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FedNow Is Live

federalreserve.gov

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Re: FedNow Is Live

#891

Post by rubyskills »

hathawsh wrote: post #634
wslh wrote: post #304

Earlier quoted context omitted.

What is innovative and/or well engineered there? Could any bank or financial institution connect seamlessly with the system? How does it handle security keys, transparency, and transaction log duration?

As I see it, the innovative part is that the service is push-only. With ACH and most other systems in the US, payees can pull from accounts, while FedNow has no support for forceful debits. That's a significant shift in the way we think about payments (for the better, IMHO). This has been done before by other service providers, but not by someone with this kind of influence and clout in the US.

We already have a push system called Check 21. You scan an image of a check and it will send the money instantly to the bank instead of through the Fed. It created after 9/11, as money couldn't move when the Fed was frozen.

Re: FedNow Is Live

#892

Post by connordoner »

slipperlobster wrote: post #621
hathawsh wrote: post #542

Earlier quoted context omitted.

Once the service provider is connected to the Fed (a somewhat complex process), it's normal software development. The client uses either MQI or JMS to send and receive messages; the messages are essentially ISO20022 XML. The development environment could be anything (any OS, any IDE). You interface those messages with your system of accounts. The Fed also provides a simple web UI and a testing network where you can t…

That's really interesting. I worked in PCI (payment cards industry) and we had terminals we could relay the ISO8583 messages through, eventually opting to emulate via software for obvious reasons. Always so cool to hear about this sort of stuff.

For someone entirely outside of the payments space, what are those obvious reasons please?

Re: FedNow Is Live

#893

Post by psd1 »

rkagerer wrote: post #484
ke88y wrote: post #433

Earlier quoted context omitted.

At the very least, one would hope that credentials and perhaps also certain design documents such as threat models aren't public. There may also be implementation details or code which are subject to NDA, either from the Fed itself or from service providers such as IBM in this case. Sometimes you can get that info from a FOIA request, but that doesn't negate the fact that the employees working on the system are bound…

certain design documents such as threat models aren't public That smells like security through obscurity (which admittedly is the status quo in the banking world). Contrasted to approaches like Bitcoin, for which full code and whitepaper are public, and which has managed to survive every attack vector thrown at it for the last decade and a half. Not arguing for Bitcoin as money here, just highlighting the diverse app…

I can't agree that Bitcoin has survived every attack vector, given the animosity over the BTC fork.

Re: FedNow Is Live

#894

Post by oblio »

dboreham wrote: post #158
tjpnz wrote: post #149

I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.

The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing. Same for importing drugs from other countries. And on and on.

> The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing.

Why is it horrible?

Re: FedNow Is Live

#895

Post by mattsan »

_delirium wrote: post #791
elyobo wrote: post #757

Earlier quoted context omitted.

People outside the US stopped using cheques ~decades ago. At 40+ from New Zealand I've literally never paid anyone with one and have been paid with them only a handful of times.

Oddly, given the context of this thread, the UK is an exception. Or at least it was until a few years ago (I left in 2019). They have Faster Payments, but they also still use (used?) cheques more often than any other non-US country I've interacted with. For example, a number of UK universities still do (or until recently did?) expense reimbursements in the form of paper cheques, when reimbursing people not employed b…

I've never used or seen cheques been used. Anecdotal though.

Re: FedNow Is Live

#896

Post by stephen_g »

aidenn0 wrote: post #436
HoyaSaxa wrote: post #298

For those curious, it is really using IBM MQ[1] under the hood and uses a bespoke flavor of the ISO 20022 specification. The FedNow Service itself is the tip of the iceberg in terms of what actually happens from an end-to-end perspective. We've been working to become a Certified Service Provider so feel free to ask me anything. I'm happy to share anything that is not under NDA. [1] https://www.ibm.com/products/mq

Is the eventual end-game that I can send money from my account at Bank A, to a friend's account at Bank B to split a check at dinner without using a third party like Venmo?

From the perspective of most people from other developed countries, it’s honestly incredible that the US hasn’t already had this for years like we all have…

Re: FedNow Is Live

#897

Post by carlosjobim »

astrange wrote: post #707
carlosjobim wrote: post #229

Earlier quoted context omitted.

Because you get bombed if you don't accept it. There's no "we have allowed", it is "they have imposed", and you and I were born into a slave system. Thank God there are ways to escape, such as crypto and foreign accounts.

You can't escape the US of all places with foreign accounts. You're actually famously unable to do that.

I agree, American subjects have a much harder time to escape with foreign accounts, but where there's a will there's a way. The US also has some interesting domestic solutions, since it's a union of states.

Re: FedNow Is Live

#898

Post by spiralx »

nimbleplum40 wrote: post #368
imtringued wrote: post #270

Earlier quoted context omitted.

>Unless you want savings limits and expiry dates on your money. I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well. This is particularly relevant with deb…

Savings and debt in an economy are related, but not 1:1. See the money multiplier [1]. [1] https://en.m.wikipedia.org/wiki/Money_multiplier

Which, as the article says, is an inaccurate model of how modern monetary economies actually work. Bank loans create new money, they don't lend out existing deposits, and repayments destroy that money. Reserve requirements - in countries that have them - don't affect whether a loan can be made or not.

Re: FedNow Is Live

#899

Post by bostik »

_delirium wrote: post #791
elyobo wrote: post #757

Earlier quoted context omitted.

People outside the US stopped using cheques ~decades ago. At 40+ from New Zealand I've literally never paid anyone with one and have been paid with them only a handful of times.

Oddly, given the context of this thread, the UK is an exception. Or at least it was until a few years ago (I left in 2019). They have Faster Payments, but they also still use (used?) cheques more often than any other non-US country I've interacted with. For example, a number of UK universities still do (or until recently did?) expense reimbursements in the form of paper cheques, when reimbursing people not employed b…

The only time I've seen a cheque in the decade since I moved to UK has been from DVLA. They send refund as a cheque, and for relatively small amounts likely expect a significant fraction of people to never cash it in because handling the bloody things is just annoying.

My bank's mobile app supports cashing them in via camera. Niche use case, but nice to have it for this attempt at government agency nickle-and-diming the populace.

Re: FedNow Is Live

#900

Post by TheBengaluruGuy »

hardwaresofton wrote: post #788
TheBengaluruGuy wrote: post #631

In India, there’s something similar to FedNow called UPI — “Unified Payments Interface” that really disrupted the market completely about 7 years ago — it is interoperable, works instantly and has no charges. It was phenomenal how that grew and got adopted, keen to see how FedNow changes the American payments systems.

Do you think that eventually UPI will be a vector for more efficient taxation? IIRC India has relatively high tax rates, but has struggled with collection in the past -- maybe I'm being overly paranoid, but UPI seems like the perfect mix of usefulness and convenience to get everyone hooked, then once it's widely adopted enough (let's say 80/90%+ of payments) a sales tax could be enforced. I don't know the specifics o…

>I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.

UPI connects with your bank account -- that's the only way it works. So the identification that UPI has, will be same as that of what the bank account requires. Typically, higher the amount, more the IDs required to keep the account active.

> IIRC India has relatively high tax rates, but has struggled with collection in the past ....

The way tax evasion primarily happened in india was through cash payments. When you rotate money in cash, it's really hard to trace it back. Now with UPI becoming mainstream, the thing that is now accessible to govt is your day-to-day transaction history.

> once it's widely adopted enough (let's say 80/90%+ of payments)

UPI already is >80% of all consumer digital transactions (as per this article - https://bfsi.economictimes.indiatimes.com/news/fintech/upi-d... )

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