12 ms·

Nearly all first world countries enjoy instant payments at the point of sale and person to person. It boggles my mind that it has taken this long and a pandemic

Nearly all first world countries enjoy instant payments at the point of sale and person to person. It boggles my mind that it has taken this long and a pandemic to even set the gears in motion, all while battling ridiculous levels of cheque and credit card fraud.

mixmastamyk 6y ago
Not to mention potentially malicious rent-seeking third parties inserted and selling financial info.
- orthecreedence 6y ago
  Why is this downvoted? We have three major credit bureaus, and only just recently one got hacked and leaked everyone's info. Finance in the US is full of third-party jackasses that make money by doing nothing other than acting as gatekeepers. It's the definition of rent-seeking.
  - mixmastamyk 6y ago
    Yes, was also thinking unnecessary players like venmo or mobile pay. Weren't needed in places with modern banking.
kome 6y ago
Americans have such a strange relationship with technology... the most innovative startups, and yet the worse infrastructure. here in Europe it's the contrary :) and btw: the service will be active in 2023 or 2024... while I enjoy immediate transfers bank to bank since years...
- api 6y ago
  Its because a generation or two of Americans were propagandized heavily that anything socialized will immediately lead to Soviet communism. If we build infrastructure Lenin will rise from the dead and transform into a giant mech warrior and wade across the Atlantic to destroy us all.
  - pacaro 6y ago
    I would watch this movie
    - api 6y ago
      It's called Red Dawn and it's awesome.
- qzx_pierri 6y ago
  Germany?
- kelnos 6y ago
  Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn from your mistakes when they do their first implementation. On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. It's rare for places in the US (at least in fairly well-populated areas) to not take credit or at least debit cards.
  - Swizec 6y ago
    > On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. This is mostly for tax evasion reasons and sometimes for employees skimming off the top. The more “proper” a place, the less likely they are to encourage cash transactions. Happens in US too, of course. It’s always the shady places that are cash only and everyone else is digital.
    - chiph 6y ago
      Or it's Germany. They prefer cash over plastic for privacy reasons. https://www.npr.org/2019/06/09/728323278/for-many-germans-cash-is-still-king https://www.npr.org/2019/06/09/728323278/for-many-germans-ca...
    - pfundstein 6y ago
      That's a bit cynical. While I'm not saying that doesn't happen, I would say that smaller businesses typically accept cash-only to avoid the fees of accepting card payments. And this is not only the 1-2% transaction fee charged by (e.g.) Visa/Mastercard, these fees also include things like * Fees for the rental and maintenance of payment card terminals. * Gateway fees. * Cost of fraud prevention services. * Fees or premiums to insure against ‘forward delivery risk’ All of this erodes the already thin margins that small businesses typically operate at. And then you have cash: no fees, instant payment, private.
- phkahler 6y ago
  >> the most innovative startups, and yet the worse infrastructure. Nobody in the US wants to pay for infrastructure. It's the governments role, but political figures want to spend our money in less critical ways.
  - adventured 6y ago
    This isn't unique to the US of course: the US is spending a higher share of its GDP on infrastructure than the EU is at this point. The welfare state in both Europe and the US is consuming all available resources, and that's only going to get far worse over the next 20-30 years due to aging and contracting workforces. Most of Europe outside of Germany has zero available resources for big infrastructure spend. The US could divert $200 billion from its military spending (requiring a near total retreat from the rest of the world, including Europe, Japan and South Korea), however that would merely lessen the extreme budget deficit that already exists thanks to entitlement spending. That budget gap will grow dramatically over the coming decade. The US needs to raise taxes by $1.5 trillion just to break even.
