15 ms·

FedNow FAQ

232 points by hnburnsy 4y ago

pjkundert 4y ago
- himeexcelanta 4y ago
  Huh? What’s your point?
eric4smith 4y ago
This is one of the best things about living in Southeast Asia. Instant bank transfers. Because of this you csn just scan the QR code of your taxi, the fruit seller on the street, transfer to your friends. Everyone gets it instantly. Now this is not third party services. It’s bank account to bank account. As a result things like PayPal or Cash app make no sense in this part of the world and have no uptake here. In fact it’s a downgrade to use those kinds of services. Remembering the bank issues in North America is quite painful. Hope it really happens next year.
- westurner 4y ago
  FedNow is for US, interbank transactions only. Do your country's favorite banks implement ILP Interledger Protocol; to solve for more than just banks' domestic transactions between themselves? https://github.com/interledger/rfcs/blob/master/0001-interledger-architecture/0001-interledger-architecture.md#interledger-protocol-suite https://github.com/interledger/rfcs/blob/master/0001-interle...
- scottiebarnes 4y ago
  > Now this is not third party services. It’s bank account to bank account. As a result things like PayPal or Cash app make no sense in this part of the world and have no uptake here. Aren't WeChat Pay and AliPay basically embedded versions of paypal/cash app?
  - navanchauhan 4y ago
    I feel like they are talking about the UPI (unified payment interface) that exists in India. It works way better than Zelle because you don’t need to use your bank’s app (you can if you want to, but most people use PayTM/Google Pay/PhonePe), and you can add multiple bank accounts in your preferred UPI client. You just get a UPI ID that looks like whatever@yourapporbank. Then for online payments you can just enter that ID and approve/deny the transaction request in your UPI client. You could also just generate a QR code for that transaction and scan it with the UPI client I see that a lot of people are unaware about UPI on HN, I might summarise my experience in a separate post and comparing it to Zelle
    - toomuchtodo 4y ago
      > I see that a lot of people are unaware about UPI on HN, I might summarise my experience in a separate post and comparing it to Zelle Please do! I would buy you a coffee or similar for doing so. Likewise if someone wants to create and maintain a Wikipedia page listing instant payment systems and their details (because FiServ keeps taking down their marketing enumerating this information while also excluding it back from Wayback Machine[1]), I'd be willing to throw some fiat at that. [1] https://www.fisglobal.com/en/flavors-of-fast https://www.fisglobal.com/en/flavors-of-fast (404s, don't bother clicking, Modern Treasury has some content marketing that refers to it)
      - ra7 4y ago
        Previous UPI discussion on HN from 2 years ago: https://news.ycombinator.com/item?id=24094323 https://news.ycombinator.com/item?id=24094323. It links to posts explaining UPI in detail.
  - j16sdiz 4y ago
    WeChat and AliPay exist because China had the same problem. In India, Singapore, Hong Kong, this is a solved problem.
- RC_ITR 4y ago
  I hear this a lot, but Visa/MC do the exact same thing (though it has died down now that Westerners see universal NFC pay as rightly superior to QR codes) And before you tell me they charge for it, I agree they do, but I also get fraud protection that's 1000x better than anything in SEA or on Venmo/Cash app.
  - cuteboy19 4y ago
    > universal NFC pay as rightly superior to QR codes Why though? You can print out QRs and send them around digitally. No extra tech is needed to handle QRs. Why is NFC better?
    - wizofaus 4y ago
      Does anyone seriously think QR codes will still be around in 10 years? They always struck me as clunky. They often don't work, require holding your phone in awkward positions for uncomfortably long periods of time and in many circumstances (e.g. a cashier wishing to expose a dynamically generated QR code to a customer) aren't practical. It's only because we haven't come up with cheap/reliable alternatives that all manufacturers agree to support that they're still in use.
      - cuteboy19 4y ago
        Oh I understand now. It's the fault of the implementation of the QR reader that you use. For example all UPI apps have near instant qr recognition at any angle. In fact on my phone, it takes longer for the camera to start than for the QR recognition to finish. I also think there are a lot of things that QRs can do but NFC cannot. But the opposite is not true
        wizofaus 4y ago
        Currently, yes. But in principle NFC or alternatives (that could be cheaply/ instantly generated anywhere, including by non-digital physical objects like pieces of paper) should be better and I'm willing to bet will be in the foreseeable future.
- paxys 4y ago
  This will never happen in North America because the existing payments establishment is collectively worth trillions of dollars (think Visa, Mastercard, Paypal, Square, Stripe, all credit card issuing banks, all smaller second and third degree players) and will be ready to spend a big chunk of it to lobby and keep themselves relevant. Look at the case with tax filings, for example. The US government will never be permitted to enter a business area and displace existing corporations regardless of whether it makes life easier for citizens or not.
  - srhngpr 4y ago
    This has existed in Canada for a very long time via Interac e-Transfers and it doesn't cost anything. You can send money instantly from one bank to any other bank. You do this by sending to someone's email or phone number. The recipient can setup auto-deposit so the money is deposited instantly. For this reason, Venmo, Cash App, etc. makes no sense in Canada either.
    - 1-more 4y ago
      Zelle is roughly that in the US. Where Venmo is an intermediary that makes money by having your money before you take the extra step to transfer to your bank (for free in 3 days or instantly for a fee), Zelle is bank account to bank account. Transfers with it show up as debit card transactions in my statement, and I can look people up with phone or email.
    - mardifoufs 4y ago
      Interac is not really the same thing. It's much closer to Venmo, but with more integration with your bank. Mostly because not all banks are actually in the interac network and the transfers are between interac accounts, not bank accounts. You can set it up to autodeposit but it's still a "third" party layer more than actual interbank transfers.
      - aceofspades19 4y ago
        What Canadian banks are not in the Interac network?
- legitster 4y ago
  > Everyone gets it instantly. I have to believe that there is constant, baseline fraud that everyone in these areas puts up with. In the US, if someone steals my phone or credit card, or intercepts my payments in any way, I pretty much expect to get all my money back. When payments are instant, what's there to stop scammers and fraudsters disappearing with my money?
  - jazzkingrt 4y ago
    I'm not an expert in this area. But a fairer comparison would be a US service like Venmo. In my experience Fraudulent payments with venmo are much harder to recover. I think a lot of fraud prevention tech can reasonably be done in a matter of seconds. FedNow also proposes to be domestic only for the time being, which means the recipient accounts are in US jurisdiction and easier to shut down and prosecute. Finally, there's no reason a wait-period/cooldown can't be implemented in another layer.
