Remember the days when writing a check or making a withdrawal was the only way to access your money? With all of those long lines at the bank, it's no wonder stashing cash beneath the mattress was such a popular option.
Luckily, things got a lot easier when debit cards were introduced. And, even more so, when online banking came into existence.
But, there's another big improvement that's about to take the banking industry by storm. That is, instant payments.
What are "instant payments," exactly? To answer this question, imagine the following scenario: You're out to dinner with friends and the waiter has forgotten to split the bill. There's an awkward moment of silence as everyone considers who'll front the cost and have the other parties repay them. Well, with instant payments, this scenario wouldn't even be that big of a deal. All parties at the table could simply pull out their smartphones and transfer money directly to the person covering the bill.
The concept has been in the works for around five years, as key leaders in the finance industry and Silicon Valley have worked to develop a system called, clearXchange. Once launched, this system will allow major financial institutions to connect and complete transactions with one another instantaneously. No more two-day holds before your funds become available. No more hassle. Period.
Today, if a customer wants to transfer cash to another person digitally — whether on an app like PayPal's Venmo, or through an individual bank's payment transfer system, like Chase's QuickPay — it usually takes one to three days for money to move to an account at another institution. On clearXchange, the cash can move instantaneously with the tap of a finger.
So far, several big-name banks like JP Morgan Chase, Bank of America, Wells Fargo and U.S. Bancorp have already started plugging into the system. And, some have already started rolling out the service for customers.
Reports indicate that the banks which have already joined clearXchange system plan to make the service available to customers by the end of the year.