dawnerd 6y ago
US has means of instant payments, it's just not standard across banks. There's lots of way other countries are far behind as well (like Canada having banks that still charge for every transaction you make).
- nucleardog 6y ago
  I wouldn’t say Canada is “far behind” because the banks like to rip people off. We’ve had a single unified payment network for like 40 years. We’ve had instantly settled electronic transfers (Interac e-Transfer) exposed to consumers directly through their institutions for about 20 years. We’ve had chip and pin and NFC contactless payments for quite a long time. And the rip off is really just the handful of big banks. My credit union (which is in another province but thanks to the unified network and mobile deposit, etc I’ve been able to continue using on the other end of the country without issue or inconvenience) provides free accounts with no per-transaction or other fees. They’re also happy to issue a loan or provide other services online. Obviously I’m not as familiar with the US system, but I think putting Canada anywhere near the same level as the US is a mistake.
  - patmorgan23 6y ago
    The US has a unified payment system (ACH) and has had it for many decades it's just not instant, usually takes 3 business days for a transaction to fully settle.
    - JumpCrisscross 6y ago
      > The US has a unified payment system (ACH) and has had it for many decades it's just not instant And for instantaneous transfers, we have Fedwire. The original real-time wire service. It’s free for most commercial and high net worth users, and thus, from a bulk economic perspective, sufficient for industry.
    - iagovar 6y ago
      So why isn't ACH used widespread?
peteretep 6y ago
> Nearly all first world countries And many poorer countries too -- pretty common here in Thailand to scan a QR code with someone's bank details in it to send them money, bank-to-bank, instantly.
crazygringo 6y ago
As a general rule, the US is terrible at a lot of first-world things for a good reason: because it was the first (or close). We have crappy old subways, airports, bridges, skyscrapers, and so on... because we built them early, versions 1.0. And they stuck around. Other countries had the luxuries of building their versions decades later, when the technology was 2.0 and 3.0 and so on. So the US is stuck with both old and crappier versions of a lot of stuff, but where it still doesn't make financial sense to rip them out and replace them with the newest. Our financial system suffers from a lot of similar flaws. E.g. by the time other countries knew enough to base their credit cards on chips+PIN, the US was still stuck with a legacy installed base of stripes+signatures. Money transfers is just one more example.
- pacaro 6y ago
  Banking in general and international banking, predate the US London, Glasgow, Budapest and Paris all have metro systems that predate the New York Subway There are multiple bridges that are still in use that predate European colonization of North America While the oldest airport is in the US, (College Park), Hamburg, Bucharest, Bremen, Rome, Amsterdam, Paris, Sydney all follow very shortly after AFAICT Skyscrapers is really the only example you give where the US canonically built the v1.0 I think that there are probably other reasons, my suspicion is primarily rent seeking
  - alasdair_ 6y ago
    I’m from Glasgow. Completely random fact ahead: The underground in Glasgow was comprised of orange trains. They “ran like clockwork” and had the nickname “the clockwork orange”, which is where the Stanley Kubrick movie title came from. Allegedly.
    - mayankkaizen 6y ago
      Holy shit! Never thought I'd get to know what Clockwork Orange actually means through a random comment on HN.
bestnameever 6y ago
