Money Movement

How Honey Moves Money

How Honey Moves Money

Moving funds is easiest using the credit card networks, but it’s not efficient and it can still take up to 72 hours to accomplish. Lengthy settlement times mean some small businesses must take short-term loans to cover their costs.

There are some “faster” payment solutions out there, but they are too costly to scale and cannot be considered. Up front, let’s establish that there is no such thing as an instant inter-bank electronic fund transfer mechanism that exists in the U.S today. Lots of folks, like Zelle, claim “instant,” but it just doesn’t exist. Wire transfers are quick, but not instant. ACH claims to be quick, but nothing batched will ever be “quick.” A lot of “instant” can also depend on how much each party trusts the other. In some cases, the sending bank will guarantee the funds to the receiving bank and the receiving bank will, in a sense, grant a short-term loan to the recipient until the receiving bank receives the funds from the sending bank. It’s a mouthful, and it’s also costly and hard to administer at scale.

While instant is changing for most of the world, the only instant U.S. transaction, as far as we can tell, is using the same bank to transfer money from one account to another. It makes sense. The bank is housing the money for both parties, so a transfer is just a simple ledger change at the bank. This is not dissimilar to how international money transfer companies do currency exchanges. Using the simplest explanation, Honey has money in each of the large institutions and is only pushing money to and from it’s own Honey accounts and each of its customer’s accounts. This gives Honey tremendous flexibility to provide low cost transactions.

We really don’t want to get too deep on this topic here, but Honey leverages this concept to create our network and takes money movement to a whole other level.

Next Section: User | Merchant Benefits

Quick Shortcuts