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The Fed is getting into the Real-Time payments business
- daeroth 7y agoSome real-time payment infrastructures to compare to: UK - Faster Payments Service (2008) https://en.wikipedia.org/wiki/Faster_Payments_Service https://en.wikipedia.org/wiki/Faster_Payments_Service EU - SEPA Instant Credit (2017) https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#SEPA_Instant_Credit_Transfer https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#SEPA... Australia - New Payments Platform (2018) https://en.wikipedia.org/wiki/New_Payments_Platform https://en.wikipedia.org/wiki/New_Payments_Platform
- ggm 7y agoNPP has been hugely beneficial for p2p. I've used it and now trust it implicitly, as a mechanism. Being stuck in cheque clearing bank settlement delay is a royal pain. International funds clearance and KYC remain problems.
- aussiegeek 7y agoNPP is on it's way to being really handy, but it still sucks that I have to hack things to force NPP for some payments (ie. CommBank will only use NPP for PayID payments, but banks like Up will use NPP for transfers for a BSB/Account number if the receiving banks supports it, not all banks are fully on the platform yet) The downside is my teenagers can now shake me down for cash remotely
- natal60 7y agoNPP is a joke. There's a limit of $1,000 for transfers. It doesn't always work if you don't use a PayID. Compare that to Faster Payments which easily works with 250k with or without a PayID
- stephen_g 7y agoThat transaction limit is only a bank imposed limitation - while out of the ones I checked, Commonwealth (and I assume some other) does have a $1K daily limit for personal accounts, various other banks appear to have higher limits or just use the regular transaction limit (which you can usually choose yourself).
- ggm 7y agoIf you regularly need to move 250k sums electronically inside the Australian economy, using this kind of mechanism, I'd love to know what you're doing. Only because I am nosy: I cannot conceive of transactions on this level which demand NPP class behaviour.
- zwkrt 7y agoI think the idea is that it is very common to transact in amounts >$1000. Rent, car payment, direct deposit, etc.
- obtino 7y ago> If you regularly need to move 250k sums electronically inside the Australian economy. Paying sub-contractors, settling property transactions, the list goes on. When buying a house, I remember having to withdraw $60k in cash from my savings bank account and walking over and depositing it in another because it would take the other bank 3 working days to clear a bank-cheque. Some banks do offer an over-night inter-bank mechanism, but surprisingly CommBank does not.
- ggm 7y agoI don't think it was designed for what you want to do. Interesting problem: fast efficient payment of GST-incurring and other taxable money in a low doc manner.
- obtino 7y ago> NPP is a joke. There's a limit of $1,000 for transfers. It doesn't always work if you don't use a PayID. ANZ have a $5000 limit. It's down to the bank to enforce this.
- deleted 7y ago[deleted]
- trazire 7y agoAlso, despite not technically being a governmental operation, see https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface, from India.
- os7borne 7y agoCame here to say this. UPI is quite revolutionary. Launched in 2016 [0], UPI handles 882.3 million transactions with ~USD 21 billion in transaction value [1], as of July, 2019. UPI is designed to be a payment utility by National Payments Corporation of India (NPCI). NPCI is not a governmental organisation but is formed by a collective of 56 Indian Banks including 10 core banks [2]. [0] - https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface [1] - https://www.medianama.com/2019/08/223-upi-transactions-grew-9-to-822-3m-in-july-2019-rs-146386-6-cr-transacted/ https://www.medianama.com/2019/08/223-upi-transactions-grew-... [2] - https://www.npci.org.in/about-us-background https://www.npci.org.in/about-us-background
- digianarchist 7y agoHopefully Canada next and no, Interac isn't an equivalent service.
- thinkloop 7y agoWhy isn't interac equivalent?
- digianarchist 7y agoInterac is designed for consumer-to-consumer transactions and isn't automated like these systems.
- josu 7y agoMexico - SPEI (2004) http://www.anterior.banxico.org.mx/sistemas-de-pago/servicios/sistema-de-pagos-electronicos-interbancarios-spei/interbanking-electronic-payme.html http://www.anterior.banxico.org.mx/sistemas-de-pago/servicio...
