Google, Square thwarted by banks’ 1970s tech

Disco-era computers bedevil efforts to allow for instant money transfers

by. Jonnelle Marte

New services are popping up to make sending someone cash as easy as sending an email.

There’s just one problem: the technology banks use to move money dates back to the 1970s. So while the Internet makes it possible to transmit 10 books across the country in several seconds, moving 10 bucks can take several days. And demand for instant payment services isn’t nearly strong enough to convince the banking industry to join the 21st century, experts say.

Despite their simple interfaces, the new offerings from Square Inc., Google and Fiserv cannot overcome the fact that the most widely used system for transferring money from one bank to another for bill payments or personal transfers is one that hasn’t been updated since bell bottoms were in style. “We’re still dealing to some extent with systems that are built for a different era,” says Tom Roberts, senior vice president of marketing for electronic payments for Fiserv, a company that offers technology services for financial institutions, including Popmoney, a service that lets people send money to each other using their emails or phone numbers.

Roberts was speaking of the Automated Clearing House (ACH), the national electronic transfer system created in the 1970s to give banks a secure way to transfer funds that was more efficient than the old system of physically mailing checks from one bank to another. ACH is what nearly all U.S. banks use to process direct deposit payments, person-to-person transfers, bill payments, and other transfers.

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