Comment by lmm
1 year ago
> The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
You present this statement as though it's an immutable law of nature, rather than a design feature of the US banking system that allows them to offer an excuse for closing accounts that's convenient for those banks. (The fact that someone on HN can read about it and feel smart because they think they understood the deep reality that lesser people don't get is also a convenient design feature).
You can't make a bank account where there is no possible chance a transaction can be reversed. That's what you're asking for.
(Crypto doesn't do this. You can be taken to court and they don't care that it's decentralized and immutable and all that. That's much of the point of his writing.)
If account has insufficient funds to do a reversal the bank is not always obliged to step in, only in a few specific circumstances. Avoiding such circumstances is possible.
There's an example in the article. If the account is owned by a company and it goes bankrupt, the account no longer contains money even though your computer says it does. So if anyone reverses a deposit quickly enough your computer is going to let it through and you're paying for it.
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As long as we agree that it's a basic feature of the US financial system I don't think there's much for us to argue about.
I don't think it's a "basic" feature. I suspect it's one of those things that, like the ACH upgrade mentioned in the article, would be changed swiftly if the relevant parties were sufficiently motivated.
I don't agree, but even that statement concedes Patrick's point.
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I haven't seen any proof that it's a basic feature of bank accounts.
Some specific services (checkbooks, embossed and offline-chip cards, visa/mc acquiring) can require a credit-worthy account, but these services can be denied without denying the account itself.
Does your envisioned product allow someone to direct deposit a paycheck? Then congratulations, it is a credit account, because a) we expect to spend paychecks including very soon after receiving them but b) payroll companies sometimes screw up payroll and can in some cases pull the money back.
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