- close04 7y agoEU - TIPS (2018) https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...
- shamir 7y agoDon't forget the best of them all India - UPI (2016) https://www.npci.org.in/product-overview/upi-product-overview https://www.npci.org.in/product-overview/upi-product-overvie...
- deleted 7y ago[deleted]
- scardine 7y agoBrazil - Sistema de Pagamentos Brasileiro (Brazilian Payment System) 2002 https://www.bcb.gov.br/en/financialstability/paymentsystem https://www.bcb.gov.br/en/financialstability/paymentsystem > Guidelines for the Brazilian Instant Payments Ecosystem: The Brazilian instant payments ecosystem will have a flexible and open participation structure and will be similar to the existing interbank electronic funds transfer (TED)—with greater availability, speed, and simpler addressing of payments. The transactions will be performed in a simple and fast way to different beneficiaries. Moreover, the BCB (Brazilian Central Bank) will develop a single settlement infrastructure.
- noneeeed 7y agoWhile BACS' 24h clearing of interbank transfers was normally ok, FasterPayments really makes having multiple accounts split across bank's super convenient. My wife and I both have our own accounts with Barclays and joint accounts (and mortgage) with Nationwide, and I have a Monzo account for small day to day expenses. It takes me less than a minute to open the Barclays app, transfer some money to the joint account, and then open the Nationwide app to confirm the balance and do whatever I needed to do from there. Total money management game changer. I've done a four hop transfer from my savings to overpay the mortgage, in about three minutes.
- ForHackernews 7y agoRIP Zuckbucks ️ This removes a huge part of the mainstream rationale for digital alternative currencies.
- FourScore 7y agoWhich in itself is one of the biggest rationales for developing such a system. The Fed really has a third unspoken directive: maintain dollar supremacy.
- thinkloop 7y agoNot so unspoken, Mnuchin on July 15: "Treasury takes very seriously the role of the US Dollar as the world's reserve currency, and will continue our efforts to protect our country". https://m.youtube.com/watch?v=zAICzg8ir50&t=370&feature=youtu.be https://m.youtube.com/watch?v=zAICzg8ir50&t=370&feature=yout...
- bhl 7y agoMaybe in the United States, but I would still wager there would be interest for a Facebook's digital currency in countries with more volatile, native currencies.
- faceyspacey 7y agoMy guess is Libra (and everything else going on in the crypto world) will have 5 years before FedNow is out. A lot can happen in that time.
- Proven 7y agoWrong. Libra can still provide hassle-free currency access from within supporting apps and Web sites. Also it can provide "free" transactions whereas FedNow won't be free. For 99% of legal money senders this removes the need to consider Bitcoin or most shitcoins. The only use case left for crypto, which Bitcoin itself has somewhat neglected, is anonymous uncensored payments. And that's the one that doesn't work because it's extremely hard to get in and out without being noticed.
- vinay427 7y agoI'm still hoping for something similar where I currently live, here in Switzerland (not in the EU). Payments generally arrive the next business day but that isn't good enough for most in-person transactions.
- adventured 7y agoIs Switzerland working on something along those lines now? I'm surprised, given the outsized Swiss position in global banking, that they're not among the leaders on this front.
- trazire 7y agoSwitzerland has access to SEPA, I believe, as a member of the European Free Trade Association. I don't think it's widely accepted.
- Double_a_92 7y agoThat just works with € transactions, and it's still not instant. But yeah every ebanking software offers SEPA transactions.
- Double_a_92 7y agoSwiss banks are not leaders on anything now... They are just expensive. I pay 10 swiss francs per month to have an account and card there. And they still want 5 more so I can make more than 10 transactions a month (which I want since I started paying contactless in shops). And there aren't really any good alternatives, any bank is like that.