    - legitster 4y ago
      > easier to shut down and prosecute The problem is when someone spins up a scam account, gets a fraudulent payment, and then cashes it and shuts down the account. If they already have the money in cash, it may be impossible to prosecute. Any fraud prevention is going to have to be privacy intrusive by it's nature.
  - davchana 4y ago
    There is a constant need of OTP for every transaction. That sms says again and again Do not share it with anybody or, something similar to that. Instant transfers are only from bank to bank accounts, and not to any personal wallets. Banks have strict KYC requirements to get the documents again every few years. So whoever account is getting the money, bank gas most of their information. So even after all those multiple warnings, if somebody gets frauded (which happens, because people get greedy, they pay a small amount to get a bigger prize, or a work from home job etc scams), police in some places now have IT Crime cell, which follows up with banks and try to recover the money. No guarantee. But there is no constant stream of fraud anymore thatln what happens here in US with people who fall for scams.
- beorno 4y ago
  Similar to what China did in 1994? https://en.wikipedia.org/wiki/Banking_in_China#Electronic_banking https://en.wikipedia.org/wiki/Banking_in_China#Electronic_ba...
- _8j50 4y ago
  The problem in east asia is now you are beholden to smartphones. You can't even give money to a street beggar without a smartphone. The only convenience added by their way is qrcode scanning as opposed to typing up a recipient name. Which I admit is verh nice so long as they mandate accepting cash payments as a condition of a business participating in commerce. Every transaction you make is tracked and being banned from that app means you can't even buy basic survival items and services like food, shelter and even public toilet access lol. You can't even beg people for money because you are banned and your account is tied to your government ID. You effectively accept wepay or whatever monopoly app as your master. Freaky stuff. No thanks, cash is still nicer and convenient (to consumer not merchant).
- m463 4y ago
  I think fraud would be a problem. I remember reading Matt Ridley's book "The Rational Optimist" and he said that society only progresses when we trade, and we only trade productively when we have trust. So basically I think there must be trust otherwise it will hamper the growth of society.
  - dannyincolor 4y ago
    So, the current situation if you get scammed via Venmo/PayPal or other electronic payment methods is for the FBI / local law enforcement to subpoena the provider for records about the incident. Now, imagine all that data is sitting on Federal servers by default. No subpoena required, and fraud systems would be integrated directly with investigative services at the Federal level. This integration should strike fear in the heart of anyone who currently scams via 3rd-party payment providers. I am bothered that fraud isn't directly addressed in this page, but it's only an FAQ and it'd be silly to think the Fed wouldn't build industry standard (or better) fraud protections into a system they're building from scratch.
    - ceeplusplus 4y ago
      No, the current situation if you get scammed via a credit card or PayPal is that you file a chargeback, and PP/card company reverses the transaction, because withdrawing money takes time. And if the transaction is not reversible, then PP/CC company take the hit on their own bottom line. Is the federal government going to take on that risk? What makes you think they can afford to hire programmers who are skilled enough to build out a sophisticated fraud detection system? The highest GS pay scale is lower than what a new grad makes at Stripe/PayPal.
      - astrange 4y ago
        > The highest GS pay scale is lower than what a new grad makes at Stripe/PayPal. It's better if you compare benefits and cost of living. Or if Stripe fires you because your manager didn't like that you tweeted a joke about Elon Musk once (apparently this happens).
- happyopossum 4y ago
  > This is one of the best things about living in Southeast Asia. > Instant bank transfers. Really? One of the BEST things? That sets a pretty darned low bar.. I mean, I've never once been even remotely inconvenienced by the US way of handling money and payments.
  - VHRanger 4y ago
    I imagine your payments experience is largely as a retail consumer then
  - eric4smith 4y ago
    Yes. It's one of the best things. The first time you are sitting with your friend and you want to transfer some money to them - and they get it as soon as you tap the button in your bank app -- you will get it. It's normal to people in Asia. But weird to people in the USA and Canada.
- odiroot 4y ago
  > This is one of the best things about living in Southeast Asia. UK also has near-instant bank transfers. It usually just takes me about 30s to receive one. But you do have to specify the sort-code and account number by hand.
- deleted 4y ago
  [deleted]
- shafyy 4y ago
  We have also instant transfers with many (most?) EU banks, even between countries (SEPA). Granted, it's not yet used to pay taxis or fruit sellers, at least not in Germany.
- deleted 4y ago
  [deleted]
koblas 4y ago
This will be a nice little win for account verification processes. Just doing this to connect two accounts and having to wait the days for the transfers to show up to verify.
oneplane 4y ago
Look like the US version of SEPA transfers (technology-wise) like (somewhat) described at https://www.europeanpaymentscouncil.eu/what-we-do/sepa-payment-scheme-management/schemes-rely-global-open-standards https://www.europeanpaymentscouncil.eu/what-we-do/sepa-payme... but instead of just SWIFT (which is what is also ISO 20022 supported) its more for internal transfers as well. I do wonder why the 12-year lag in the US implementation of essentially the same standards (and the same ones they had implemented on SWIFT much earlier) was there to begin with. You'd think that with the states in the US not being nation-states it would be much easier/faster to implement something like this nation-wide.
- Mountain_Skies 4y ago
  Let others work out the defects and shortcomings while learning from their mistakes to develop best practices for your own implementation. In this particular situation, there is no "first mover" advantage.
- __derek__ 4y ago
  The US banking system is notably decentralized/fragmented, with a fat tail of regional banks. That extends to regulation, where banks are chartered at both the federal and state levels (both of which jealously guard their authority). Large banks started to offer a direct-transfer service called Zelle[1] a few years ago, but making it "standard" is a slog thanks to all of those regional banks. Instead, most people use third-party apps that operate over ACH. [1]: https://en.wikipedia.org/wiki/Zelle_(payment_service) https://en.wikipedia.org/wiki/Zelle_(payment_service)
  - jdmichal 4y ago
