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Fed announces details of new interbank service to support instant payments

federalreserve.gov

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Re: Fed announces details of new interbank service to support instant payments

#31

Post by mjevans »

gizmo686 wrote: post #14
vxNsr wrote: post #9

> The rapid expenditure of COVID emergency relief payments highlighted the critical importance of having a resilient instant payments infrastructure with nationwide reach, especially for households and small businesses with cash flow constraints," The main issue with releasing cash as I understand it wasn’t that it wasn’t arriving fast enough; rather it was verifying the recipient was eligible and was who they say th…

We already have a national ID. It is called social security, and it is bad at its job because it was explicitly not supposed to be a national ID when it was created.

Alternately, every flipping service that demands you identify with a phone number (or billable credit card); which is being used as a proxy for an ID.

Re: Fed announces details of new interbank service to support instant payments

#32

Post by kome »

pfundstein wrote: post #24

Nearly all first world countries enjoy instant payments at the point of sale and person to person. It boggles my mind that it has taken this long and a pandemic to even set the gears in motion, all while battling ridiculous levels of cheque and credit card fraud.

Americans have such a strange relationship with technology... the most innovative startups, and yet the worse infrastructure.

here in Europe it's the contrary :)

and btw: the service will be active in 2023 or 2024... while I enjoy immediate transfers bank to bank since years...

Re: Fed announces details of new interbank service to support instant payments

#34

Post by bichiliad »

ahmedfromtunis wrote: post #19

How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system? Are banks resisting it and if yes, why would they?

There's a profit to be made on the funds held while seemingly-instant transactions settle. When you Venmo someone money, you send money to their Venmo account, which has to go through the 1-to-three-day-long ACH process to get to your actual bank account. If money sits in your Venmo account, interest can be accrued on it[0].

Plus, Venmo (and PayPal) has interest in being a trusted brand in financial transactions of other sorts, I'm sure. PayPal has a credit product now, for example. I would not be surprised if they have a rent-seeking lobbying interest in making federal bank transactions remain a worse experience than their own service.

[0]:https://www.marketplace.org/2018/02/20/what-are-apps-venmo-d...

Re: Fed announces details of new interbank service to support instant payments

#35

Post by mixmastamyk »

TedDoesntTalk wrote: post #10
toomuchtodo wrote: post #4

Earlier quoted context omitted.

This likely replaces (most) domestic wires, checks, ACH transfers, and other legacy funds transfer mechanisms. https://www.federalreserve.gov/newsevents/pressreleases/file...

We will still need banks’ mobile apps to support this kind of transfer (FedNow). Considering that I’ve never been able to do wire transfers by mobile app with two major US banks (but Zelle transfer by mobile app? Of course!), I’m not confident this will replace Zelle, Venmo, etc for some time. Sure, in 10 years or so... but don’t hold your breath.

At least they’re finally working on it.

Re: Fed announces details of new interbank service to support instant payments

#37

Post by tyingq »

TedDoesntTalk wrote: post #33

Planet Money did a piece on ACH seven years ago. It’s a batch system written in COBOL in the 1970s: https://www.npr.org/transcripts/229224964 And that’s why the Feds want to replace it, not refactor it.

Your Visa transactions are running through older TPF 360 assembler. Old isn't an excuse for bad.

Re: Fed announces details of new interbank service to support instant payments

#38

Post by jiqiren »

ahmedfromtunis wrote: post #19

How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system? Are banks resisting it and if yes, why would they?

Because there are already alternatives for transactions that have to instantly settle - like SWIFT or FedWire.

Re: Fed announces details of new interbank service to support instant payments

#39

Post by woodruffw »

Settlement between banks in the United States is astoundingly complicated, for (fascinating, terrifying) historical reasons. FedNow is a huge step towards fixing holes that private companies have been papering over for over two decades.

Blatant self promotion: for anybody interested in learning more about the Automated Clearing House system (which FedNow will eventually supplement) and interbank settlement in general, I wrote a summary of much of it here: https://blog.yossarian.net/2019/12/25/A-shallow-dive-into-th...

Re: Fed announces details of new interbank service to support instant payments

#40

Post by jimbob45 »

vxNsr wrote: post #17
foxfired wrote: post #16

Earlier quoted context omitted.

Correct me if I'm wrong, but the Real ID act[1] is a national ID in every way but the name. [1]: https://www.dhs.gov/xlibrary/assets/real-id-act-text.pdf

Real ID is very worrying and I’m hopeful that it eventually goes away as it keeps getting delayed.

I don’t understand the criticism behind RealIDs and the criticism section on Wikipedia wasn’t helpful. Are passports not basically national IDs? Does it just boil down to blocking illegal immigrants from accessing some services?
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