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Fed announces details of new interbank service to support instant payments

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

#171

Post by xeromal »

jdub wrote: post #150
crazygringo wrote: post #101

Earlier quoted context omitted.

As a general rule, the US is terrible at a lot of first-world things for a good reason: because it was the first (or close). We have crappy old subways, airports, bridges, skyscrapers, and so on... because we built them early, versions 1.0. And they stuck around. Other countries had the luxuries of building their versions decades later, when the technology was 2.0 and 3.0 and so on. So the US is stuck with both old a…

You'll generally find the rest of the (first) world did 1.0 too. But they invest in public infrastructure, so also did 2.0 and 3.0. The USA is a very strange mix of hyper-first-world and second/third-world, and a lot of it has to do with how taxes are raised and spent.

The fact that it has federal and state systems probably bears a portion of the responsibility.

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

#172

Post by AnssiH »

throw0101a wrote: post #57
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?

> is still not equipped with such a system? Inertia, at least partially. It's why chip-and-pin is still not a thing in many places: Old School credit card POS devices were distributed to a lot of places over the years, and those only had the magnetic strip readers. Replacing is time consuming and no one wants to go through the expense and effort of changing it in all the places that they're in (e.g., gas pumps). Some…

This is often said to be the reason, but that alone does not explain it IMO.

Chip-cards replaced old cards here in 2006. During those 14 years every reader has already been updated several times, including gas pumps.

So it seems somehow the US has a much lower rate of updating readers - I'd really like to know why that is... Maybe the merchant services market is somehow radically different?

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

#173

Post by adventured »

phkahler wrote: post #79
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...

>> 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.

This isn't unique to the US of course: the US is spending a higher share of its GDP on infrastructure than the EU is at this point. The welfare state in both Europe and the US is consuming all available resources, and that's only going to get far worse over the next 20-30 years due to aging and contracting workforces. Most of Europe outside of Germany has zero available resources for big infrastructure spend. The US could divert $200 billion from its military spending (requiring a near total retreat from the rest of the world, including Europe, Japan and South Korea), however that would merely lessen the extreme budget deficit that already exists thanks to entitlement spending. That budget gap will grow dramatically over the coming decade. The US needs to raise taxes by $1.5 trillion just to break even.

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

#174

Post by at_a_remove »

btian wrote: post #151

> The target launch date for the service remains 2023 or 2024 Does anyone in fin tech know why it takes so long? My understanding is this achieves the same goal as wire transfer, which already exists today, but is for whatever reason super expensive. Why is wire transfer so expensive?

Just as a hunch, but maybe "move fast and break things" doesn't really resonate with the people who are concerned about where billions of dollars are.

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

#175

Post by ConcernedCoder »

alasdair_ wrote: post #154
harikb wrote: post #130

One thing I don't see mention regarding the existing US ACH (or whatever interbank) system is that there is absolutely no verification or security in this system. Just like verification of paper check signature and a whole lot of other financial items - most banks allow anything until questioned. The easiest and cost effective way is to let it happen and reimburse for failures. 1. I have linked a non-joint account in…

Regarding #3, having a bank agent state on a recorded call “well, you don’t sound female” seems like a good way to get sued by a protected class.

that's not discrimination, might be a bit insulting, but that's not against the law...

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

#176

Post by pjg »

crazygringo wrote: post #101
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.

As a general rule, the US is terrible at a lot of first-world things for a good reason: because it was the first (or close). We have crappy old subways, airports, bridges, skyscrapers, and so on... because we built them early, versions 1.0. And they stuck around. Other countries had the luxuries of building their versions decades later, when the technology was 2.0 and 3.0 and so on. So the US is stuck with both old a…

There is another reason. This is very specific to the way USA does things. It has to do with the role of the government vs. market. Other countries also had an antiquated payments infrastructure e.g. Cheques in Britian, Scandinavian countries etc. The government there simply mandated the dozen or so banks to come up with an instant/real-time payment system and it was rolled out in a few years

US has more than 10,000 banks and credit unions. That combined with the fact that US the most "market driven" of the industrialized countries it has take a backseat approach of letting the "market" solve it

There have been attempts by the "market" e.g. wallets and lately "push to card" by VISA/MC and RTP by the The Clearing House but it has realized that the Federal Government needs to come up with a standard settlement network with specifications and a protocol that "market" i.e. private companies can build upon.

