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I expect banks to start charging a $65 per transaction premium to interface with this system. FedACH, or "direct deposit", costs pennies wholesale [0]. The val

I 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 ago
Chase 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 ago
  Sadly, yes, for outgoing through Bank of America.
- jjeaff 7y ago
  But 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 ago
  I 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 ago
Venmo 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.
wahern 7y ago
The real cost to ACH is fraud, not the electronic processing, per se. The faster a payment settles the easier and more profitable fraud becomes as it makes it easier to cash out and run. Low fees, fast transfers, high volume/high value--you only get to pick two of the three. (Okay, maybe that doesn't quite work, but you get the idea.)
- woodruffw 7y ago
  I'm not exactly an expert on clearing, but isn't the reverse also true? FedACH's 24+ hour turnaround makes a whole slew of scams (e.g. fraudulent cash-in, legit cash-out[1]) possible that wouldn't be with an instantaneous system. [1]: I send you, good samaritan, $500 "by accident" and ask you to return it. You return it, my original transaction never clears, and I'm $500 richer.
  - wahern 7y ago
    That's how check kiting works, and AFAIU banks long ago stopped permitting withdrawal of funds that haven't cleared, unless they have other reasons to trust you or to claw back their money. Perhaps there still are modern equivalents to kiting. I dunno. But, yeah, in any event fraud is a real problem. It's why we can't have nice things, at least without paying an insurance premium.
- sneak 7y ago
  I think reversibility/non-immutability is one of the sides of this iron triangle, as Bitcoin currently supports all three you listed, but is a fraud risk because while you can transfer a practically unlimited amount globally for $1 in an hour, there is no “undo”, which is, in various ways, a blessing and a curse.
  - oarsinsync 7y ago
    Bitcoin holder and user for ~5 years here. As a comparison of two of those features, against Faster Payments (which is what the Fed is proposing creating a similar system to): Bitcoin is slow - it takes minimum 10 mins with high fees, or in times of congestion, hours or days with low fees. Faster payments takes minimum a few seconds, maximum 2 hours, for processing, no fees involved. Bitcoin is expensive - fees are variable depending on congestion on the network, and current value of BTC. Faster Payments charge nothing to transfer 0.01 - 100,000.00 GBP (in reality, 10k - 100k, depending on your bank. I have banks that allow 25k and 50k) in a single transaction. Bitcoin is a wonderful experiment, wonderful proof of trustless immutable transactions, but as far as a payment system goes, is only better in one way, and worse in many others.

mehrdadn 7y ago

Chase 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 ago
Sadly, yes, for outgoing through Bank of America.
jjeaff 7y ago
But 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 ago
I 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 ago

Venmo 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.

wahern 7y ago

The real cost to ACH is fraud, not the electronic processing, per se. The faster a payment settles the easier and more profitable fraud becomes as it makes it easier to cash out and run. Low fees, fast transfers, high volume/high value--you only get to pick two of the three. (Okay, maybe that doesn't quite work, but you get the idea.)

woodruffw 7y ago
I'm not exactly an expert on clearing, but isn't the reverse also true? FedACH's 24+ hour turnaround makes a whole slew of scams (e.g. fraudulent cash-in, legit cash-out[1]) possible that wouldn't be with an instantaneous system. [1]: I send you, good samaritan, $500 "by accident" and ask you to return it. You return it, my original transaction never clears, and I'm $500 richer.
- wahern 7y ago
  That's how check kiting works, and AFAIU banks long ago stopped permitting withdrawal of funds that haven't cleared, unless they have other reasons to trust you or to claw back their money. Perhaps there still are modern equivalents to kiting. I dunno. But, yeah, in any event fraud is a real problem. It's why we can't have nice things, at least without paying an insurance premium.
sneak 7y ago
I think reversibility/non-immutability is one of the sides of this iron triangle, as Bitcoin currently supports all three you listed, but is a fraud risk because while you can transfer a practically unlimited amount globally for $1 in an hour, there is no “undo”, which is, in various ways, a blessing and a curse.
- oarsinsync 7y ago
  Bitcoin holder and user for ~5 years here. As a comparison of two of those features, against Faster Payments (which is what the Fed is proposing creating a similar system to): Bitcoin is slow - it takes minimum 10 mins with high fees, or in times of congestion, hours or days with low fees. Faster payments takes minimum a few seconds, maximum 2 hours, for processing, no fees involved. Bitcoin is expensive - fees are variable depending on congestion on the network, and current value of BTC. Faster Payments charge nothing to transfer 0.01 - 100,000.00 GBP (in reality, 10k - 100k, depending on your bank. I have banks that allow 25k and 50k) in a single transaction. Bitcoin is a wonderful experiment, wonderful proof of trustless immutable transactions, but as far as a payment system goes, is only better in one way, and worse in many others.