    I just want to clarify that Zelle was basically a 2017 rebranding of clearXchange, which existed since way back in 2011. Both Zelle and clearXchange were mostly marketing failures. The basic use-case of nearly-instant person-to-person transfers has been constant and functional throughout its existence. And you're 100% correct that uptake in the long tail of smaller banks and credit unions is probably one of the biggest "issues" with the service. If your bank isn't signed up, there's nothing you can do as an individual except move to a bank that is. Systems like CashApp and Venmo don't have that issue.
TheChaplain 4y ago
Have something similar in Sweden for years called Swish. Transfers instantly from my account to another person or business, all it takes is a phone number or QR code. And I can also send request for payment. Only drawback is there is no protection like with debit/credit cards, so no chargeback.
- notch656a 4y ago
  >Only drawback is there is no protection like with debit/credit cards, so no chargeback. I see that as an upside though. Fraud (and other protection) is essentially an insurance service you pay for, often in several percent premium. This service would lose its utility to me if I had to pay a premium to cover fraud. We already have debit/credit for those who want fraud protection.
  - xur17 4y ago
    100% agreed. Zelle is somewhat similar to this, but overly complicated + doesn't always settle instantly. I'd love to be able to hand folks a simple string or image, and have them able to send funds to me instantly, irrevocably, with no fees, and in a way that they can't pull funds back from my account (cough checks / ach).
- Qworg 4y ago
  RE: Swish - have you found int'l travellers still having issues with it? There were many stories about non-Swedish visitors being locked out of commerce a few years ago.
i13e 4y ago
Am I understanding this correctly? It seems like this simple feature if added to US bank accounts would make Zelle, Venmo, cash app, maybe even PayPal, completely irrelevant
- mr_tristan 4y ago
  We can only hope that the US doesn't let a corporate interest put limits on this a la Intuit with free tax filing. Otherwise, yes, it sure seems like this would pretty much obsolete a lot of payment platforms.
- notch656a 4y ago
  To some extent crypto too. HN constantly shits on me for saying I use crypto for this purpose, but there are vendors in the US I legitimately use crypto for because it is the only low-fee way for me to send something that will clear in under 30 minutes.
  - brewdad 4y ago
    Most pot dealers will take cash. ;-) Seriously though, what kind of vendors are you finding crypto useful for that no other payment method can match or beat? I haven't found a single need for crypto in my life, aside from pure financial speculation. Maybe I just don't run in the right circles.
    - notch656a 4y ago
      metal bullion. If you have free wire transfers, some of the time it might clear as fast for cheaper, but then again usually not and none of my banks offer free wires. Most bullion dealers charge absurd markups for cards because people will steal credit cards or paypal account and drain it buying metals, which means the fraud premium for credit is sky high. Crypto is irreversible so you don't get stuck paying insurance premiums for fraud you're not engaging in.
    - bobthepanda 4y ago
      Funny enough, the pot shops really embraced BTC in their infancy because anything to reduce cash was good (banks will not touch them due to the federal gov‘t), but they‘ve all since dropped it due to volatility being too expensive to deal with.
jrm4 4y ago
Hard to not think the advent of crypto might have pushed this?
- jlongr 4y ago
  Judging by the article, it sounds like they are reaching for technological parity with other governments around the world: >In fact, among the many countries that have either developed or are in the process of developing instant payment capabilities, the vast majority have done so with the direct operational involvement of their central banks. This progress means that the U.S. retail payment system lags behind systems in other countries. Furthermore, they don't have confidence in the private sector to achieve this sort of thing: >Based on its assessment, the Board concluded that private-sector real-time gross settlement services for instant payments alone were unlikely to provide an infrastructure for instant payments with reasonable effectiveness, scope, and equity. In particular, private-sector services are likely to face significant challenges in extending equitable access to the more than 10,000 diverse depository institutions across the country.
- rvz 4y ago
  The truth and the fact is that it already has and only a few crypto projects are compliant with the ISO 20020 standard such as XRP (RippleNet), Algorand, Stellar Network, etc which are becoming compliant with the standard to be used for that use case. The furthest and the most compliant crypto project compatible with the ISO 20020 standard which fits this use-case so far is XRP.
notsahil 4y ago
In India we have UPI https://www.npci.org.in/what-we-do/upi/product-overview https://www.npci.org.in/what-we-do/upi/product-overview which also integrates with third-party apps.
Tyrannosaur 4y ago
I frequently ask people "If all major American banks got together and implemented a system where you could send money from one bank account to another in a payment system much faster than ACH, would it be big news?" And yet they did, but it was not big news. There is currently an instant payment system integrated with all major American banks for person-to-person transactions, and yet they somehow fumbled it so Venmo takes all the publicity. Zelle https://en.wikipedia.org/wiki/Zelle_(payment_service) https://en.wikipedia.org/wiki/Zelle_(payment_service)
- Qworg 4y ago
  Zelle has significant limitations for gross settlement and relies on a security model that leaves much to be desired. Zelle also is a product of TCH, hence why "major banks" carries a lot of water. You can't leave behind rural and low income Americans.
  - dogman144 4y ago
    Yes, the platform is arbitrarily limited to $500 transfers and significant disclosures on why/how you want to use your money. ACH, checks and Venmo still win out
    - paxys 4y ago
      No it isn't. All of the major banks allow Zelle transfers of anywhere between $2500 to $5000 a day.
      - notch656a 4y ago
        Actually you're both right. The last 3 banks I've had have had the $500 limit because if your bank doesn't 'natively' support zelle, Zelle themselves limit it to $500 per week taken via your debit card. If your bank integrates zelle, then the limit seems to be up to the bank up to the $5000 or whatever you quoted. This can be a major problem, because some landlords only take their rent by Zelle and if you accidently zelle someone at the wrong time and your whole household runs out of Zelle limits you're fucked for paying the rent.
joshstrange 4y ago
One of the most important questions (IMHO) is what the cost is going to be. Some googling says it's going to be ~$0.05 which would be insane and amazing. I know that middlemen will probably be required to build on top of this and take their cut but I'd love nothing more than Visa and Mastercard to lose their near-duopoly.
- Qworg 4y ago
  A2A payments will be huge - the backend benefits over debit is where the focus should be beyond a unit cost for transfer.
  - Brystephor 4y ago
    What does A2A stand for?
    - themanmaran 4y ago
      Account to account payments
vivegi 4y ago
