept wire transfers, not ACH.

Buying a house does not have 'finality' in that sense. This is why you buy title insurance - many things can happen where it turns out you don't own the house like you thought.

If I sell someone a meal and they eat it, I really don't want that money to leave my account, because I have no recourse on my side.

Okay so what if you give them the wrong meal and they want money back?

Happened recently, ordered pizza but they delivered to wrong address. Called them they wanted to deliver pizza again but it would have been too late. So they refunded the transaction, though seemed a little reluctant.

My guess is that if I had no option to do a chargeback, it would have been harder to get a refund then.

Then the dissatisfied customer throws a fit and warns their peers that the vendor isn't trustworthy.

There is an asymmetry here because anyone can be a customer but not everyone can be a vendor- that requires a certain level of reputation and upfront investment. So it is more risky for a vendor to scam a customer than the other way around.

Thank goodness that the merchants that I do deals with do not force me to pay with cryptocurrency.

I don't know, I hear all the time about people buying things on amazon or something and when it arrives it's just crap and you can't get a refund. At the end of the day, getting a refund is not about the payment method, it is about your business relationship with the vendor.

Cryptocurrency transactions require high trust in the sense that they cannot be refunded, but they also require low trust in the sense that the vendor cannot possibly steal any more money than what you sign them.

If you are going to argue by anecdote at least use a believable anecdote. Amazon have one of the most customer friendly refund policies and always offer a refund or replacement- obviously because they are just pushing it on to their sellers but still, they do.

> Amazon have one of the most customer friendly refund policies and always offer a refund or replacement- obviously because they are just pushing it on to their sellers but still, they do.

With an open season of friendly / chargeback fraud, customer lies, refund tricks, etc which customers keep doing every day and so on which too many of that and Amazon will ban your account and they should.

I'm not sure if you have a point?

My point is very clear. Such lax customer policies is open to high abuse and friendly fraud which hurts both the customer and the merchant.

there is nothing inherent in cryptocurrency that prevents clawback.

If this was true, then why do most restaurants have you pay after you eat?

İf the meal is bought with stolen funds...

then the cook should be left uncompensated for their work? There is no "fair" outcome in this situation, so you should at least make the system fail in a reliable way.

Normally, with credit cards and stuff, the onus is on the vendor that made the sale, technically they should verify the Id of the user match with the name on the card and stuff.

Most don't do because convenience wins for the user and increases the value.

The user knows if something is wrong (like stolen funds, accounts etc) they will get their money back, and trusts the system so spends more.

İf you don't provide this trust system, they won't spend as much as they do.

You will get less volume.

Hiring a hitman?

I think wire transfers are generally irreversible.

>> a reasonably good explanation of why, at least in my opinion, crypto is still completely non-viable as a real medium of exchange

The way I see it, the reversibility of ACH is mostly a 'workaround' of ACH's security flaws. If a crypto does not have security flaws, then it does not require such workarounds. The only drawback is that it cannot correct for human error. But IMO, I don't see human error as a major issue since it's a reality of life that people should be responsible for their mistakes. There are an infinite number of ways in which a person can ruin their lives within the space of a minute, sending money to the wrong address is just one more of them.

> it's a reality of life that people should be responsible for their mistakes.

Society has absolutely zero sympathy for this point of view.

Eventually society will give genuine, serious consideration to crypto.

"No ability for the legal system to reverse transactions in the case of fraud you say?"

And that will be that.

No-one in the majority of the populace actually wants an ungovernable financial system.

So, what happened with the DAO?

>and also a reasonably good explanation of why, at least in my opinion, crypto is still completely non-viable as a real medium of exchange

I understand HN is a shit-on-crypto echo chamber but it's naive to think crypto is just settlement.

Settlement is simply a low-level primitive. With smart contracts, you can build whatever mechanism you want before making something final. Multisig, clawbacks, timed-delays, time-locks, escrow, recovery wallets, etc.