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An update on the Federal Reserve’s Instant Payments Service

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Re: An update on the Federal Reserve’s Instant Payments Service

#71

Post by KingMachiavelli »

lotsofpulp wrote: post #63
KingMachiavelli wrote: post #62

Earlier quoted context omitted.

If you're actually interested in why the US banking is so fragmented, it's on purpose and it works very well. The US wants banks to be small to distribute risk and encourage local investment. Small banks and credit unions are much more willing to give small business loans, auto loans, etc. to people/clients with worse credit, etc. These policies only work if small and medium banks have depositors so that's why everyo…

What does any of that have to do with electronically sending and receiving money? gstatic is correct with this: >If I want to send my grandma cash, why do 2 banks have to be sitting in the middle? The US government should be offering electronic money accounts to everyone as a utility, and they should be constitutionally guaranteed (even to felons), with no ability to lose them. Anyone should be able to send and recei…

If people were depositing their money with the Fed then traditional banks wouldn't have (as many) deposits.

How are you getting money into this "FedAccount" does your paycheck get sent directly to it? Do you first send money from another bank? If it's the former option then real banks will have less money to lend, if it's the latter option then it's no different then using Zelle or any other intermediate.

Honestly what you want sounds exactly like what the Fed is building which is a common electronic exchange platform. I agree with the other points in that I hope this is mandatory to some degree.

> If people then want to invest their money, then they can make that choice individually.

I think you're underestimating how much such a service (if it accepted direct ACH from your job) would impact our current banking system. Companies would just bypass actual banks and send all paychecks to everyone's "FedAccount" that would be billions of dollars moved. Money in real banks is lent out, money in a "FedAccount" would/couldn't be (if banks have fewer deposits then they can't get as much money from the Fed). This isn't just adding a minor service for the government to provide, it would be a complete redesign of our monetary policy. A lot of countries wish they could have a banking environment as diverse as the US, it's a huge feature not a bug.

Re: An update on the Federal Reserve’s Instant Payments Service

#72

Post by fnordpiglet »

satvikpendem wrote: post #24
inhumantsar wrote: post #18

Earlier quoted context omitted.

This is for bank to bank transfers, like ACH but different. It won't be used for retail payments directly, though it could make them cheaper in the long run.

Depending on the implementation, I could use them for retail transfers though, if I trust the other party enough. It might not be wise in most cases, due to lacking the protections of credit cards, but it could be in some.

If you read carefully they clearly are not disrupting anyone’s gig. This is America man, the a public instruction isn’t going to step in and eat their business alive especially not something as big as payment processing. This is Zelle 2.0, ACH 2.0, etc. It won’t ever be for payments.

Given the numbers they quote re: cashless payment, it doesn’t matter if retailers don’t like the credit card processors. Consumers do - and with all the points and rewards and convenience of cashless payment, they will demand they at least support such payments and most people will use them even with passing on the fees. It’s hard for me to see a world where that changes any time soon.

Re: An update on the Federal Reserve’s Instant Payments Service

#73

Post by gsatic »

KingMachiavelli wrote: post #62
gsatic wrote: post #22

Fed is moving so slowly compared to China or India. Going to be left in the dust soon. They need to open settlements up to everyone not just "financial institutions". Fed deposit accounts for everyone or Interest bearing CBDCs should be rolled out to every one. The fucking banks need to be disintermediated from all transaction involving Depositors. Convert them to pure lenders. If the goal is to "improve settlement e…

If you're actually interested in why the US banking is so fragmented, it's on purpose and it works very well. The US wants banks to be small to distribute risk and encourage local investment. Small banks and credit unions are much more willing to give small business loans, auto loans, etc. to people/clients with worse credit, etc. These policies only work if small and medium banks have depositors so that's why everyo…

> These policies only work if small and medium banks have depositors so that's why everyone has a different local bank, etc

Ofcourse. But this should be a choice. Depositors should be allowed to choose between a fed deposit account or a local bank deposit.

Re: An update on the Federal Reserve’s Instant Payments Service

#74

Post by seewhydee »

Animats wrote: post #55
teraflop wrote: post #21

I wish there was a bit more detail about this part: > The initial release of the FedNow Service will include features to help banks manage fraud risk and mitigate fraud losses. [...] In addition, there will be tools that help a financial institution investigate erroneous or suspected fraudulent transactions. Let's say Alice's "Bank A" processes a FedNow transfer of $1,000 to Bob at Bank B. What happens if Alice calls…

I'm wondering about that. This is a debit transaction that clears within seconds. The recipient has good funds immediately and can take them out of the destination bank, just like a wire transfer. Or, for that matter, cryptocurrency. ACH is daily. It really is a batch system, with a daily batch at 4:30 PM Eastern Time, and settles around 6 PM. There's a whole "undo" system built into ACH. FedNow does not have "undo".…

There are tons of everyday use-cases where it's preferable to sacrifice fraud protection to achieve instantaneous money transfer. Credit card companies have normalized using credit cards (with their attendant fees) for all sorts of small-denomination transactions, like public transportation, where the fraud protection machinery of the credit card system is of negligible benefit; it's a rip-off.