In India, we have UPI, a tokenized peer to peer payments network powered by the National Payments Corporation of India (NPCI). Banks participate on the NPCI payment network. I can assign a Virtual Payment Address (VPA) such as payxyz@mybank and give that VPA to anyone that needs to transfer funds to me. At the moment, there are no transaction fees with a transaction limit of INR 200,000 (approx. $2500). This makes it unnecessary to share any sensitive bank routing numbers / account numbers etc., One can create different VPAs for different purposes/payers. UPI has had impressive growth in transaction volume (both # and monetary value) since its inception in 2016. https://www.npci.org.in/what-we-do/upi/product-statistics https://www.npci.org.in/what-we-do/upi/product-statistics The transfers are instantaneous (i.e., completed within seconds) and accounts debited/credited. The system works transparently across banks due to the network being managed by NPCI.
- Brystephor 4y ago
  Is UPI a protocol, an interface/set of messages, or is it an actual payment rail? Like, could I use a credit card with UPI?
  - vivegi 4y ago
    Banks implement the UPI protocol (an API essentially) to talk to the NPCI infrastructure network. Your UPI VPA is linked to your bank account. Most banks in India are already on the NPCI/UPI network. Thirdparty apps can also implement the API to provide services on top of UPI eg: bill pay, ticket booking for buses, trains, movies etc., Payment processors provide UPI as a payment method (in addition to debit cards/credit cards/netbanking/digital wallets etc.,). To answer your question on credit cards usage with UPI: No, you only need a bank account. UPI is a p2p payment overlay over the banking network.
  - captn3m0 4y ago
    Credit Cards on UPI is planned, but pending approval from the central bank: https://indianexpress.com/article/business/banking-and-finance/credit-card-on-upi-npci-in-talks-with-banks-for-pilot-8046563/ https://indianexpress.com/article/business/banking-and-finan... As it stands, it's common infra for a lot of instant settlements in the country, including payments for toll-booths at highways.
bearjaws 4y ago
I am a betting man, and I bet all the major banks, Venmo, PayPal, Zelle will all go to court, probably all the way to the supreme court (or does it go to Senate now?) to rule that this is beyond the powers of the Fed. We will either implement nothing or we will implement a system that lets all these companies profit. Meanwhile every major country in the world solved this issue 8+ years ago.
- nominusllc 4y ago
  All? No. A lucky few? Absolutely.
- TakeBlaster16 4y ago
  FedNow has been in the works since 2019 (at least). If someone were taking them to court, shouldn't it have happened by now?
  - bearjaws 4y ago
    To me this is the first formal announcement that the Fed is going to solely operate this system, which makes many of these companies redundant.
- legitster 4y ago
  This is specifically about interbank clearinghouses. Not sure why payment companies would care?
- nickvanw 4y ago
  I would bet money on the opposite happening: The Fed is not going to release a social app that interrupts the network effects of all of those systems. Zelle may be the one that has the most to worry about, because it is partnered with big banks and powers a lot of their transfer systems. PayPal, Venmo, etc. will all start to use FedNow in the backend to provide for a better product experience and charge the same fee, but spend less on settlement. These are better payment rails, not the wholesale replacement of how people send money to each other in the USA.
Brystephor 4y ago
> As with current Federal Reserve Bank services, the FedNow Service will be available to depository institutions eligible to hold accounts at the Reserve Banks under applicable federal statutes and Federal Reserve rules, policies, and procedures. I wish this would be more available to directly connect with versus having to go through an existing bank. It also leads me to believe that adoption won't be widespread for a few years after release. With Real time payments (RTP, the clearing house instant payment rail) it still has banks onboarding to the network each month. RTP was launched in late 2017
rvz 4y ago
> The Federal Reserve is committed to using the widely accepted ISO 20022 standard and other industry best practices to remove unnecessary and burdensome incompatibilities that could be a barrier to payment routing, a model of interoperability. So the underlying technology that is going to basically power and be compatible this standard will most certainly be in collaboration of the creators of XRP, (RippleNet), Stellar Network, Algorand and XDC chains as they are notable cryptocurrency technologies and ledgers that are gaining general compliance with the ISO 20020 standard. [0] So like it or not, there is a compliant few cryptocurrency DLT technologies that are already being evaluated and are being considered for this use-case. [0] https://investorplace.com/2021/10/iso-20022-crypto-list-5-compliant-names-that-will-benefit-as-fed-adopts-new-format/ https://investorplace.com/2021/10/iso-20022-crypto-list-5-co...
josemando 4y ago
In Brazil, we have PIX, a way to make instant transfers 24/7 that is always free for individuals. It was launched in Nov/2020 as last month alone it had 1.8B transactions on its network. It's really ubiquitous right now, as you can pay pretty much anything using it. [edit] for those who like numbers, here are the stats from the federal bank (ps: it's in Portuguese): https://www.bcb.gov.br/estabilidadefinanceira/estatisticaspix https://www.bcb.gov.br/estabilidadefinanceira/estatisticaspi...
- eliseumds 4y ago
  And they recently launched the ability for trusted apps to start a Pix transaction. It'll open your banking app with the recipient and amount pre-filled, and all you have to do is authorise it. They're working on an offline version now, we'll see... that'd be amazing. All in all, I'll keep using credit cards for security (Pix transactions can't be disputed) and miles.
- dudus 4y ago
  There's also a trend of kidnaping people in Brazil to force them to execute PIX transactions using their phones. It hasn't been exactly smooth sailing.
  - cuteboy19 4y ago
    I mean at that point no system is safe.
rexreed 4y ago
It would seem from the article here [0] that pricing for FedNow is $25/mo per routing number (which generally means per bank not per account, since many accounts at a bank share the same routing number) and about $0.05 per credit transaction. Not sure how that will be passed thru in costs from the bank(s) or if they will absorb what seems to be a small cost? "The service will include a $25 monthly participation fee for every routing transit number enrolling in the service. Then there will be a $0.045 per credit transfer and one cent for a RFP message to be paid by the requestor." And a routing transit number is a 9 digit number that identifies the bank, not the variable number that identifies each individual account [1] "A routing transit number is a nine-digit number used to identify a bank or financial institution when clearing funds for electronic transfers or processing checks in the United States. A routing transit number is also used in online banking and clearinghouses for financial transactions. Only federally chartered and state-chartered banks that are eligible to maintain an account at a Federal Reserve Bank are issued routing transit numbers. " [0] https://www.pymnts.com/news/faster-payments/2022/fed-releases-fednow-pricing-schedule/ https://www.pymnts.com/news/faster-payments/2022/fed-release... [1] https://www.investopedia.com/terms/r/routing_transit_number.asp https://www.investopedia.com/terms/r/routing_transit_number....
