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To my knowledge, the US doesn't yet have a central widespread instant-payment infrastructure (compared to the UK's Faster Payments[0]). The US Federal Reserve

To my knowledge, the US doesn't yet have a central widespread instant-payment infrastructure (compared to the UK's Faster Payments[0]). The US Federal Reserve is working on FedNow[1], but that's not going to be released until 2023. In the meantime, there are all number of financial-industry groups including the US Faster Payments Council[7] and The Clearing House[8]. Some are just industry groups, while others have actual systems in place. All of this has, in my opinion, led to a lot of fragmentation on the front-end. The only instant-payment platform I know of that is bank-endorsed is Zelle[4], owned by Early Warning Services[5], which is better known for their pseudo-credit reporting agency (that focuses on bank accounts instead of credit cards and loans[6]). You've also got a ton of third-party apps filling the space in the US, including Cash App[2] and Venmo[3]. Within all of this, VISA is in an interesting position, as I discovered when I—a credit union member—set up Zelle. When an institution is a member of Zelle, you tell you institution that you want to associate your phone number/email address with Zelle; the bank then does the rest of the work. As my credit union isn't a member of Zelle, I had to use their app to set up an account. After confirming that I don't have an account at a member bank, Zelle asked for my debit card information. Using that, I have been able to both send _and receive_ money instantly. I confirmed this when I received money, and saw it appear in my bank account within an hour of getting the Zelle notification. This is a power that I didn't know my debit card possesses. And it's why I think this investigation is important. I want to be able to move around smaller amounts of money without incurring fees, because that will hit hardest on those who can't afford it. [0]: https://www.fasterpayments.org.uk https://www.fasterpayments.org.uk [1]: https://www.frbservices.org/financial-services/fednow/index.html https://www.frbservices.org/financial-services/fednow/index.... [2]: https://cash.app https://cash.app [3]: https://venmo.com https://venmo.com [4]: https://www.zellepay.com https://www.zellepay.com [5]: https://www.earlywarning.com https://www.earlywarning.com [6]: https://checkingexpert.com/what-is-early-warning-services/ https://checkingexpert.com/what-is-early-warning-services/ [7]: https://fasterpaymentscouncil.org https://fasterpaymentscouncil.org [8]: https://www.theclearinghouse.org/payment-systems/rtp https://www.theclearinghouse.org/payment-systems/rtp

quesera 6y ago
> To my knowledge, the US doesn't yet have a central widespread instant-payment infrastructure I don't know how it compares to Faster Payments, but Visa has Visa Direct[0], and Mastercard has Mastercard Send[1]. Collectively "OCT", Original Credit Transaction, a/k/a Push-to-Debit. [0] https://developer.visa.com/capabilities/visa_direct https://developer.visa.com/capabilities/visa_direct [1] https://www.mastercard.us/content/mccom-admin/faq-category-admin/mastercardsend.html https://www.mastercard.us/content/mccom-admin/faq-category-a...
- Symbiote 6y ago
  Faster Payments integrates directly with banks, rather than card processors. It replaces (for transfers under £250k) the older electronic transfer system, BACS. Otherwise, it looks similar, although Visa/MC is an additional middleman compared to Faster Payments, which is just between the banks.
hakfoo 6y ago
I wonder how impactful things like FedNow can be, because AFAIK it doesn't have any sort of lending component built in. You can potentially route anything that would have been a debit card sale onto it, but that does nothing for the huge percentage of transactions done with an actual credit card, either for the purpose of revolving the charge, purchase-protection benefits, or farming rewards. I recall there was a brief period in the early 2000s when there were rewards on debit card purchases, back before the fees became regulated. I think it was like a 3-cent kickback per purchase. If FedNow presented an existential threat to Visa and Mastercard Debit, they'd probably find some way to make them reappear, funding them out of their margins to keep consumer loyalty.

quesera 6y ago

> To my knowledge, the US doesn't yet have a central widespread instant-payment infrastructure I don't know how it compares to Faster Payments, but Visa has Visa Direct[0], and Mastercard has Mastercard Send[1]. Collectively "OCT", Original Credit Transaction, a/k/a Push-to-Debit. [0] https://developer.visa.com/capabilities/visa_direct https://developer.visa.com/capabilities/visa_direct [1] https://www.mastercard.us/content/mccom-admin/faq-category-admin/mastercardsend.html https://www.mastercard.us/content/mccom-admin/faq-category-a...

Symbiote 6y ago
Faster Payments integrates directly with banks, rather than card processors. It replaces (for transfers under £250k) the older electronic transfer system, BACS. Otherwise, it looks similar, although Visa/MC is an additional middleman compared to Faster Payments, which is just between the banks.

hakfoo 6y ago

I wonder how impactful things like FedNow can be, because AFAIK it doesn't have any sort of lending component built in. You can potentially route anything that would have been a debit card sale onto it, but that does nothing for the huge percentage of transactions done with an actual credit card, either for the purpose of revolving the charge, purchase-protection benefits, or farming rewards. I recall there was a brief period in the early 2000s when there were rewards on debit card purchases, back before the fees became regulated. I think it was like a 3-cent kickback per purchase. If FedNow presented an existential threat to Visa and Mastercard Debit, they'd probably find some way to make them reappear, funding them out of their margins to keep consumer loyalty.