# Payments mean pull payments 4/29/26 Most people have the intuitive direction of payments wrong. Remember: your landlord *pulls* your rent payment, Amex *pulls* your card payment, the IRS *pulls* your tax balance: from your bank, through ACH Direct Debit. You're not "sending" them these payments – they're *debiting* you for goods and services rendered. **A "payment" is a motion organized by the end-recipient.** The end-recipient acts, the sender merely *authorizes.* In payments, the end-recipient is the primary *actor*. As a consumer, I'm here to obtain goods and services. *You*, the end-recipient, are here to get *paid*. This truth is the origin of a lot of intermediation. The first paragraph of the Bitcoin whitepaper – a screed against intermediation – is autistically pointed at the more anodyne – but fundamental – payments problem of "disputes." And these disputes are a *symptom* of end-recipients being able to optimistically *pull* funds from recipients: backing that *optimistic* payment is a ton of recourse the recipient has, in case funds were pulled in error or neglect. Bitcoin is literally a rebellion against pull payments. It takes intermediaries to support *optimistic* payments. ![[Screenshot 2026-05-19 at 12.11.25 PM.png|The opening paragraph of the Bitcoin whitepaper.|700]] It's easy to characterize the intermediated status quo as rent-seeking. Or, more intelligently, as symptomatic of a pre-technological era. But the case being made is less frequently "the thing these middlemen do could be done for cheaper," and more often "must we bother with the things that they do?" This is a form of [schlep blindness](https://www.paulgraham.com/schlep.html) (h/t Paul Graham). > The most dangerous thing about our dislike of schleps is that much of it is unconscious. Your unconscious won't even let you see ideas that involve painful schleps. That's schlep blindness. PG's main example in this evergreen post – which is really an ode to Stripe – points, ironically, to payments as the classic "schlep." Stripe (and Square, Ramp, Coinbase, etc) – having speedrun all kinds of schleps – have given payments novelty and prestige. Still, *even* payments people – even at companies like these, even *I*! – often forget the *schleps* that underpin what "payments" *actually are.* ![[Pasted image 20260501170219.png|Early schlep noticers.|700]] If you had to *actively push* funds to a merchant every time you owed them for a good, service, or subscription: it would be enough work for you that at the margins – perhaps even *at* *large* – far fewer of these transactions would occur in the first place. This is the "schlep" that any would-be economic intermediary discovers, and solves. But it's also a bit galaxy-brained relative to the *actual* origin of this mechanism; which I think is more intuitive and follows from more common-sense improvements on money: *more*, *cheaper*, *faster*. It's instructive to walk all the way back to paper checks and work forward into "debiting". ## Paper checks were the future Sending someone money once required a physical cash transfer (the sort of thing Satoshi waxes nostalgically about in his whitepaper). Checks were a step *forward* from that status quo. They're a simple, flexible piece of paper that the sender can offer the recipient – which the recipient can show to their bank as proof that they're *authorized* to *pull* the sender's funds. Jumbo checks are actually depositable! When you scan a paper check using your mobile banking app: you are *debiting* – pulling from – the person who gave you that check. Remember, payments are a motion organized by the end-recipient. ## The future of crypto I'm actually going to talk about crypto *before* we get into ACH – which runs a highly-functional debiting rail. 16 years after Bitcoin, stablecoins — USDC and USDT — have taken payments by storm. Satoshi, the technologist, was right! They’re objectively useful means by which to store US dollars and transmit them globally, without the travails of legacy FX systems, hard-to-obtain multi-currency bank accounts, or painful and slow SWIFT. Stablecoin payments are still blockchain-based, irrevocable\*, push payments — in the evolutionary path of Bitcoin. But their utility to the mainstream financial system comes with a cost to the vision in Satoshi’s first paragraph: intermediation — *engaged* intermediation —is in *major* demand. Brian Armstrong and Fred Ehrsam would tell you “always has been.” ![[Pasted image 20260519152344.png|Solving the biggest schlep in crypto.