> It boggles my mind that it has taken this long and a pandemic to even set the gears in motion The gears were set in motion prior to the Pandemic. They are just saying that the Pandemic reinforces the work they have been doing. "Since we initiated FedNow one year ago, we have been hitting our project milestones, and today I am pleased to announce the Federal Reserve Board has approved the core features and functionality based on extensive input from stakeholders."
rorykoehler 6y ago
It always feels like going back in time whenever an American requests a cheque. I haven't filled one in for over 15 years at this stage.
- Reelin 6y ago
  I don't use them very often but they still serve a purpose. You don't have to know the payment details for the receiving party, just their name. You don't need an electronic device or an internet connection. Of course you have to be more mindful about fraud when accepting one but in many scenarios they prove quite useful.
- riffraff 6y ago
  I am curious, what did you use to make significant one-time payments? E.g. house, or car. Where I'm from (Italy) we still use cheques, and where I live (Hungary) they never used them. This was odd for me. This resulted in people here buying expensive items by going around with a literal bag of money, or people having to walk into a bank together. Possibly now it's solved with instant payments and everyone having a mobile banking app, I don't know.
  - Sander_Marechal 6y ago
    Here in The Netherlands, instant electronic payments with your debit card (pinnen) has been widely available since 1990. People sometimes used cheques before that, but even then it was rare. Most large payments happened by "Acceptgiro". It's a form that the sender would mail to the bank to authorize a payment to another bank account. Not sure if there's a proper English name for it.
    - leokennis 6y ago
      Please note that "pin" transactions are not settled instantly. It's just that when you pay via pin, the vendor of the machine (most likely CCV or similar) guarantees the shop they get the money. The actual money transfers (the €5 you paid at some shop from your account to the pin terminal vendor, and the hourly or daily total for that shop from the vendor to the shop's internal account) take place hours after the fact. So for all parties involved it seems instant, but technology wise it's still more or less batched, but seems instant based on trust. Of course in The Netherlands, we have SEPA Instant Payments now (based on but not entirely the same as the European IP scheme). These are actually instant; when you pay, account balances of you and the creditor (at the other bank) are updated within 5 seconds.
boruto 6y ago
There is SEPA instant in Europe which is quite recent. But most banks charge to send money through it or have not implemented the sending part yet.
- usr1106 6y ago
  SEPA instant started November 2017. I have 3 banks in 2 SEPA countries, none of them is participating. Not that I would need it, because SEPA transfers which are "free", mandatorily offered by every bank and take only 1 banking day. But there could be use cases for instantaneously. https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
  - boruto 6y ago
    Not until 2019 did central banks started to ask banks to implement SEPA instant. Normal SEPA does not work in weekends just like ACH even though the core process is moving XML files to an shared FTP server. SEPA instant could be starting point for mobile based payments in Eurozone which is currently not present in anyway.
  - antihero 6y ago
    A whole day? That's absolute madness. Why does it take a day when money is electronic and nothing has to physically move?
    - boruto 6y ago
      The basic working is this, you give a SEPA transfer order to your bank in the afternoon. Your bank consolidates all the transfers for the day in a big XML file and puts it in an ftp server in the evening. Bundesbank pull it from there and puts the XML file in other banks ftp server. Other bank pull it from there and completes the transaction. In case the account does not exist or something happens the whole thing has to happen again to get your money back. This is similar to BACS in UK.
      - 6y ago

