Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

wsj.com

Post reply on HN
Print view View original

141–149 of 149 posts

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

#141

Post by wan23 »

hakfoo wrote: post #61
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…

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…

Venmo and Cash App basically commoditize bank accounts. Banks don't like that. And since Zelle is run by the banks, they get to put their own branding all over it, make it available as the official supported way to send money from their mobile apps, and create a third network thereby reducing the network effects of the first two. Also, Zelle is more popular than Cash App and about on par with Venmo so it clearly wasn't too late to catch up.

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

#142

Post by naniwaduni »

pfranz wrote: post #137
kalleboo wrote: post #52

Earlier quoted context omitted.

> 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…

They also did that, in the form of the RTP network mentioned in the article: https://www.theclearinghouse.org/payment-systems/rtp

Separate from this, wire transfers are near-instant during business hours. Most banks surcharge these for standard customers, but all the big banks have wire fee waivers on certain account tiers.

There's also the "accidental" transfer method of over-refunding a debit card, which used to be a sketchy fintech trick but is now straight up supported by Visa.

Sometimes they offer bill pay services which don't guarantee prompt delivery (in fact, often imply that they might fall back to sending a physical check through literal postal mail), but in practice frequently enough do go through instantly by whatever means the bank happened to find convenient.

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

#143

Post by keep_reading »

fragmede wrote: post #139
astrange wrote: post #129

Earlier quoted context omitted.

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.

If the other end of the wire is a bank in the USA they certainly can get it back. It's only when the money has left the country that you're in real trouble

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

#144

Post by mixmastamyk »

keep_reading wrote: post #143
fragmede wrote: post #139

Earlier quoted context omitted.

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.

If the other end of the wire is a bank in the USA they certainly can get it back. It's only when the money has left the country that you're in real trouble

When the money leaves the account, i.e. immediately in fraud cases.

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

#145

Post by astrange »

mixmastamyk wrote: post #134
astrange wrote: post #129

Earlier quoted context omitted.

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.

It's just a credit and a debit whenever it is. A reversal before it settles isn't actually much more real.

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

#146

Post by rcbdev »

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…

> "The U.S. has more than 4,000 small banks. That's more than any other country in the world and more than all of the small banks in the entire European Union combined."

I doubt this. Austria alone has 334 independent Raiffeisenbanks(!) (usually Ltd. or Cooperatives) and this is only considering one of our three banking sectors. In total we easily have over 500 independent banks in Austria alone and I know our Swiss colleagues have much more than this. And we're just two tiny countries.

Instant payments in the EEA have worked without an issue for a long time now, by the way.

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

#147

Post by hakfoo »

missedthecue wrote: post #99
otterley wrote: post #98

Earlier quoted context omitted.

Banks are probably a bit hesitant to unlock instant payments because they can’t be reversed and so they will be a juicy target for perpetrating fraud. I’m confident they’ll be rolled out eventually but I think it’s going to take a little time for banks to figure out what the right controls for the feature should be.

This is one of the main headwinds with Zelle. It's digital cash. It's advertised as digital cash. But still even with a lot of consumer education, so many people treat it as a reversible payment. Congress grilled bank executives about it last year and even most of the representatives failed to grasp that it was digital cash. If someone gets defrauded, it's just as if they handed $20 to a scammer. It's going to be har…

The problem isn't a matter of messaging. You can draw as many diagrams and explain "it's digital cash" as much as you want.

It's that table stakes have changed. Mainstream customers-- and the regulators who represent them-- expect reversibility as a built-in feature. The technology exists for it. Saying "we're building digital cash in 2023" is like saying "we're going to sell a 4K OLED television with seperate VHF and UHF knobs, because it was fine for Grandpa's 17" CRT."

Various players may desperately want a non-reversible transaction to save a few cents per transaction, or to immunize themselves against bad-faith chargebacks, but it's pretty much ignoring everything we've learned about fraud and user experience in the last 50 years of electronic payments.

At best, there might be a market for a seperate, parallel universe of nonreversible transfers, but it would likely be something tightly regulated and B2B, rather than something that you can misdirect ordinary customers into choosing (like, say, Zelle or PayPal's friends-and-family mode)

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

#148

Post by simne »

lxgr wrote: post #30
chadash wrote: post #25

Earlier quoted context omitted.

Except the parts that don’t scale. For example, some banks specialize in servicing specific communities (e.g., Chinese immigrants). Other banks understand local geographic areas well. For example, they might be able to give you a better rate on financing a gut remodel because they know your contractor does good work and your plans for the remodel will be desirable in a specific neighborhood. It’s hard to do that when…

I hear that argument often, but I’m not convinced. Why should efficient lending decisions somehow be uniquely hard to make in a large corporation with many local branch offices? We’ve seen massive consolidation in mobile phone networks (where local knowledge should arguably matter just as much for where to build the next tower), supermarkets (I’d assume preferences and spending habits to also vary widely), media, and…

> Why should efficient lending decisions somehow be uniquely hard to make in a large corporation with many local branch offices?

Easy. When you only exist in for example Manhattan, you don't have to deal with divergence laws against Calif, because you just not in Calif.

But when you have branches in NY and in Calif, laws just prohibited you to make different decisions for NY and Calif - all MUST be SAME.

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

#149

Post by fragmede »

keep_reading wrote: post #143
fragmede wrote: post #139

Earlier quoted context omitted.

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.

If the other end of the wire is a bank in the USA they certainly can get it back. It's only when the money has left the country that you're in real trouble

To be clear, it's safe to assume the money's left the country in instances of wire fraud.
Post reply on HN