Comparing the Rails

The chapters before this one take one way of paying at a time: cards online and in person, ACH, checks, cash, and the wallets and local methods the rest of the world uses. A provider runs all of them through one platform, and the platform's job is to treat each honestly: not as a card that happens to be slower, but as a rail with its own answers to the same few questions. This chapter puts those answers side by side. It also includes two rails that come later, Canadian pre-authorized debits and pushes to a debit card, so the comparison is complete.

The Questions Every Rail Answers#

Rail	Who starts it	You know it worked	Settles	Final	Comes back as
Card, online	The merchant, with the cardholder's details	Seconds, at authorization	Next business day or two to the acquirer, then funded on a schedule	After the dispute window, typically 120 days, longer for goods paid in advance	A chargeback, contested with evidence
Card, in person	The merchant, at a terminal	Seconds, unless the terminal was offline	Same as online	Same as online; an offline payment can still be declined when it's forwarded	A chargeback
Wallet (Apple Pay, Google Pay)	The merchant, with a network token	Seconds	Same as a card	Same as a card	A chargeback
ACH debit	The originator, under the payer's authorization	Only when no return arrives, 2 banking days for most reasons	Same day or next banking day	60 calendar days for a consumer's unauthorized claim, 2 banking days for a business	A return with a reason code, not contested inside the network
ACH credit	The payer, pushing	When it settles	Same day or next banking day	On settlement for the payee, though the originator can reverse an erroneous one within five banking days	A reversal by the originator; a credit you send can come back as a return (closed or invalid account)
RTP, FedNow, wire	The payer, pushing	Seconds (RTP, FedNow) or hours (wire)	Immediately	Immediately	Nothing; a mistake needs a new transfer back
Check	The payer writes it; the payee deposits it	Only when the paying bank's return window passes, about two business days after presentment	Through image clearing, days	Ordinary returns within days, warranty and forgery claims long after	A return, then possibly a claim
Retail cash	The payer, at a store counter	Seconds, at the network's confirmation	Days later, net of fees	At confirmation	Nothing; refunds go by another rail
Canadian pre-authorized debit (Payments in Canada)	The payee, under a PAD agreement	When no dishonour arrives by the next business day	Next business day	90 calendar days for a personal debit's claim	A dishonour or a reimbursement claim
SEPA or Bacs Direct Debit	The payee, under a mandate	Days later	Days	Eight weeks for SEPA's no-questions refund, 13 months if there was no valid mandate; Bacs refunds under its guarantee	A scheme refund through the payer's bank
Instant push abroad (SEPA Instant, Faster Payments, Pix, UPI)	The payer, from their bank	Seconds	Immediately	Immediately, except fraud reimbursement schemes like the UK's for scams and Pix's MED	A new transfer, or a fraud claim outside the payment
Buy now, pay later	The merchant, via the lender	When the lender approves	Paid out by the lender	The lender's terms	The lender's dispute process
Push to card (a payout, Vendor Payouts)	The platform, pushing to a debit card	Seconds to 30 minutes	Immediately, if the card's issuer is in Visa's Fast Funds program	Immediately; reversible only for processing errors	Nothing, in practice

Two columns matter more than the rest. "You know it worked" is when to tell the customer the payment went through. "Final" is when it's safe to release value you can't take back: ship the goods, pay out the merchant, credit the wallet. Most losses on a payments platform happen in the gap between those two moments, caused by a system that treated the first as the second. Payment States & Ledgers turns the gap into states, and Payouts & Settlement into holds.

How Refunds Differ#

Rail	A refund is
Card and wallet	A credit sent back through the network to the same card, which can fail if the card is closed
ACH, PAD, SEPA, Bacs	A new credit to the account that was debited
RTP, FedNow, wire, instant push	A new push payment from you
Check, cash, voucher	A payout by another rail, to details you collect
Buy now, pay later	A request to the lender, which adjusts the customer's plan

Every refund is its own object with its own failure states, never an edit to the payment (Designing the Payments API).

Where the Money Actually Goes#

The tables describe timing. The money also physically crosses bank accounts, and for a provider those accounts are where the legal and treasury questions live:

• Card money settles from issuers to the network, then to the acquirer, which for most providers is a sponsor bank: the network member that lets a non-bank participate. From there it lands in an account the provider controls but doesn't own.
• Bank money arrives through the provider's ODFI, usually the same bank, into the same account.
• That account is held for the merchants, a for-benefit-of (FBO) account, and the provider's ledger says who owns what inside it (Treasury & Bank Operations). Apart from payouts, and what network settlement nets out for refunds and chargebacks, only the provider's earned fees leave it, for the provider's own operating account.
• Payouts leave it by ACH, instant rails or push to card, to each merchant's bank (Payouts & Settlement).

Whether the provider ever holds that money in its own name is the question money transmission law turns on, which is why this picture is drawn with counsel before the ledger is designed.

What This Means for the System You Build#

• One payment model, per-rail state machines, with "you know it worked" and "final" as separate states for every rail.
• Holds keyed to the rail's finality, not to the merchant alone.
• Refunds per rail, each its own object, with a fallback when the original rail can't take the money back.
• A funds-flow diagram, reviewed with counsel, that says which bank account every rail's money crosses and who owns it at each step.

References#

Reference

• Nacha: ACH Network Risk and Enforcement Topics, return windows that decide when an ACH debit is final
• Payments Canada: Rule H1, Pre-Authorized Debits, the 90-day reimbursement window for personal debits
• Deutsche Bundesbank: SEPA Direct Debit, the eight-week and 13-month refund rights
• 12 CFR 330.5, the conditions for pass-through insurance on custodial accounts
• Visa Core Rules and Visa Product and Service Rules, the 120-day dispute window and Fast Funds
• 12 CFR 229.31, when a returned check must reach the depositary bank
• Lewis Silkin: PSR confirms maximum reimbursement for APP fraud