mixmastamyk 6y ago

Not to mention potentially malicious rent-seeking third parties inserted and selling financial info.

orthecreedence 6y ago
Why is this downvoted? We have three major credit bureaus, and only just recently one got hacked and leaked everyone's info. Finance in the US is full of third-party jackasses that make money by doing nothing other than acting as gatekeepers. It's the definition of rent-seeking.
- mixmastamyk 6y ago
  Yes, was also thinking unnecessary players like venmo or mobile pay. Weren't needed in places with modern banking.

kome 6y ago

Americans have such a strange relationship with technology... the most innovative startups, and yet the worse infrastructure. here in Europe it's the contrary :) and btw: the service will be active in 2023 or 2024... while I enjoy immediate transfers bank to bank since years...

api 6y ago
Its because a generation or two of Americans were propagandized heavily that anything socialized will immediately lead to Soviet communism. If we build infrastructure Lenin will rise from the dead and transform into a giant mech warrior and wade across the Atlantic to destroy us all.
- pacaro 6y ago
  I would watch this movie
  - api 6y ago
    It's called Red Dawn and it's awesome.
qzx_pierri 6y ago
Germany?
kelnos 6y ago
Two things (probably more) contribute to this, I think: 1) Americans have been trained from birth to distrust government in all forms. Centralizing more and more services triggers a visceral fear response. (IMO it's nonsense, for the most part, but it's there nonetheless.) 2) Being "first to market" with new technologies often means you're just stuck with the sub-optimal first version, while other countries can learn from your mistakes when they do their first implementation. On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. It's rare for places in the US (at least in fairly well-populated areas) to not take credit or at least debit cards.
- Swizec 6y ago
  > On the flip side, when I'm in Europe, I definitely run into more places that only take cash, which I find annoying to no end. This is mostly for tax evasion reasons and sometimes for employees skimming off the top. The more “proper” a place, the less likely they are to encourage cash transactions. Happens in US too, of course. It’s always the shady places that are cash only and everyone else is digital.
  - chiph 6y ago
    Or it's Germany. They prefer cash over plastic for privacy reasons. https://www.npr.org/2019/06/09/728323278/for-many-germans-cash-is-still-king https://www.npr.org/2019/06/09/728323278/for-many-germans-ca...
  - pfundstein 6y ago
    That's a bit cynical. While I'm not saying that doesn't happen, I would say that smaller businesses typically accept cash-only to avoid the fees of accepting card payments. And this is not only the 1-2% transaction fee charged by (e.g.) Visa/Mastercard, these fees also include things like * Fees for the rental and maintenance of payment card terminals. * Gateway fees. * Cost of fraud prevention services. * Fees or premiums to insure against ‘forward delivery risk’ All of this erodes the already thin margins that small businesses typically operate at. And then you have cash: no fees, instant payment, private.
phkahler 6y ago
>> the most innovative startups, and yet the worse infrastructure. Nobody in the US wants to pay for infrastructure. It's the governments role, but political figures want to spend our money in less critical ways.
- adventured 6y ago
  This isn't unique to the US of course: the US is spending a higher share of its GDP on infrastructure than the EU is at this point. The welfare state in both Europe and the US is consuming all available resources, and that's only going to get far worse over the next 20-30 years due to aging and contracting workforces. Most of Europe outside of Germany has zero available resources for big infrastructure spend. The US could divert $200 billion from its military spending (requiring a near total retreat from the rest of the world, including Europe, Japan and South Korea), however that would merely lessen the extreme budget deficit that already exists thanks to entitlement spending. That budget gap will grow dramatically over the coming decade. The US needs to raise taxes by $1.5 trillion just to break even.

dawnerd 6y ago

US has means of instant payments, it's just not standard across banks. There's lots of way other countries are far behind as well (like Canada having banks that still charge for every transaction you make).

nucleardog 6y ago
I wouldn’t say Canada is “far behind” because the banks like to rip people off. We’ve had a single unified payment network for like 40 years. We’ve had instantly settled electronic transfers (Interac e-Transfer) exposed to consumers directly through their institutions for about 20 years. We’ve had chip and pin and NFC contactless payments for quite a long time. And the rip off is really just the handful of big banks. My credit union (which is in another province but thanks to the unified network and mobile deposit, etc I’ve been able to continue using on the other end of the country without issue or inconvenience) provides free accounts with no per-transaction or other fees. They’re also happy to issue a loan or provide other services online. Obviously I’m not as familiar with the US system, but I think putting Canada anywhere near the same level as the US is a mistake.
- patmorgan23 6y ago
  The US has a unified payment system (ACH) and has had it for many decades it's just not instant, usually takes 3 business days for a transaction to fully settle.
  - JumpCrisscross 6y ago
    > The US has a unified payment system (ACH) and has had it for many decades it's just not instant And for instantaneous transfers, we have Fedwire. The original real-time wire service. It’s free for most commercial and high net worth users, and thus, from a bulk economic perspective, sufficient for industry.
  - iagovar 6y ago
    So why isn't ACH used widespread?

peteretep 6y ago

> Nearly all first world countries And many poorer countries too -- pretty common here in Thailand to scan a QR code with someone's bank details in it to send them money, bank-to-bank, instantly.

crazygringo 6y ago

As a general rule, the US is terrible at a lot of first-world things for a good reason: because it was the first (or close). We have crappy old subways, airports, bridges, skyscrapers, and so on... because we built them early, versions 1.0. And they stuck around. Other countries had the luxuries of building their versions decades later, when the technology was 2.0 and 3.0 and so on. So the US is stuck with both old and crappier versions of a lot of stuff, but where it still doesn't make financial sense to rip them out and replace them with the newest. Our financial system suffers from a lot of similar flaws. E.g. by the time other countries knew enough to base their credit cards on chips+PIN, the US was still stuck with a legacy installed base of stripes+signatures. Money transfers is just one more example.

