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How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system

How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system? Are banks resisting it and if yes, why would they?

mixmastamyk 6y ago
Special interests like it that way.
bichiliad 6y ago
There's a profit to be made on the funds held while seemingly-instant transactions settle. When you Venmo someone money, you send money to their Venmo account, which has to go through the 1-to-three-day-long ACH process to get to your actual bank account. If money sits in your Venmo account, interest can be accrued on it[0]. Plus, Venmo (and PayPal) has interest in being a trusted brand in financial transactions of other sorts, I'm sure. PayPal has a credit product now, for example. I would not be surprised if they have a rent-seeking lobbying interest in making federal bank transactions remain a worse experience than their own service. [0]:https://www.marketplace.org/2018/02/20/what-are-apps-venmo-doing-your-money/ https://www.marketplace.org/2018/02/20/what-are-apps-venmo-d...
jiqiren 6y ago
Because there are already alternatives for transactions that have to instantly settle - like SWIFT or FedWire.
- Qworg 6y ago
  Neither are instant.
throw0101a 6y ago
> is still not equipped with such a system? Inertia, at least partially. It's why chip-and-pin is still not a thing in many places: Old School credit card POS devices were distributed to a lot of places over the years, and those only had the magnetic strip readers. Replacing is time consuming and no one wants to go through the expense and effort of changing it in all the places that they're in (e.g., gas pumps). Sometimes it's handy to be a late/delayed adopter of technology and to skip a generation or two.
- AnssiH 6y ago
  This is often said to be the reason, but that alone does not explain it IMO. Chip-cards replaced old cards here in 2006. During those 14 years every reader has already been updated several times, including gas pumps. So it seems somehow the US has a much lower rate of updating readers - I'd really like to know why that is... Maybe the merchant services market is somehow radically different?
reaperducer 6y ago
How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system? Because, as pointed out in other comments, the United States pioneered electronic finances when the rest of the world's banks were still settling their accounts at the end of the day by dragging cartloads of paper money and gold bars from branch to branch. You're welcome.
- ra7 6y ago
  None of the “you’re welcome” snark changes the fact that there is inertia and a lack of intent to disturb an already existing payments infrastructure for a better one.
bitxbit 6y ago
It’s by design to extract fees and etc.

mixmastamyk 6y ago

Special interests like it that way.

bichiliad 6y ago

There's a profit to be made on the funds held while seemingly-instant transactions settle. When you Venmo someone money, you send money to their Venmo account, which has to go through the 1-to-three-day-long ACH process to get to your actual bank account. If money sits in your Venmo account, interest can be accrued on it[0]. Plus, Venmo (and PayPal) has interest in being a trusted brand in financial transactions of other sorts, I'm sure. PayPal has a credit product now, for example. I would not be surprised if they have a rent-seeking lobbying interest in making federal bank transactions remain a worse experience than their own service. [0]:https://www.marketplace.org/2018/02/20/what-are-apps-venmo-doing-your-money/ https://www.marketplace.org/2018/02/20/what-are-apps-venmo-d...

jiqiren 6y ago

Because there are already alternatives for transactions that have to instantly settle - like SWIFT or FedWire.

Qworg 6y ago
Neither are instant.

throw0101a 6y ago

> is still not equipped with such a system? Inertia, at least partially. It's why chip-and-pin is still not a thing in many places: Old School credit card POS devices were distributed to a lot of places over the years, and those only had the magnetic strip readers. Replacing is time consuming and no one wants to go through the expense and effort of changing it in all the places that they're in (e.g., gas pumps). Sometimes it's handy to be a late/delayed adopter of technology and to skip a generation or two.

AnssiH 6y ago
This is often said to be the reason, but that alone does not explain it IMO. Chip-cards replaced old cards here in 2006. During those 14 years every reader has already been updated several times, including gas pumps. So it seems somehow the US has a much lower rate of updating readers - I'd really like to know why that is... Maybe the merchant services market is somehow radically different?

reaperducer 6y ago

How come the US -- the biggest economy in the world, and home of the most sophisticated banking sector on the planet -- is still not equipped with such a system? Because, as pointed out in other comments, the United States pioneered electronic finances when the rest of the world's banks were still settling their accounts at the end of the day by dragging cartloads of paper money and gold bars from branch to branch. You're welcome.

ra7 6y ago
None of the “you’re welcome” snark changes the fact that there is inertia and a lack of intent to disturb an already existing payments infrastructure for a better one.

bitxbit 6y ago

It’s by design to extract fees and etc.