Re: An update on the Federal Reserve’s Instant Payments Service

#75

Post by nly »

satvikpendem wrote: post #3

This would be great if it can cut down payment processor fees which are mainly driven by the rates that Visa and MasterCard charge, essentially as a duopoly power in the market. They also control what you can and can't buy, such as for example heavily frowning upon adult content, even if you are legally an adult.

The EU didn't this effectively by just regulating them.

It's a failure of US regulation only that VISA and MasterCard etc charge what they do

Re: An update on the Federal Reserve’s Instant Payments Service

#76

Post by cvalka »

lotsofpulp wrote: post #47
cvalka wrote: post #39

Earlier quoted context omitted.

LOL. The Zelle limits are ridiculously low. Most Americans don't have online access to transferring money. Wire and ACH online transfers are usually not available to the average b2c consumer.

Only the smallest local bank or credit union would not have the ability to transfer money online via ACH for their customers. Pretty much everyone can login, go to the transfers tab, and enter an account/routing number to transfer money to (or give their account/routing number to another bank to transfer money in). If you do not, then you should probably sign up for a free account at any of the multitude of online ba…

Are you able to do outgoing ACH and wire transfers to third party accounts online as an individual?

Re: An update on the Federal Reserve’s Instant Payments Service

#77

Post by happymellon »

cuuupid wrote: post #35
raverbashing wrote: post #28

Earlier quoted context omitted.

If the situation was so fine and dandy you wouldn't still have $30tri of cheque transactions "ACH takes a few days" Americans in denial about this and their "open market for tax filing solutions" is interesting

I don’t know how this devolved into an America bashing thread but it’s worth noting that cheque transactions have other causes. You could make the same argument about the popularity of cash as a payment method abroad. ACH sucks but Zelle is at least second party; every major bank supports it and I don’t need any details to transfer money beyond their phone number.

I didn't mean for this to be an American bashing thread I'm just surprised that it's taken this long.

Zelle is not universal, I think it's around 20% of banks/credit unions don't support it, and has high fees associated with it. It's good to see the Fed doing something about it.

Re: An update on the Federal Reserve’s Instant Payments Service

#78

Post by happymellon »

lotsofpulp wrote: post #31
happymellon wrote: post #27

Earlier quoted context omitted.

Literally my point. Not all banks support Zelle. It's a 3rd party app.

Zelle is owned and operated by the biggest banks in the US, it's basically like using your own bank. You do not even have to use the Zelle app, you can just log into your bank's app and transfer money from there. And sure, there would have been no need for it to exist had the US government done its job 20+ years ago as opposed to waiting until the 2020s, but the reality is that most Americans have been able to instan…

Isn't that a problem?

The biggest banks got together and created a new network for transfers, and charge all the smaller banks fees to access it?

It sounds like another method of crushing competition.

Re: An update on the Federal Reserve’s Instant Payments Service

#79

Post by lotsofpulp »

KingMachiavelli wrote: post #71
lotsofpulp wrote: post #63

Earlier quoted context omitted.

What does any of that have to do with electronically sending and receiving money? gstatic is correct with this: >If I want to send my grandma cash, why do 2 banks have to be sitting in the middle? The US government should be offering electronic money accounts to everyone as a utility, and they should be constitutionally guaranteed (even to felons), with no ability to lose them. Anyone should be able to send and recei…

If people were depositing their money with the Fed then traditional banks wouldn't have (as many) deposits. How are you getting money into this "FedAccount" does your paycheck get sent directly to it? Do you first send money from another bank? If it's the former option then real banks will have less money to lend, if it's the latter option then it's no different then using Zelle or any other intermediate. Honestly wh…

> How are you getting money into this "FedAccount" does your paycheck get sent directly to it? Do you first send money from another bank?

No, electronic money is just a number in a database. The US government can give you an account number like any other bank does now. Of course, you would still have the option to use a non US government electronic money account.

>If it's the former option then real banks will have less money to lend,

Yes, currently banks are earning money for an inefficiency from back in times when cash was the primary money. A lot of their purpose is obviated with todays’ technology of computers, databases, and instant communications.

> Companies would just bypass actual banks and send all paychecks to everyone's "FedAccount" that would be billions of dollars moved.

Possibly, if that is what people want.

>Money in real banks is lent out, money in a "FedAccount" would/couldn't be (if banks have fewer deposits then they can't get as much money from the Fed).

Banks can still offer people interest to entice them to deposit funds with them rather than the US government.

Re: An update on the Federal Reserve’s Instant Payments Service

#80

Post by lotsofpulp »

happymellon wrote: post #78
lotsofpulp wrote: post #31

Earlier quoted context omitted.

Zelle is owned and operated by the biggest banks in the US, it's basically like using your own bank. You do not even have to use the Zelle app, you can just log into your bank's app and transfer money from there. And sure, there would have been no need for it to exist had the US government done its job 20+ years ago as opposed to waiting until the 2020s, but the reality is that most Americans have been able to instan…

Isn't that a problem? The biggest banks got together and created a new network for transfers, and charge all the smaller banks fees to access it? It sounds like another method of crushing competition.

Well they allow any other bank/credit union to use it, and based on the fact that 1,600 financial institutions participate/80%+ of the US population, it must not be costly (or or is free).

It sounds like the US government was asleep at the wheel and the big banks got together and did what they had to to enable US residents to be able to instantly send money to each other electronically.

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