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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

#131

Post by astrange »

DonsDiscountGas wrote: post #102
akosoghaaafjdr wrote: post #4

This article doesn't really go into much detail, but this shouldn't be surprising. IT in financial services is the most insanely complicated, heavily regulated, mishmash of every technology under the sun going back about 60 years that it's a miracle it works as well as it does. This is also why fintech/insuretech/etc startups tend to fail so spectacularly...because in almost every case they severely underestimate the…

>The CEOs of Citi and Bank of America both told lawmakers at a Dec. 6 Senate hearing that they were preparing to join the network in the coming months. Assuming this is actually correct, I agree with you that this would be pretty successful. Although it still seems like FedNow should've existed years ago. I can deposit a check using the supercomputer/high-res-camera I carry around in my pocket, using a global informa…

ACH largely takes one day these days; the extra delay is just if your bank doesn't trust the sender to be real. But your paycheck comes in a day because it's always from the same place.

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

#133

Post by maxerickson »

Izkata wrote: post #113
hakfoo wrote: post #61

Earlier quoted context omitted.

The whole "their own competitor" (Zelle) thing seems sort of weird. It hit the market well after people were seeing FedNow on the horizon. Why bother building something expensive that's obviously going to be obsolete in a few years? If it was meant to compete with PayPal/Cashapp/Venmo, it was 10-15 years too late for that. Anyone who wanted it had it already. I wonder if the value of Zelle is that it's still a privat…

Zelle must have brought something to the table the others didn't: My bank provides an interface for Zelle on their website, letting you send payments without having to go through creating or linking an account. It never had any of the others.

It's owned by several quite large banks, it brings lots of market power to the table.

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

#134

Post by mixmastamyk »

astrange wrote: post #129
mixmastamyk wrote: post #128

Earlier quoted context omitted.

Because the seller doesn’t want it to be and won’t proceed with the transaction if it is. Imagine you’ve sold a car, the buyer drives off and later reverses the payment. For very large transactions we have escrow—but isn’t quick by design.

There's no such thing as an unreversible transaction. There's merely transactions they don't want to reverse, which means you may have to go to court first, but you can still get the other side to send it back if you win.

You could lose the case or the other party could disappear. This happens in almost every fraud case, i.e. very frequently.

A new potential court-ordered opposite transaction is not what people think of when they hear reversible.

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

#135

Post by NoPicklez »

akosoghaaafjdr wrote: post #4

This article doesn't really go into much detail, but this shouldn't be surprising. IT in financial services is the most insanely complicated, heavily regulated, mishmash of every technology under the sun going back about 60 years that it's a miracle it works as well as it does. This is also why fintech/insuretech/etc startups tend to fail so spectacularly...because in almost every case they severely underestimate the…

Here in Australia we have very old banking systems. However there have been newer payment platforms put over the top of existing systems to facilitate near instant payments.

All of our major banks have PayID, which means you send money to a mobile number and the transaction is instant.

I agree 100% what you have said. Just showing that there is improvement in this space.

Having said that, Australia had Visa Paywave completely rolled out and ubiquitous before the US did... believe it or not

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

#136

Post by imtringued »

jjeaff wrote: post #110
o-o- wrote: post #106

Earlier quoted context omitted.

> No that isn't surprising because those were new buildouts of brand new systems that didn't exist before Granted tech leaping explains why many third world countries are ahead, however the US was no where near the first to digitize its banking infrastructure. I've heard stories from former (now-retired) colleagues who went to visit banks in the US to showcase Skandinaviska Bankens digital ledger. This was around 196…

ACH transfers are basically instant in the US. But because they can, the sending bank holds on to the outgoing transfer for as long as they can get away with and the receiving bank waits to make the transfer available to the customer for as long as they can get away with. this allows banks to squeeze a little bit more return out of the money, and more importantly, the longer money is in limbo, the more likely custome…

The real reason is that banks are destroying liquidity to make netting/clearing possible. The longer you wait, the less liquid reserves you need in case of large outgoing transfers, because they were offset by incoming transfers.

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

#137

Post by pfranz »

kalleboo wrote: post #52
viraptor wrote: post #20

Earlier quoted context omitted.

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

I don't think Zelle is the same thing at all.

> The initial release of the FedNow Service provides baseline functionality supporting market needs for a range of use cases, including those growing in demand such as account-to-account (A2A) transfers and bill pay.

https://www.frbservices.org/financial-services/fednow/about....

I've never seen Zelle suggested for bill pay. I've tried to use Zelle for account-to-account transfers, but it was obvious this wasn't the intention; I think I had one bank account tied to my email and another to a bank account tried to my phone number so I could send money to myself (the intention seems to be a person only sends/receives from one bank account) and the limits are very, very low. When I was trying this, the cap seemed to be secret and vary institution to institution.

[1] https://www.zellepay.com/faq/there-limit-how-much-money-i-ca...

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

#138

Post by ZeroSolstice »

lxgr wrote: post #127
ZeroSolstice wrote: post #85

Earlier quoted context omitted.

I don't know many businesses that would perform processes that don't make them money. Even if we use your example of next business day what happens on a Friday where the refund isn't processed until Monday or Tuesday? Is customer satisfaction really increased if you get their refund back to them in 3, 7 or 10 days? In instances where you have to ship the defective product back. They don't send you an over-night, next…

> Even if we use your example of next business day what happens on a Friday where the refund isn't processed until Monday or Tuesday? The same thing that happens when you make a purchase on a Friday: It most likely gets posted to your account the following Monday. No clearing (or at least settlement) on the weekend goes both ways.

I'm specifically talking about refunds not purchases as in US only a few states have laws relating to returns and refunds.[1] Otherwise its left up to the retailer to set the policy. Most purchasers are not making large amounts of interest on their checking accounts compared to the balance amounts a business would carry. If no settlement happens on the weekends I can see a large advantage to a business holding one million dollars in refunds for two extra days before you complete or run the batch job of refunds.

When I make a purchase I don't get to decide when to run the batch job for it to post/settle. Retailers however can determine when they want to actually process refunds. What can a customer complain about when the posted refund shows up on the following Monday, Tuesday, Friday, two weeks later?

To further my point of retailers not being incentivized to process your refund quickly there was a small study done that delaying refunds had customers "re-spending" the refund before it had fulled settled.[2]

[1] https://www.freeprivacypolicy.com/blog/return-refund-us-laws...

[2] https://hbr.org/2023/06/how-retailers-can-capitalize-on-the-...

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

#139

Post by fragmede »

astrange wrote: post #129
mixmastamyk wrote: post #128

Earlier quoted context omitted.

Because the seller doesn’t want it to be and won’t proceed with the transaction if it is. Imagine you’ve sold a car, the buyer drives off and later reverses the payment. For very large transactions we have escrow—but isn’t quick by design.

There's no such thing as an unreversible transaction. There's merely transactions they don't want to reverse, which means you may have to go to court first, but you can still get the other side to send it back if you win.

tell that to the victims of wire fraud. they wire their savings to the scammers number, and then can't get it back, or at least, not all of it. Even after a court case.
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