|700]] --- In April of 2026, the Drift Protocol on Solana — in the storied tradition of this nascent technology\* — was compromised, customer funds being funneled out using USDC as a medium (to North Korea, as it happens). And the entire industry wanted Circle — the issuer of USDC, holder of the actual dollars and treasury backing the token 1:1 — to *intervene.*  Circle didn’t do anything to stop it, much to the chagrin of many industry participants. Tether, issuer of rival stablecoin USDT, who works with law enforcement far more than you’d expect if you had a cursory familiarity with their operation (famously more of a black box than Circle), used their willingness to freeze funds as a marketing opportunity.  People want their money intermediated; it's a lot of responsibility to be your own bank. It is a genuine advancement that you can *choose* to be your own – crypto still produces a genuinely powerful "public option." The team at [Better Money Company](https://bettermoney.com) is building the first clearinghouse for stablecoins. They [observed](https://bettermoney.com/insights/the-drift-hack-another-reason-to-have-your-own-stablecoin) the actual insight buried in the news. > If a business is building on somebody else's stablecoin, they are at the whim of that stablecoin issuer’s procedures, preferences, and incentives. Drift presumably attempted to get the USDC frozen over those ~6 critical hours...unsuccessfully. Consumers have a far worse chance of recovering their funds as a result. **If a business launches its own stablecoin, it controls the big red button.** If stablecoins are to mature as a payment rail – you need a few things to happen at once. There is a baseline level of "responsibility" that stablecoin issuers like Circle, Tether, and others have taken on in the background – around regulatory & compliance, treasury management, etc – that people do not fully appreciate. Stablecoins aren't purely regulatory arbitrage; they're quite regulated, and in some ways *favorable* to regulators (in their utter transparency). But you need the institutions serving actual end-customers – the fintechs, "stablecoin neobanks," etc – to take on more of the actual *responsibilities* of an issuer; and therefore the controls. Especially since mistakes are almost as irrevocable as they are with physical cash. Simultaneously – these new-issuances still have to clear amongst themselves, 1:1, so that they remain fungible enough for the whole thing to remain viable. This is where a clearinghouse enters the picture. In a world where there are many institutions issuing their own stablecoins, and they're reliably clearing between each other: you can extrapolate the frontier from other clearing systems. ## Automated Clearing House The gold standard for payroll, statement payments, B2B, rent, deposits, and almost everything else. Somehow a perennial punching bag in payments. It's cheaper than wires: wires clear between banks one-off, instantly; which is more of a "cost" to the bank than batching a bunch of inflows & outflows and "netting" (which is how ACH works). And true, both stablecoins and RTP/FedNow "solve" that for a lot of use cases; also "one-off," also instant – much cheaper than a wire. But not the same as a wire in terms of hard dollars moving between banks. See [[Real-Time Payments work better on weekdays]]. To be honest, none of those differentiators even matter to me. What matters is that you can use ACH to *pull,* cheaply. %% It's unsurprising that the bleeding edge in "payments-grade crypto" is the ability for merchants to "charge" – pull from – customers holding crypto; for subscriptions, autopay, etc. It’s a much harder problem than anyone lets on, though, and I think it remains unsolved in both crypto and consumer real-time payments. ![[Pasted image 20260429130501.png|Tempo, the Stripe/Paradigm-incubated blockchain for payments, recently announced the ability to "charge" for subscriptions and autopay, onchain.|600]] The first passes at this problem in crypto – still behind on "unsecured credit" – resorted to the solution of *escrowing* funds in transit, and only releasing from escrow to end-recipient once everyone was ready for finality (ie. the sender was beyond their window of recourse). This is the worst of both worlds: - Slower than ACH, in practice: funds sitting in escrow are not spendable by end-recipient, so it's closer to as if the funds haven't landed yet. - Any improvement to the "recourse" the sender has is at the cost of the funds availability for the end-recipient. %%