- ars 4y ago
  That's a strange pricing model, I would have expected a much higher per routing number cost, and a lower per transaction cost.
  - rexreed 4y ago
    The # of banks and financial institutions stays fairly stable so that covers the ongoing fixed costs. The number of transactions is highly variable so that covers the variable costs. According to https://bank.codes/us-routing-number/bank/ https://bank.codes/us-routing-number/bank/ there are around 18,000 current routing transit codes active, which would amount to about $5.4M annually if all 18,000 were enrolled in FedNow. According to https://www.statista.com/statistics/871706/zelle-payments-number-per-quarter/ https://www.statista.com/statistics/871706/zelle-payments-nu..., Zelle processed 436 Milion payment transactions in Q2 2021 alone. If FedNow were to do the same volume, they would net $19.62M per quarter, around $78.5M a year.
chirau 4y ago
Is this not what Dwolla has been trying to do all along? Or at least was promising at some point? https://www.dwolla.com/features/real-time-payments/ https://www.dwolla.com/features/real-time-payments/
clcaev 4y ago
The FAQ does not address fraud or charge backs. This is worrisome. The FAQ had a link to a community site, but that link is already broken. I'd like to see a critical service like this fully open source so that it can be inspected and referenced.
- adrr 4y ago
  Thats the problem with instant money transfer. With ACH you have time to claw back the money before it settles on the other side.
divbzero 4y ago
I recently initiated a transfer from a American Express Business Checking account to a business checking account at a different bank. The funds were deposited the same day which seemed way too fast to be ACH. Does anyone know how the funds could be transferred so quickly?
- pachouli-please 4y ago
  Your receiving bank can very quickly get notification of the incoming transfer, and 'spot' you an arbitrary amount (or all) while it _actually_ clears in the background.
  - astrange 4y ago
    Same day ACH has been available since 2017 and expanded in 2021. It's very slightly more expensive for the bank. Whether or not the funds are made available mostly depends on how much the receiver trusts the transmitting account; even if it shows up the same day it still might turn out to be fraud a few days later.
- phyzix5761 4y ago
  Most likely they used same day ACH. They could have also used some form of RTP (Real time payments). But it's probably same day ACH.
stazz1 4y ago
Bitcoin, for all its flaws, did force an update to archaic money-moving technology.
greenail 4y ago
If you are not a fan of big government do you view expanding the power of the federal reserve as dangerous?
- mixmastamyk 4y ago
  No, nothing of note is changing other than speed and ubiquity of transactions. If you believed sloth and paper checks were providing you privacy, think again.
majinuub 4y ago
Europe and Asia have been doing instant bank transfers for a while now. Bitcoin has been doing 24/7 payments since 2009 and instant payments since at least 2018. Not to mention Bitcoin is decentralized and not reliant on government and bank bureaucracy to function. The Fed is a little late on this one.
_9hey 4y ago
Nope nope nope nope nope Nobody should have this much oversight into individual finances, not even the fed. FedNow can go back to hell
NordSteve 4y ago
Lots of FedNow jobs, if this sounds interesting. I have friends who have worked at the Fed and it's a pretty decent gig. https://rb.wd5.myworkdayjobs.com/en-US/FRS/details/FedNow-Incident-Coordinator_R-0000010684?q=fednow https://rb.wd5.myworkdayjobs.com/en-US/FRS/details/FedNow-In... Plus -- how many other large tech employers have a real police department to guard their giant pile of gold? https://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm https://www.federalreserve.gov/faqs/does-the-federal-reserve...
supernova87a 4y ago
The most important questions to me are: 1. Are the transfers irreversible? Why? Because one big problem with our current system is the fraud (and mistrust) that results from ACH/checks being sent under the impression they are guaranteed funds, but being reversed by the sender or because they didn't actually clear, days (up to weeks) later. This is a big source of scams. People are out lots of money because of this, and continuing every day that this doesn't get resolved. Not saying that we can protect everyone from everything, but this is a no-brainer. Are the transactions final (unless there is legal action and both parties are identified)? 2. Is it a "push" only system? Push, obviously meaning that only the account owner can initiate a transaction to transfer funds out of the account. I figure it must be, if things are instantaneous and irreversible (but that is to be confirmed). I don't want any more of our current system where someone knowing my bank account numbers can accidentally or purposefully withdraw money from my account and it's up to me to detect and ask for that to be fixed. This is ridiculous that we still have a system that allows that. ------ Of course, this new system means that people will need to be educated/trained on some of the dangers that may not be apparent when a system changes. Like, if someone gets duped into sending money, it is now irreversible. Or if fraud is committed somehow, there is no recovering from it. It probably (hopefully) will have to come with new types of account protection given these facts. Some problems will now be prevented, but new problems may be caused. An updated diligence on the part of users (and the system) will also be needed. I think it's a welcome and overdue development though.
- connicpu 4y ago
  It seems the idea here is that they are irreversible as settlement and clearing both happen instantaneously, and both the sender and recipient should have that information updated for them immediately. It didn't seem entirely clear, but it seems like request-for-payment is a supported feature, and that they will charge 1 cent per RfP transaction. The wording as a "request" makes it sound like the one paying will still have to approve the transaction on their side for it to go through
  - abrylov 4y ago
    Actually yes, FedNow will only support one way transfers (push credits), when the owner of the account can initiate a transfer. Request for Payments supposed to support this as well, when merchant can send you a request to pay for something, but the account owner is the one who authorizes the transfer (ad oppose to direct debits in the ach world).
beorno 4y ago
I wish they'd also implement IBAN and get rid of all the routing/transit/etc crap.
nonameking2026 4y ago
1) Make vulnerable system 2) Repeat scams happen 3) Give government more power to fight scams. 4) Hire 87.000 IRS Agents ?
kevinak 4y ago
I think the comments in here really highlight how little people understand the banking system. This is nothing at all like PayPal, credit cards, WePay or other systems. This is to settle between banks. The thing banks do at the end of the day.

