Ask HN: What security is in place for bank-to-bank EFT?

https://news.ycombinator.com/item?id=26110640

by andrewon • 5 years ago

1 4 5 years ago

news.ycombinator.com

When I set up an ETF on a bank's website, all I need to enter is the other bank's routing number and account number, which can be readily found on a paper check. Then you can transfer money from one bank to another... What security and authentication is in place to prevent fraud? In case of fraud, is the victim guaranteed to get the money back?

wmf2• 5 years ago

That's only for sending money, not receiving it, right? But in general ACH has no security.

andrewon• 5 years ago

The setup works both way.

wmf2• 5 years ago

To withdraw money from another account they will definitely require you to prove control of the account either using Plaid or by depositing a few cents and asking you what they are.

westurner• 5 years ago

AFAIU, no existing banking transaction systems require the receiver to confirm in order to receive a funds transfer.

You can create a "multisig" DLT smart contract that requires multiple parties' signatures before the [optionally escrowed] funds are actually transferred.

EFT: Electronic Funds Transfer: https://en.wikipedia.org/wiki/Electronic_funds_transfer

As far as permissions to write to the account ledger: Check signatures are scanned. Cryptoasset keys are very long, high-entropy "passwords". US debit cards are chip+pin; it's not enough to just copy down the card number (and CVV code).

Though credit cards typically are covered by fraud protection, debit card transactions typically aren't: hopefully something will be recovered, but AFAIU debit txs might as well be as unreversible as cryptoasset transactions.

TPL: Transaction Permission Layer is one proposed system for permissions in blockchain; so that e.g. {proof of residence, receiver confirmation, accredited investor status, etc.} can be necessary for a transaction to go through.

ILP: Interledger Protocol > RFC 32 > "Peering, Clearing and Settling" describes how ~EFT with Interledger works: https://interledger.org/rfcs/0032-peering-clearing-settlemen...

Ask HN: What security is in place for bank-to-bank EFT?

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