pacaro 6y ago
Banking in general and international banking, predate the US London, Glasgow, Budapest and Paris all have metro systems that predate the New York Subway There are multiple bridges that are still in use that predate European colonization of North America While the oldest airport is in the US, (College Park), Hamburg, Bucharest, Bremen, Rome, Amsterdam, Paris, Sydney all follow very shortly after AFAICT Skyscrapers is really the only example you give where the US canonically built the v1.0 I think that there are probably other reasons, my suspicion is primarily rent seeking
- alasdair_ 6y ago
  I’m from Glasgow. Completely random fact ahead: The underground in Glasgow was comprised of orange trains. They “ran like clockwork” and had the nickname “the clockwork orange”, which is where the Stanley Kubrick movie title came from. Allegedly.
  - mayankkaizen 6y ago
    Holy shit! Never thought I'd get to know what Clockwork Orange actually means through a random comment on HN.

bestnameever 6y ago

> It boggles my mind that it has taken this long and a pandemic to even set the gears in motion The gears were set in motion prior to the Pandemic. They are just saying that the Pandemic reinforces the work they have been doing. "Since we initiated FedNow one year ago, we have been hitting our project milestones, and today I am pleased to announce the Federal Reserve Board has approved the core features and functionality based on extensive input from stakeholders."

rorykoehler 6y ago

It always feels like going back in time whenever an American requests a cheque. I haven't filled one in for over 15 years at this stage.

Reelin 6y ago
I don't use them very often but they still serve a purpose. You don't have to know the payment details for the receiving party, just their name. You don't need an electronic device or an internet connection. Of course you have to be more mindful about fraud when accepting one but in many scenarios they prove quite useful.
riffraff 6y ago
I am curious, what did you use to make significant one-time payments? E.g. house, or car. Where I'm from (Italy) we still use cheques, and where I live (Hungary) they never used them. This was odd for me. This resulted in people here buying expensive items by going around with a literal bag of money, or people having to walk into a bank together. Possibly now it's solved with instant payments and everyone having a mobile banking app, I don't know.
- Sander_Marechal 6y ago
  Here in The Netherlands, instant electronic payments with your debit card (pinnen) has been widely available since 1990. People sometimes used cheques before that, but even then it was rare. Most large payments happened by "Acceptgiro". It's a form that the sender would mail to the bank to authorize a payment to another bank account. Not sure if there's a proper English name for it.
  - leokennis 6y ago
    Please note that "pin" transactions are not settled instantly. It's just that when you pay via pin, the vendor of the machine (most likely CCV or similar) guarantees the shop they get the money. The actual money transfers (the €5 you paid at some shop from your account to the pin terminal vendor, and the hourly or daily total for that shop from the vendor to the shop's internal account) take place hours after the fact. So for all parties involved it seems instant, but technology wise it's still more or less batched, but seems instant based on trust. Of course in The Netherlands, we have SEPA Instant Payments now (based on but not entirely the same as the European IP scheme). These are actually instant; when you pay, account balances of you and the creditor (at the other bank) are updated within 5 seconds.

boruto 6y ago

There is SEPA instant in Europe which is quite recent. But most banks charge to send money through it or have not implemented the sending part yet.

usr1106 6y ago
SEPA instant started November 2017. I have 3 banks in 2 SEPA countries, none of them is participating. Not that I would need it, because SEPA transfers which are "free", mandatorily offered by every bank and take only 1 banking day. But there could be use cases for instantaneously. https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
- boruto 6y ago
  Not until 2019 did central banks started to ask banks to implement SEPA instant. Normal SEPA does not work in weekends just like ACH even though the core process is moving XML files to an shared FTP server. SEPA instant could be starting point for mobile based payments in Eurozone which is currently not present in anyway.
- antihero 6y ago
  A whole day? That's absolute madness. Why does it take a day when money is electronic and nothing has to physically move?
  - boruto 6y ago
    The basic working is this, you give a SEPA transfer order to your bank in the afternoon. Your bank consolidates all the transfers for the day in a big XML file and puts it in an ftp server in the evening. Bundesbank pull it from there and puts the XML file in other banks ftp server. Other bank pull it from there and completes the transaction. In case the account does not exist or something happens the whole thing has to happen again to get your money back. This is similar to BACS in UK.
    - 6y ago