232 points by hnburnsy 4y ago

himeexcelanta 4y ago
Huh? What’s your point?

This is one of the best things about living in Southeast Asia. Instant bank transfers. Because of this you csn just scan the QR code of your taxi, the fruit seller on the street, transfer to your friends. Everyone gets it instantly. Now this is not third party services. It’s bank account to bank account. As a result things like PayPal or Cash app make no sense in this part of the world and have no uptake here. In fact it’s a downgrade to use those kinds of services. Remembering the bank issues in North America is quite painful. Hope it really happens next year.

westurner 4y ago
FedNow is for US, interbank transactions only. Do your country's favorite banks implement ILP Interledger Protocol; to solve for more than just banks' domestic transactions between themselves? https://github.com/interledger/rfcs/blob/master/0001-interledger-architecture/0001-interledger-architecture.md#interledger-protocol-suite https://github.com/interledger/rfcs/blob/master/0001-interle...
scottiebarnes 4y ago
> Now this is not third party services. It’s bank account to bank account. As a result things like PayPal or Cash app make no sense in this part of the world and have no uptake here. Aren't WeChat Pay and AliPay basically embedded versions of paypal/cash app?
- navanchauhan 4y ago
  I feel like they are talking about the UPI (unified payment interface) that exists in India. It works way better than Zelle because you don’t need to use your bank’s app (you can if you want to, but most people use PayTM/Google Pay/PhonePe), and you can add multiple bank accounts in your preferred UPI client. You just get a UPI ID that looks like whatever@yourapporbank. Then for online payments you can just enter that ID and approve/deny the transaction request in your UPI client. You could also just generate a QR code for that transaction and scan it with the UPI client I see that a lot of people are unaware about UPI on HN, I might summarise my experience in a separate post and comparing it to Zelle
  - toomuchtodo 4y ago
    > I see that a lot of people are unaware about UPI on HN, I might summarise my experience in a separate post and comparing it to Zelle Please do! I would buy you a coffee or similar for doing so. Likewise if someone wants to create and maintain a Wikipedia page listing instant payment systems and their details (because FiServ keeps taking down their marketing enumerating this information while also excluding it back from Wayback Machine[1]), I'd be willing to throw some fiat at that. [1] https://www.fisglobal.com/en/flavors-of-fast https://www.fisglobal.com/en/flavors-of-fast (404s, don't bother clicking, Modern Treasury has some content marketing that refers to it)
    - ra7 4y ago
      Previous UPI discussion on HN from 2 years ago: https://news.ycombinator.com/item?id=24094323 https://news.ycombinator.com/item?id=24094323. It links to posts explaining UPI in detail.
- j16sdiz 4y ago
  WeChat and AliPay exist because China had the same problem. In India, Singapore, Hong Kong, this is a solved problem.
RC_ITR 4y ago
I hear this a lot, but Visa/MC do the exact same thing (though it has died down now that Westerners see universal NFC pay as rightly superior to QR codes) And before you tell me they charge for it, I agree they do, but I also get fraud protection that's 1000x better than anything in SEA or on Venmo/Cash app.
- cuteboy19 4y ago
  > universal NFC pay as rightly superior to QR codes Why though? You can print out QRs and send them around digitally. No extra tech is needed to handle QRs. Why is NFC better?
  - wizofaus 4y ago
    Does anyone seriously think QR codes will still be around in 10 years? They always struck me as clunky. They often don't work, require holding your phone in awkward positions for uncomfortably long periods of time and in many circumstances (e.g. a cashier wishing to expose a dynamically generated QR code to a customer) aren't practical. It's only because we haven't come up with cheap/reliable alternatives that all manufacturers agree to support that they're still in use.
    - cuteboy19 4y ago
      Oh I understand now. It's the fault of the implementation of the QR reader that you use. For example all UPI apps have near instant qr recognition at any angle. In fact on my phone, it takes longer for the camera to start than for the QR recognition to finish. I also think there are a lot of things that QRs can do but NFC cannot. But the opposite is not true
      - wizofaus 4y ago
        Currently, yes. But in principle NFC or alternatives (that could be cheaply/ instantly generated anywhere, including by non-digital physical objects like pieces of paper) should be better and I'm willing to bet will be in the foreseeable future.
paxys 4y ago
This will never happen in North America because the existing payments establishment is collectively worth trillions of dollars (think Visa, Mastercard, Paypal, Square, Stripe, all credit card issuing banks, all smaller second and third degree players) and will be ready to spend a big chunk of it to lobby and keep themselves relevant. Look at the case with tax filings, for example. The US government will never be permitted to enter a business area and displace existing corporations regardless of whether it makes life easier for citizens or not.
- srhngpr 4y ago
  This has existed in Canada for a very long time via Interac e-Transfers and it doesn't cost anything. You can send money instantly from one bank to any other bank. You do this by sending to someone's email or phone number. The recipient can setup auto-deposit so the money is deposited instantly. For this reason, Venmo, Cash App, etc. makes no sense in Canada either.
  - 1-more 4y ago
    Zelle is roughly that in the US. Where Venmo is an intermediary that makes money by having your money before you take the extra step to transfer to your bank (for free in 3 days or instantly for a fee), Zelle is bank account to bank account. Transfers with it show up as debit card transactions in my statement, and I can look people up with phone or email.
  - mardifoufs 4y ago
    Interac is not really the same thing. It's much closer to Venmo, but with more integration with your bank. Mostly because not all banks are actually in the interac network and the transfers are between interac accounts, not bank accounts. You can set it up to autodeposit but it's still a "third" party layer more than actual interbank transfers.
    - aceofspades19 4y ago
      What Canadian banks are not in the Interac network?
legitster 4y ago
> Everyone gets it instantly. I have to believe that there is constant, baseline fraud that everyone in these areas puts up with. In the US, if someone steals my phone or credit card, or intercepts my payments in any way, I pretty much expect to get all my money back. When payments are instant, what's there to stop scammers and fraudsters disappearing with my money?
- jazzkingrt 4y ago
  I'm not an expert in this area. But a fairer comparison would be a US service like Venmo. In my experience Fraudulent payments with venmo are much harder to recover. I think a lot of fraud prevention tech can reasonably be done in a matter of seconds. FedNow also proposes to be domestic only for the time being, which means the recipient accounts are in US jurisdiction and easier to shut down and prosecute. Finally, there's no reason a wait-period/cooldown can't be implemented in another layer.
  - legitster 4y ago
    > easier to shut down and prosecute The problem is when someone spins up a scam account, gets a fraudulent payment, and then cashes it and shuts down the account. If they already have the money in cash, it may be impossible to prosecute. Any fraud prevention is going to have to be privacy intrusive by it's nature.
- davchana 4y ago
  There is a constant need of OTP for every transaction. That sms says again and again Do not share it with anybody or, something similar to that. Instant transfers are only from bank to bank accounts, and not to any personal wallets. Banks have strict KYC requirements to get the documents again every few years. So whoever account is getting the money, bank gas most of their information. So even after all those multiple warnings, if somebody gets frauded (which happens, because people get greedy, they pay a small amount to get a bigger prize, or a work from home job etc scams), police in some places now have IT Crime cell, which follows up with banks and try to recover the money. No guarantee. But there is no constant stream of fraud anymore thatln what happens here in US with people who fall for scams.
beorno 4y ago
Similar to what China did in 1994? https://en.wikipedia.org/wiki/Banking_in_China#Electronic_banking https://en.wikipedia.org/wiki/Banking_in_China#Electronic_ba...
_8j50 4y ago
The problem in east asia is now you are beholden to smartphones. You can't even give money to a street beggar without a smartphone. The only convenience added by their way is qrcode scanning as opposed to typing up a recipient name. Which I admit is verh nice so long as they mandate accepting cash payments as a condition of a business participating in commerce. Every transaction you make is tracked and being banned from that app means you can't even buy basic survival items and services like food, shelter and even public toilet access lol. You can't even beg people for money because you are banned and your account is tied to your government ID. You effectively accept wepay or whatever monopoly app as your master. Freaky stuff. No thanks, cash is still nicer and convenient (to consumer not merchant).
m463 4y ago
I think fraud would be a problem. I remember reading Matt Ridley's book "The Rational Optimist" and he said that society only progresses when we trade, and we only trade productively when we have trust. So basically I think there must be trust otherwise it will hamper the growth of society.
- dannyincolor 4y ago
  So, the current situation if you get scammed via Venmo/PayPal or other electronic payment methods is for the FBI / local law enforcement to subpoena the provider for records about the incident. Now, imagine all that data is sitting on Federal servers by default. No subpoena required, and fraud systems would be integrated directly with investigative services at the Federal level. This integration should strike fear in the heart of anyone who currently scams via 3rd-party payment providers. I am bothered that fraud isn't directly addressed in this page, but it's only an FAQ and it'd be silly to think the Fed wouldn't build industry standard (or better) fraud protections into a system they're building from scratch.
  - ceeplusplus 4y ago
    No, the current situation if you get scammed via a credit card or PayPal is that you file a chargeback, and PP/card company reverses the transaction, because withdrawing money takes time. And if the transaction is not reversible, then PP/CC company take the hit on their own bottom line. Is the federal government going to take on that risk? What makes you think they can afford to hire programmers who are skilled enough to build out a sophisticated fraud detection system? The highest GS pay scale is lower than what a new grad makes at Stripe/PayPal.
    - astrange 4y ago
      > The highest GS pay scale is lower than what a new grad makes at Stripe/PayPal. It's better if you compare benefits and cost of living. Or if Stripe fires you because your manager didn't like that you tweeted a joke about Elon Musk once (apparently this happens).
happyopossum 4y ago
> This is one of the best things about living in Southeast Asia. > Instant bank transfers. Really? One of the BEST things? That sets a pretty darned low bar.. I mean, I've never once been even remotely inconvenienced by the US way of handling money and payments.
- VHRanger 4y ago
  I imagine your payments experience is largely as a retail consumer then
- eric4smith 4y ago
  Yes. It's one of the best things. The first time you are sitting with your friend and you want to transfer some money to them - and they get it as soon as you tap the button in your bank app -- you will get it. It's normal to people in Asia. But weird to people in the USA and Canada.
odiroot 4y ago
> This is one of the best things about living in Southeast Asia. UK also has near-instant bank transfers. It usually just takes me about 30s to receive one. But you do have to specify the sort-code and account number by hand.
deleted 4y ago
[deleted]
shafyy 4y ago
We have also instant transfers with many (most?) EU banks, even between countries (SEPA). Granted, it's not yet used to pay taxis or fruit sellers, at least not in Germany.
deleted 4y ago
[deleted]