- vinay427 7y agoIf I lived here and wasn't eligible for a student account as I am now, I might honestly consider just using one of the US accounts which allows for free ATM withdrawals anywhere. It seems absurd to have to pay a monthly fee just to have an account. There do at least seem to be a few free (with no minimum balance) app-based checking/private accounts.
- 0xDEFC0DE 7y agoGood lord, that's an awful name for something like that.
- themattress 7y agoYea, sounds like a grubhub competitor.
- MrRadar 7y agoKeep in mind that what the Fed is building will just be a backend service for facilitating instant money transfers, not an end-user product. It will be up to the banks to develop the front-end for their customers to use.
- blackdogie 7y agoEspecially for something that’s actually not available now but in five years ...
- lioeters 7y agoFedLater℠ Service.. Joking aside, this area is ripe for an overhaul/redesign, and I'm glad they're working towards it. > The rapid evolution of technology presents a pivotal opportunity for the Federal Reserve and the payment industry to modernize the nation's payment system and establish a safe and efficient foundation for the future.
- btown 7y ago> [Interoperability between all banks has] been one of the arguments for blockchain-based payment systems like Facebook's (FB) Libra, which would circumvent the need for third-party payment settlement. During two Congressional hearings on Libra last month, some lawmakers called on the Fed to create a real-time payment system itself rather than having to rely on a network developed by Facebook. It's a reminder that blockchain solutions aren't as useful if there actually is a trusted central entity, upon whose sterling reputation the global economy relies in the first place, to record transactions. And it does speak to a mission to regulate and facilitate interstate commerce. If they get the branding and execution right this could be huge for enabling micro-entrepreneurship. Of course, they won't get it right, but one can dream.
- lykr0n 7y agoFedACH is already widely used- this makes perfect sense. All US Banks are part of the Federal Reserve system, so it makes sense for the FRB (which is the entity being discuessed here) to drive this with the help of each Federal Reserve branch.
- kevas 7y agoHow does effect Visa & MasterCard
- gst 7y agoBoth companies already offer real-time payment services: Visa: https://developer.visa.com/capabilities/visa_direct https://developer.visa.com/capabilities/visa_direct Mastercard: https://www.mastercard.us/en-us/issuers/products-and-solutions/customer-needs/consumer-solutions/mastercardsend.html https://www.mastercard.us/en-us/issuers/products-and-solutio... According to https://www.forbes.com/sites/tomgroenfeldt/2019/03/15/visa-direct-is-the-engine-behind-zelle-and-venmo/ https://www.forbes.com/sites/tomgroenfeldt/2019/03/15/visa-d... >50% of Uber/Lyft drivers opt to pay a 50 cent fee to get paid in real-time instead of via ACH.
- stephen_g 7y agoComing from a country that has had a modern payments system like this for a while - you generally still use a credit card for anything online or at stores, in an Uber or taxis, but use the real time bank payment system for paying invoices and bills, or buying a car from somebody, or sending $12 to your friend in real time because he paid for your lunch etc.
- kevas 7y agoWhy? Why opt for two when one, I presume, is sponsored by the gov and accepted everywhere in your country?
- asutekku 7y agoWhat do you mean? There’s usually no way to pay without credit card / debit card / cash in most countries. Contactless payments are still not as popular as they could be.
- LowLevelHacker 7y agoFees
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- xvilka 7y agoYes, it is always ridiculous that bank transfers are so slow in the era of fighting for every split second in the high frequency trading.
- cwt137 7y agoEven with frequency trading, I think the trades still settle like 3 days later.
- ianhawes 7y agoI expect banks to start charging a $65 per transaction premium to interface with this system. FedACH, or "direct deposit", costs pennies wholesale [0]. The value proposition of Venmo/Zelle is not just that they're instant, but that the fees are not insane. Compare that to retail banks which charge upwards of $35 for a "next-day ACH". The Fed should impose fee caps to encourage adoption. [0] https://www.frbservices.org/resources/fees/ach-2019.html https://www.frbservices.org/resources/fees/ach-2019.html
- mehrdadn 7y agoChase has free instant ACH to your own accounts now. Though some suspect it's using Zelle under the hood.
