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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

#71

Post by Qworg »

mike503 wrote: post #23

I thought (and maybe just my personal conspiracy feeling) that banks lagged on transactions mainly to hold on to the cash longer and get interest. Secondary thought was just poor old technology debt. Something akin to hearing that payroll at a large company was a batch job dumping a ton of text files to a share or something and the bank slurped them up for direct deposit.

Partially this is due to self interest - holding the cash longer and getting interest - but most of it is actually due to self protection. Small banks have less cushion to recover from fraud, have less people to process payments quickly, and generally lack technological sophistication. NACHA represents all of the various institutions, from JPM down to the First Bank of Your Hometown, so it has limited flexibility in adopting new things that increase cost/requirements.

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

#72

Post by toomuchtodo »

mixmastamyk wrote: post #35
TedDoesntTalk wrote: post #10

Earlier quoted context omitted.

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.

Indeed, having the infra in place is half the battle. Requiring banks provide access to the infra through their customer facing endpoints is just a bit of regulation away at that point.

It'll take a while, but it's nice to know a decent end state is on the roadmap.

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

#73

Post by kelnos »

geofft wrote: post #43
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…

What's the concern about national ID and political enemies? First, your life is already pretty bad if you don't have either federal or state ID at all. It's hard to drive, it's hard to fly, it's hard to get a paycheck. (You can live off the land in the middle of nowhere and avoid contact with the outside world, but you're not much of a political enemy for anyone if you do.) So, your data is already in some sort of da…

I think it's about propaganda and "symbols". Americans view the concept of a national ID as a symbol of federal government oppression.

I completely agree that a national ID would not enable the US government to do anything that it can't already do. But enough people in the US react to this sort of thing emotionally, not logically.

Technically we already do have a national ID: the passport. But relatively few Americans actually hold passports (when compared to, say, Europeans), and the federal and state governments would get a lot of push-back if they required passports for common things like banking. Hell, there are enough un- and under-banked people in the US due to other socioeconomic barriers; adding another would not be great.

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

#74

Post by Qworg »

jiqiren wrote: post #38
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.

Neither are instant.

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

#75

Post by endogui »

throw0101a wrote: post #44
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…

> […] a national ID which I am more against the more I hear about […] The US already has a de facto one AFAICT: the Social Security Number (SSN). Unique to every individual, assigned from birth (or whenever applied for), and which never changes for the life of the person until they die. > Many countries issued such numbers for a singular purpose, but over time, they become a de facto national identification number. F…

The SSN is not an ID but a number: anyone with your number can claim to be you for the purposes of transactions. The number is only tied to name and birthdate, maybe address if you are of the age to pay taxes. This enables a lot of fraud: I once saw someone apply for a rewards (credit) card in a US store with SSN and no photo ID ("Oh I left my drivers license at home, could you take a student ID?")

Not sure how Europe handles this, but here in Korea phone numbers are tied to government-issued photo IDs. Sellers of phones have to fax ID scans to the central office for verification. Remote transactions such as signing up for a credit card require phone name + first half of ID + phone number 2FA at a minimum.

As a result, I'm not aware of any cases of identity theft. US infrastructure is so broken.

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

#76

Post by tcbawo »

TedDoesntTalk wrote: post #52
tyingq wrote: post #37

Earlier quoted context omitted.

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

It’s not bad. It is simply a product of its time: according to planet money in that 2013 piece, ACH batch processing runs only once per day and only during bank hours (no weekends, etc). Presumably, increasing that frequency would break something in the system or it would already have been done. In the ‘70s, no one predicted 24/7 banking or even ATMs let alone internet payments. I remember my father using an ATM for…

Funnily enough, US stocks were trading in fractions until 2001!

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

#77

Post by Swizec »

kelnos wrote: post #67
kome wrote: post #32

Earlier quoted context omitted.

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...

Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn…

> On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end.

This is mostly for tax evasion reasons and sometimes for employees skimming off the top. The more “proper” a place, the less likely they are to encourage cash transactions.

Happens in US too, of course. It’s always the shady places that are cash only and everyone else is digital.

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

#78

Post by ed25519FUUU »

kelnos wrote: post #67
kome wrote: post #32

Earlier quoted context omitted.

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...

Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn…

A house built down the road from me came pre-wired with cat6 and also solar panels preinstalled. Other houses here don’t even have the roof alignment for solar electricity.

There’s advantages and disadvantages to being early.

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

#79

Post by phkahler »

kome wrote: post #32
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...

>> the most innovative startups, and yet the worse infrastructure.

Nobody in the US wants to pay for infrastructure. It's the governments role, but political figures want to spend our money in less critical ways.

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