koblas 4y ago

This will be a nice little win for account verification processes. Just doing this to connect two accounts and having to wait the days for the transfers to show up to verify.

oneplane 4y ago

Look like the US version of SEPA transfers (technology-wise) like (somewhat) described at https://www.europeanpaymentscouncil.eu/what-we-do/sepa-payment-scheme-management/schemes-rely-global-open-standards https://www.europeanpaymentscouncil.eu/what-we-do/sepa-payme... but instead of just SWIFT (which is what is also ISO 20022 supported) its more for internal transfers as well. I do wonder why the 12-year lag in the US implementation of essentially the same standards (and the same ones they had implemented on SWIFT much earlier) was there to begin with. You'd think that with the states in the US not being nation-states it would be much easier/faster to implement something like this nation-wide.

Mountain_Skies 4y ago
Let others work out the defects and shortcomings while learning from their mistakes to develop best practices for your own implementation. In this particular situation, there is no "first mover" advantage.
__derek__ 4y ago
The US banking system is notably decentralized/fragmented, with a fat tail of regional banks. That extends to regulation, where banks are chartered at both the federal and state levels (both of which jealously guard their authority). Large banks started to offer a direct-transfer service called Zelle[1] a few years ago, but making it "standard" is a slog thanks to all of those regional banks. Instead, most people use third-party apps that operate over ACH. [1]: https://en.wikipedia.org/wiki/Zelle_(payment_service) https://en.wikipedia.org/wiki/Zelle_(payment_service)
- jdmichal 4y ago
  I just want to clarify that Zelle was basically a 2017 rebranding of clearXchange, which existed since way back in 2011. Both Zelle and clearXchange were mostly marketing failures. The basic use-case of nearly-instant person-to-person transfers has been constant and functional throughout its existence. And you're 100% correct that uptake in the long tail of smaller banks and credit unions is probably one of the biggest "issues" with the service. If your bank isn't signed up, there's nothing you can do as an individual except move to a bank that is. Systems like CashApp and Venmo don't have that issue.

TheChaplain 4y ago

Have something similar in Sweden for years called Swish. Transfers instantly from my account to another person or business, all it takes is a phone number or QR code. And I can also send request for payment. Only drawback is there is no protection like with debit/credit cards, so no chargeback.

notch656a 4y ago
>Only drawback is there is no protection like with debit/credit cards, so no chargeback. I see that as an upside though. Fraud (and other protection) is essentially an insurance service you pay for, often in several percent premium. This service would lose its utility to me if I had to pay a premium to cover fraud. We already have debit/credit for those who want fraud protection.
- xur17 4y ago
  100% agreed. Zelle is somewhat similar to this, but overly complicated + doesn't always settle instantly. I'd love to be able to hand folks a simple string or image, and have them able to send funds to me instantly, irrevocably, with no fees, and in a way that they can't pull funds back from my account (cough checks / ach).
Qworg 4y ago
RE: Swish - have you found int'l travellers still having issues with it? There were many stories about non-Swedish visitors being locked out of commerce a few years ago.

i13e 4y ago

Am I understanding this correctly? It seems like this simple feature if added to US bank accounts would make Zelle, Venmo, cash app, maybe even PayPal, completely irrelevant

mr_tristan 4y ago
We can only hope that the US doesn't let a corporate interest put limits on this a la Intuit with free tax filing. Otherwise, yes, it sure seems like this would pretty much obsolete a lot of payment platforms.
notch656a 4y ago
To some extent crypto too. HN constantly shits on me for saying I use crypto for this purpose, but there are vendors in the US I legitimately use crypto for because it is the only low-fee way for me to send something that will clear in under 30 minutes.
- brewdad 4y ago
  Most pot dealers will take cash. ;-) Seriously though, what kind of vendors are you finding crypto useful for that no other payment method can match or beat? I haven't found a single need for crypto in my life, aside from pure financial speculation. Maybe I just don't run in the right circles.
  - notch656a 4y ago
    metal bullion. If you have free wire transfers, some of the time it might clear as fast for cheaper, but then again usually not and none of my banks offer free wires. Most bullion dealers charge absurd markups for cards because people will steal credit cards or paypal account and drain it buying metals, which means the fraud premium for credit is sky high. Crypto is irreversible so you don't get stuck paying insurance premiums for fraud you're not engaging in.
  - bobthepanda 4y ago
    Funny enough, the pot shops really embraced BTC in their infancy because anything to reduce cash was good (banks will not touch them due to the federal gov‘t), but they‘ve all since dropped it due to volatility being too expensive to deal with.