- gst 7y ago> Compare that to retail banks which charge upwards of $35 for a "next-day ACH". Is that still common? None of my banks / credit unions charges for incoming or outgoing ACH transfers.
- ianhawes 7y agoSadly, yes, for outgoing through Bank of America.
- jjeaff 7y agoBut they most likely are not same or next day. Mine take 3-5 days to go through. The banks are making money on the float.
- astrange 7y agoI think they’re talking about wire transfers. Those are $35 at one bank I use (which automates them) and free at another (which makes you call someone and fill out PDFs in triplicate).
- jjeaff 7y agoVenmo is free for non-commercial uses and there are weekly or monthly limits. If you want to accept venmo for commercial purposes or more cash than is usually allowed, they charge you as if it were a credit card transaction. 2.9% + 0.30. Also, PayPal owns venmo now.
- beefman 7y agoBetter source: https://www.paymentsjournal.com/fed-to-create-real-time-payment-network/ https://www.paymentsjournal.com/fed-to-create-real-time-paym... Edit: Also submitted here https://news.ycombinator.com/item?id=20616846 https://news.ycombinator.com/item?id=20616846 with this even better source https://www.federalreserve.gov/newsevents/pressreleases/other20190805a.htm https://www.federalreserve.gov/newsevents/pressreleases/othe...
- HashThis 7y agoThe Fed is probably doing this to fend of Facebook Libra. Walls Street is probably wanting to prevent Facebook Libra from money flows.
- incompatible 7y agoWhen will Libra go live? The Fed system will "aim to launch in 2023 or 2024".
- wmf 7y agoIt kind of looks like Congress is going to delay Libra until Facebook gives up.
- incompatible 7y agoDoes Facebook need permission from Congress to launch?
- wmf 7y agoWorst-case Congress can pass a law imposing onerous requirements on digital currencies backed by a basket of something. Best-case Libra has to comply with a bunch of existing money transfer regulations that were never written with cryptocurrency in mind and thus are open to interpretation; various agencies may choose stricter or looser interpretations depending on which way the winds are blowing.
- digsy 7y agoThe Fed has been using same day ACH (which was really 1/2 day settlement) since 2016. And they were sending signals pretty soon after the launch that they were wanted real-time payments. I believe that pre-dates Libra but quite some time.
- westurner 7y agoThis system will need to interface with other domestic and international settlement and payments networks. There is thus an opportunity for standards, a need for federation, and a need to make it easy for big players to offer liquidity. As far as I understand, e.g. Ripple and Stellar solve basically exactly the 24x7x365 RTGS problem that FedNow intends to solve; and, they allow all sorts of assets to be plugged into the network. Could FedNow just use a different UNL (Unique Node List) with participating banks operating trusted validators and/or offering liquidity ("liquidity provisioning")? Notably, Ripple is specifically positioned to do international interbank real time gross settlement (RTGS) and remittances. Ripple could integrate with FedNow directly. Most efficiently, if it complies with KYC/AML requirements, FedNow could operate an XRP Ledger. Or, each bank could operate XRP Ledgers. https://xrpl.org/become-an-xrp-ledger-gateway.html https://xrpl.org/become-an-xrp-ledger-gateway.html Getting thousands of banks to comply with an evolving API / EDI spec is no small task. Blockchain solutions require API compliance, have solutions for governance where there are a number of stakeholders seeking to reach consensus, and lack single points of failure. Here's to hoping that we've learned something about decentralizing distributed systems for resiliency. >> In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied. Of the approximately 150 validators today, Ripple runs only 10. Unlike Bitcoin and Ethereum — where one miner could have 51 percent of the hashing power — each Ripple validator only has one vote in support of an exchange or ordering a transaction. https://news.ycombinator.com/item?id=19195050 https://news.ycombinator.com/item?id=19195050 So, you want to get banks onboard with only one s'coin USD stablecoin; but you don't want to deal with exchanges or FOREX or anything because that's a different thing? And, this is not just yet another ACH with lower clearance time? > Interledger Architecture https://interledger.org/rfcs/0001-interledger-architecture/ https://interledger.org/rfcs/0001-interledger-architecture/ > Interledger provides for secure payments across multiple assets on different ledgers. The architecture consists of a conceptual model for interledger payments, a mechanism for securing payments, and a suite of protocols that implement this design. > The Interledger Protocol (ILP) is the core of the Interledger protocol suite. Colloquially, the whole Interledger stack is sometimes referred to as "ILP". Technically, however, the Interledger Protocol is only one layer in the stack. > Interledger is not a blockchain, a token, nor a central service. Interledger is a standard way of bridging financial systems. The Interledger architecture is heavily inspired by the Internet architecture described in RFC 1122, RFC 1123 and RFC 1009. [...] > You can envision the Interledger as a graph where the points are individual nodes and the edges are accounts between two parties. Parties with only one account can send or receive through the party on the other side of that account. Parties with two or more accounts are connectors, who can facilitate payments to or from anyone they're connected to. > Connectors provide a service of forwarding packets and relaying money, and they take on some risk when they do so. In exchange, connectors can charge fees and derive a profit from these services. In the open network of the Interledger, connectors are expected to compete among one another to offer the best balance of speed, reliability, coverage, and cost. Why should we prefer an immutable, cryptographically-signed blockchain solution over SQL/BigTable/MQ for FedNow? Blockchain and payments standards: https://news.ycombinator.com/item?id=19813340 https://news.ycombinator.com/item?id=19813340 ... Here's the notice and request for comment PDF: "Docket No. OP – 1670: Federal Reserve Actions to Support Interbank Settlement of Faster Payments" https://www.federalreserve.gov/newsevents/pressreleases/files/other20190805a1.pdf https://www.federalreserve.gov/newsevents/pressreleases/file... "Federal Reserve announces plan to develop a new round-the-clock real-time payment and settlement service to support faster payments" https://www.federalreserve.gov/newsevents/pressreleases/other20190805a.htm https://www.federalreserve.gov/newsevents/pressreleases/othe...
- Bungbung 7y agoThe are actually/ could actually be talking about xrapid blockchain inter ledger protocol from Ripple, to settle within 3-5 seconds, they just can't say it yet.
- joelbondurant 7y agoBitcoin
- throwawayForMe2 7y agoGood amount of detail here including flow: https://www.federalreserve.gov/newsevents/pressreleases/files/other20190805a1.pdf https://www.federalreserve.gov/newsevents/pressreleases/file... “...In its simplest form, a completed payment through the FedNow Service involving two participating banks would have the following steps.103 To start, a sender would initiate a payment through its bank, by submitting instructions to it using an end-user interface outside the FedNow Service. After the sender’s bank authenticates the sender and validates the payment, it would submit a payment message to a Reserve Bank using the FedNow Service. The FedNow Service would authenticate the sender’s bank and validate the payment message, for example, by verifying that the message meets the FedNow format specifications. Before the Reserve Bank executes the payment message, the service would place a provisional hold on funds in the master account of the sender’s bank and would then send an inquiry message to the receiver’s bank seeking confirmation that the receiver’s bank, among other things, maintains a valid account for the receiver included in the payment message received by the Reserve Bank. If the receiver’s bank sends a positive response to the inquiry, the FedNow Service would execute the payment for the Reserve Banks by sending a payment message forward with an advice of credit to the receiver’s bank and nearly simultaneously processing a final debits and final credit to the master accounts of the sender’s bank and receiver’s bank, respectively.104 The banks are responsible for debiting and crediting their customers’ accounts and providing further notification to their customers that the payment has been completed. The entire process would take place within seconds...”
- thinkloop 7y agoDo these kinds of initiatives reduce privacy by centralizing all transactions at a single entity?
- pcdoodle 7y agoFedNow. That's a horrible name!
- pencal 7y agodelivered in 2024? quite a long timeline for a realtime payment system.