Venmo and Zelle use Plaid which grants them full access to your entire checking account history, even transactions completely unrelated to the payment service.
Plaid is not used when your bank integrates with Zelle, which most banks do (some credit unions and smaller community banks aside). FedNow instant payments go GA in 8 months, at which point instant payment functionality will begin to roll out gradually to all US financial institutions.
Regardless, avoid PayPal and Venmo at all costs, as there are reasonable alternatives for many use cases. They have avoided regulation more traditional financial service providers operate under (banking regs), so using them is to invite suffering.
> Plaid is not used when your bank integrates with Zelle, which most banks do
Zelle is a trade name of Early Warning Systems, which maintains databases of what you do in your bank account (checks paid and deposited, monthly balances, etc.). I would assume the banks that have native Zelle integration are required to become members and share this information anyway.
If your threat model is that you don’t trust your bank with your deposit account balance and transaction history, that is hard to mitigate. I don’t necessarily trust my bank, but I do know what regulators to call for recourse when they misstep.
Where can I find more info about the '8 months' estimate? I hoped RTP would be useful to me, but the only bank that allows consumer accounts to use their RTP network is Chase. I hope this new network also doesn't fall short of the promise.
I have been a long-time Venmo user and have refused to ever link my account through Plaid. Starting a couple years ago, Venmo begin to intermittently claim they "Lost the connection" to my bank and forced me to link via Plaid. I always refused and the problem eventually went away. Now, I cannot send money to anyone via Venmo. It always gives me the same error message and asks me to link via Plaid. Extremely dark pattern.
You don’t need to use plaid to set up an external bank account with venmo. There is a little “set up bank manually” button when you go through the onboarding flow.
Zelle has different hurdles. I recently tried to pay someone and the maximum daily transaction with a single person was set at $500 with my bank unless there was some sort of "history". It took me 5 separate days of payment to accomplish what a single check could do. The identity and confirmation dialogues were exceptionally clear that the bank had no liability so I have no clue what their issue is considering what inflation is doing to the dollar.
> Zelle has different hurdles. I recently tried to pay someone and the maximum daily transaction with a single person was set at $500 with my bank unless there was some sort of "history".
And that's varying by bank too. I can only send $1000 per day total by Zelle (except a "day" is much longer than 24 hours usually) and some accounts are silently rejected as recipients. My girlfriend has to pay the rent (I pay my share to her over multiple days) because I can't send to my landlord at all and even if I could, the amount would be wrong. She has neither limit.
For person to person (not person to business), electronically, no, not really. ACH takes weeks too (yes I know your bank will credit you in advance temporarily)
There's a nonzero chance you will hit some kind of risk/fraud system based on amount too.
Wire is much better but frequently $50-100 per transaction as a fee.
Wow, that’s crazy. I knew your system had some issues, but I didn’t know it was this bad.
Just for comparison, in Germany, bank transfers are free and take 1-2 days, for a fee or free (depending on the bank) you can do instant transfers taking seconds.
They also like to re-order your pending transactions within a certain time windows to maximize bounce fees.
(If you don't explicitly have overdrafting off, so that it would just fail your transaction instead of letting it go through. The default setting may have changed in the last decade due to law but I remember these scenarios vividly)
$0 balance
+$20
-$1
-$1
-$1
Within a day or two of each other won't necessarily be positive $17 balance.
It could easily become:
$0 balance
-$1 (overdraft fee $40)
-$1 (overdraft fee $40)
-$1 (overdraft fee $40)
+$20
= negative $103 balance
Banks make a lot of money doing this to poor people.
The financial class is full of super-predatory behavior.
Can confirm. Had exactly this happen to me years ago when I was a younger man with a much lower income and a much tighter budget. I call it my "how [the bank] stole Christmas" story.
Gaining access to a credit union was one of the best things that ever happened to me.
Yes, but they take 1-3 days in my experience. I'm not sure why the parent wouldn't have used them in this case except that they also require sharing of very sensitive information, which doesn't work too well unless transferring within family/close network.
Do not use any service that uses Plaid.