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Why it's taking so long for Americans to get payments instantly

wsj.com

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Re: Why it's taking so long for Americans to get payments instantly

#51

Post by cornholio »

lxgr wrote: post #37
akosoghaaafjdr wrote: post #7

Earlier quoted context omitted.

No that isn't surprising because those were new buildouts of brand new systems that didn't exist before. In a lot of cases, those countries skipped over a whole bunch of in between phases, like how China skipped over a bunch of telecom infrastructure buildout and so managed to avoid a lot of similar issues there. The US digitalized it's financial industries the earliest and so it has the most pre-existing infrastruct…

All European countries have been doing banking for a while now, with some institutions predating computers by a couple of centuries, yet they still somehow managed to roll out SEPA Instant. And to give another counterexample: The US has had cell phone networks much longer than many other countries, yet the 5G deployment here is pretty competitive internationally. The second mover advantage is real, but I don’t think…

Not only did Western Europe digitized banking about the same time as US, but each country had its own proprietary system of payment, financial regulation, account format etc. Before SEPA Europe was a single market in name only, with expensive SWIFT payments being the most common way to settle cross border transactions.

US has a simpler task by any conceivable yard stick, but there is absolutely no political will to get it done.

Re: Why it's taking so long for Americans to get payments instantly

#52

Post by kalleboo »

viraptor wrote: post #20
cuteboy19 wrote: post #15

Earlier quoted context omitted.

I thought so too but the US has so many banks that UPI's 120 don't sound quite as impressive

I don't get the "many banks" angle. Many banks may be too small to implement it. What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers? "Bank with us and get quick payments to other good banks" Australia implemented Osko from scratch in 4 years and it took maybe 2 more before every main bank was using it. There's no need to wait for everyone.

> What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers

They did https://en.wikipedia.org/wiki/Zelle

Re: Why it's taking so long for Americans to get payments instantly

#53

Post by charcircuit »

lxgr wrote: post #41
ZeroSolstice wrote: post #33

"Fed delays have cost consumers hundreds of billions in overdraft fees, check-cashing fees and late fees, said Aaron Klein, a senior fellow at the Brookings Institution." Why would banks be incentivized to speed up this process? They make money off the delay and get to blame the Federal government. Its the same reason a purchase can be done instantly but then it takes up-to (10) business days to be refunded. Banks an…

> Being able to make money off the refund is a probable reason why they are even offered. I think you vastly overestimate the amount of interest a retailer can make on that money vs. the cost of processing the refund, potentially not being able to resell already unpacked goods etc. Purchases and refunds are also cleared and settled exactly as quickly, i.e. usually on the next business day.

It would be less about gaining interest and more about having extra liquidity.

Re: Why it's taking so long for Americans to get payments instantly

#54

Post by cornholio »

ex3ndr wrote: post #21
grecy wrote: post #16

Earlier quoted context omitted.

> most other countries got started decades later due to a lot of factors but mostly either poverty, being behind the iron curtain, or lack of access to reliable computers You are completely ignoring many countries here that have had instant, free transfers since the 90s. It never ceases to amaze the lengths Americans will go to explaining why they are behind the rest of the world in some way or other while trying as…

Like what? Most countries in europe still don't have transfers by phone number?

You mean like MPesa, the exploitative pseudo banking system popular in African countries where mobile phones are more likely to be available than electricity and running water?

Re: Why it's taking so long for Americans to get payments instantly

#55

Post by [deleted] »

ZeroSolstice wrote: post #33

"Fed delays have cost consumers hundreds of billions in overdraft fees, check-cashing fees and late fees, said Aaron Klein, a senior fellow at the Brookings Institution." Why would banks be incentivized to speed up this process? They make money off the delay and get to blame the Federal government. Its the same reason a purchase can be done instantly but then it takes up-to (10) business days to be refunded. Banks an…

[deleted]

Re: Why it's taking so long for Americans to get payments instantly

#56

Post by viraptor »

naniwaduni wrote: post #47
viraptor wrote: post #23

Earlier quoted context omitted.

It's the same problem for the biggest 4 banks. The rest can join the "future" in their own time. It's after the first 4 that you go from trillions to billions in assets. They should have some reasonable pull. 10 should be still a low enough number to make an agreement and effectively make the rest follow or lose out.

The biggest 4 banks ... do support near-instant transfers? Probably in at least three forms each pairwise? I'm not sure why we're pretending the US doesn't have infrastructure for instant transfers, there are like at least four directly supported systems, a couple accidental ones, and a whole host of third-parties in the space, each with a different set of tradeoffs and spotty support.

Yeah... That's not really a solution, is it? They're not pushing a common standard that way and the small banks will have to play stupid games instead of implementing "the" solution.

Re: Why it's taking so long for Americans to get payments instantly

#57

Post by rsynnott »

lxgr wrote: post #37
akosoghaaafjdr wrote: post #7

Earlier quoted context omitted.

No that isn't surprising because those were new buildouts of brand new systems that didn't exist before. In a lot of cases, those countries skipped over a whole bunch of in between phases, like how China skipped over a bunch of telecom infrastructure buildout and so managed to avoid a lot of similar issues there. The US digitalized it's financial industries the earliest and so it has the most pre-existing infrastruct…

All European countries have been doing banking for a while now, with some institutions predating computers by a couple of centuries, yet they still somehow managed to roll out SEPA Instant. And to give another counterexample: The US has had cell phone networks much longer than many other countries, yet the 5G deployment here is pretty competitive internationally. The second mover advantage is real, but I don’t think…

The cell phones aren’t a _great_ example, arguably; the US was behind Europe in mobile phone adoption and rollout for a long time, and in particular only adopted GSM rather late (not til the late noughties for some telcos!); at that point a large part of the US network was basically ripped and replaced. But the point still basically stands; Sweden, which had the first mobile phone network that we’d recognise as such today, has a competitive mobile phone network today.

Re: Why it's taking so long for Americans to get payments instantly

#58

Post by koolba »

csdreamer7 wrote: post #11

> The more than 300 banks it has said are using the platform represent a fraction of the roughly 9,000 U.S. banks and credit unions. The article claims big banks lobbying with their own competitor to FedNow delayed the rollout of real-time payments, according to those industry officials. But another factor I want to point out is that the USA has more small banks (and, I assume, credit unions) than any other country o…

> I am a member of one of the 20 largest credit unions in the US but they only allow to receive FedNow payments.

Only being able to receive and not send is a feature I’d love to have for my bank account. If it’s implemented at the “bank level” even better. One less worry for me.

Re: Why it's taking so long for Americans to get payments instantly

#59

Post by junofan »

andrewjl wrote: post #40
lxgr wrote: post #32

Earlier quoted context omitted.

Competition should work just fine with a handful of large banks and a vigilant regulator. In fact, I suspect that there are actually huge inefficiencies in these very small regional banks people are paying for one way or another. It might still be worth it for society, in the end, but I highly doubt that it’s cheaper/more efficient than in other countries. One example is the fact addressed in the article: It takes wa…

The US hasn't ever had a vigilant financial services regulator.

Not sure that’s true—practically the entire planet finds NYDFS prudential enough.
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