Given the timeline i.e. 2023-2024, it may be a little late since apps and companies building on top of P2C (Push to Card) and RTP (Real-time Payments ) are likely to corner substantial portion of faster 24x365 payments before FedNow is ready.

And don't forget even if it's ready on time it'll take another 2-4 years for all the Financial Institutions to connect to it

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

#177

Post by TomMarius »

alasdair_ wrote: post #154
harikb wrote: post #130

One thing I don't see mention regarding the existing US ACH (or whatever interbank) system is that there is absolutely no verification or security in this system. Just like verification of paper check signature and a whole lot of other financial items - most banks allow anything until questioned. The easiest and cost effective way is to let it happen and reimburse for failures. 1. I have linked a non-joint account in…

Regarding #3, having a bank agent state on a recorded call “well, you don’t sound female” seems like a good way to get sued by a protected class.

I had that happen to me while doing the same (trying to get my girlfriend off insurance she didn't want). I said I am ill and that was it, I had to know her 'birth number' though (date of birth + four numbers). Am European.

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

#178

Post by alasdair_ »

ConcernedCoder wrote: post #175
alasdair_ wrote: post #154

Earlier quoted context omitted.

Regarding #3, having a bank agent state on a recorded call “well, you don’t sound female” seems like a good way to get sued by a protected class.

that's not discrimination, might be a bit insulting, but that's not against the law...

There are a lot of federal regulations that ensure equal access to banking based on ethnicity, gender and veteran status.

If the bank in question has literally never dealt with federal funds (e.g. FHA mortgages) then they may be exempt but this does not apply to most consumer banks.

EDIT: The Equal Credit Protection Act and the Fair Housing Act explicitly covers gender and sex as protected classes. Very few consumer banks in the US are not covered by these acts.

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

#179

Post by sneak »

harikb wrote: post #130

One thing I don't see mention regarding the existing US ACH (or whatever interbank) system is that there is absolutely no verification or security in this system. Just like verification of paper check signature and a whole lot of other financial items - most banks allow anything until questioned. The easiest and cost effective way is to let it happen and reimburse for failures. 1. I have linked a non-joint account in…

The FBI receives every payment card swipe in the United States, in real-time, with no warrant.

This has been going on for at least a decade. There is approximately zero financial privacy in the US.

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

#180

Post by snoshy »

Silhouette wrote: post #157
jonahbenton wrote: post #127

Earlier quoted context omitted.

There will be banks that offer products for handling pulls differently, it's a product decision, various features around this are available for the big boys, just haven't trickled down to the masses. But this decade they will. Has nothing to do with Fed Now. Irrevocability- for consumer payments there will always be revocability. Humans doing stuff make mistakes, and need to be able to "take it back." At the ledger l…

Irrevocability- for consumer payments there will always be revocability. And yet, if you go into a store and buy something with cash, you have never been able to just arbitrarily reverse that payment and keep the goods several months later, and the sky has not fallen. Humans doing stuff make mistakes, and need to be able to "take it back." And what about the humans who didn't make a mistake, but simply chose to abuse…

> The quasi-judicial role that financial services play in resolving disputes, often with little regulatory oversight and absolutely no requirement to be neutral or objective, is long overdue for retirement.

I would bet that the Fed views this as a feature, not a bug. Regardless of your (and mine or their) beliefs on that matter, I would hope you see why they might choose a measure of progress in payment clearance and disassociate the two goals. I imagine the Fed fully knows it plays the role of a rather strong glue within the broader global financial system, and could just as easily throw on another layer of binding to require irrevocable payments by sheer fiat if they chose, regardless of the technical implementations of bank payment clearance.

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