Digit adds real-time transfers to overdraft protection

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Digit has introduced a new feature to its namesake savings app that provides instant overdraft prevention for its users.

The San Francisco fintech said Tuesday that it is using JPMorgan Chase’s real-time payments service, which was built based on The Clearing House’s RTP service, to offer free instant transfers from savings to checking to prevent overdrafts. The new service will be faster than its current offering for overdraft protection.

“That money will be in your account before you even read the text message alerting you to the transfer,” Digit CEO Ethan Bloch said in an interview ahead of the announcement.

This is the second instance in which Digit is using Chase’s RTP service as the backbone for a couple of the app’s most popular features with users.

In May, Digit first announced it was using Chase RTP for its instant withdrawals feature.

There is one caveat to the upgraded feature: it’s only available to users whose banks support instant withdrawals.

Bloch said he anticipates over 70% of Digit users initially will be eligible for the feature, which will be automatically activated for new and existing customers.

“Those people who aren’t eligible will still be getting the same experience everyone’s been getting for the last year and half, and it will be better since we’ve made improvements to the service,” Bloch said.

He added one of the behind-the-scenes improvements users won’t notice is Digit’s ability to process transfers throughout the day using RTP and not be held to the constraints of the automated clearinghouse.

In general, Digit’s overdraft prevention feature monitors a user’s checking account to predict when an overdraft could happen. Funds are then transferred from Digit’s Rainy Day savings account into a user’s checking account.

“If your checking account drops below, say $25, Digit will move $50 over from the Rainy Day fund to top you up,” Bloch said.

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Apps Digital banking Digital payments Real-time payments Faster payments JPMorgan Chase