jrm4 4y ago

Hard to not think the advent of crypto might have pushed this?

jlongr 4y ago
Judging by the article, it sounds like they are reaching for technological parity with other governments around the world: >In fact, among the many countries that have either developed or are in the process of developing instant payment capabilities, the vast majority have done so with the direct operational involvement of their central banks. This progress means that the U.S. retail payment system lags behind systems in other countries. Furthermore, they don't have confidence in the private sector to achieve this sort of thing: >Based on its assessment, the Board concluded that private-sector real-time gross settlement services for instant payments alone were unlikely to provide an infrastructure for instant payments with reasonable effectiveness, scope, and equity. In particular, private-sector services are likely to face significant challenges in extending equitable access to the more than 10,000 diverse depository institutions across the country.
rvz 4y ago
The truth and the fact is that it already has and only a few crypto projects are compliant with the ISO 20020 standard such as XRP (RippleNet), Algorand, Stellar Network, etc which are becoming compliant with the standard to be used for that use case. The furthest and the most compliant crypto project compatible with the ISO 20020 standard which fits this use-case so far is XRP.

notsahil 4y ago

In India we have UPI https://www.npci.org.in/what-we-do/upi/product-overview https://www.npci.org.in/what-we-do/upi/product-overview which also integrates with third-party apps.

Tyrannosaur 4y ago

I frequently ask people "If all major American banks got together and implemented a system where you could send money from one bank account to another in a payment system much faster than ACH, would it be big news?" And yet they did, but it was not big news. There is currently an instant payment system integrated with all major American banks for person-to-person transactions, and yet they somehow fumbled it so Venmo takes all the publicity. Zelle https://en.wikipedia.org/wiki/Zelle_(payment_service) https://en.wikipedia.org/wiki/Zelle_(payment_service)

Qworg 4y ago
Zelle has significant limitations for gross settlement and relies on a security model that leaves much to be desired. Zelle also is a product of TCH, hence why "major banks" carries a lot of water. You can't leave behind rural and low income Americans.
- dogman144 4y ago
  Yes, the platform is arbitrarily limited to $500 transfers and significant disclosures on why/how you want to use your money. ACH, checks and Venmo still win out
  - paxys 4y ago
    No it isn't. All of the major banks allow Zelle transfers of anywhere between $2500 to $5000 a day.
    - notch656a 4y ago
      Actually you're both right. The last 3 banks I've had have had the $500 limit because if your bank doesn't 'natively' support zelle, Zelle themselves limit it to $500 per week taken via your debit card. If your bank integrates zelle, then the limit seems to be up to the bank up to the $5000 or whatever you quoted. This can be a major problem, because some landlords only take their rent by Zelle and if you accidently zelle someone at the wrong time and your whole household runs out of Zelle limits you're fucked for paying the rent.

joshstrange 4y ago

One of the most important questions (IMHO) is what the cost is going to be. Some googling says it's going to be ~$0.05 which would be insane and amazing. I know that middlemen will probably be required to build on top of this and take their cut but I'd love nothing more than Visa and Mastercard to lose their near-duopoly.

Qworg 4y ago
A2A payments will be huge - the backend benefits over debit is where the focus should be beyond a unit cost for transfer.
- Brystephor 4y ago
  What does A2A stand for?
  - themanmaran 4y ago
    Account to account payments

vivegi 4y ago

In India, we have UPI, a tokenized peer to peer payments network powered by the National Payments Corporation of India (NPCI). Banks participate on the NPCI payment network. I can assign a Virtual Payment Address (VPA) such as payxyz@mybank and give that VPA to anyone that needs to transfer funds to me. At the moment, there are no transaction fees with a transaction limit of INR 200,000 (approx. $2500). This makes it unnecessary to share any sensitive bank routing numbers / account numbers etc., One can create different VPAs for different purposes/payers. UPI has had impressive growth in transaction volume (both # and monetary value) since its inception in 2016. https://www.npci.org.in/what-we-do/upi/product-statistics https://www.npci.org.in/what-we-do/upi/product-statistics The transfers are instantaneous (i.e., completed within seconds) and accounts debited/credited. The system works transparently across banks due to the network being managed by NPCI.

Brystephor 4y ago
Is UPI a protocol, an interface/set of messages, or is it an actual payment rail? Like, could I use a credit card with UPI?
- vivegi 4y ago
  Banks implement the UPI protocol (an API essentially) to talk to the NPCI infrastructure network. Your UPI VPA is linked to your bank account. Most banks in India are already on the NPCI/UPI network. Thirdparty apps can also implement the API to provide services on top of UPI eg: bill pay, ticket booking for buses, trains, movies etc., Payment processors provide UPI as a payment method (in addition to debit cards/credit cards/netbanking/digital wallets etc.,). To answer your question on credit cards usage with UPI: No, you only need a bank account. UPI is a p2p payment overlay over the banking network.
- captn3m0 4y ago
  Credit Cards on UPI is planned, but pending approval from the central bank: https://indianexpress.com/article/business/banking-and-finance/credit-card-on-upi-npci-in-talks-with-banks-for-pilot-8046563/ https://indianexpress.com/article/business/banking-and-finan... As it stands, it's common infra for a lot of instant settlements in the country, including payments for toll-booths at highways.

bearjaws 4y ago

I am a betting man, and I bet all the major banks, Venmo, PayPal, Zelle will all go to court, probably all the way to the supreme court (or does it go to Senate now?) to rule that this is beyond the powers of the Fed. We will either implement nothing or we will implement a system that lets all these companies profit. Meanwhile every major country in the world solved this issue 8+ years ago.

nominusllc 4y ago
All? No. A lucky few? Absolutely.
TakeBlaster16 4y ago
FedNow has been in the works since 2019 (at least). If someone were taking them to court, shouldn't it have happened by now?
- bearjaws 4y ago
  To me this is the first formal announcement that the Fed is going to solely operate this system, which makes many of these companies redundant.
legitster 4y ago
This is specifically about interbank clearinghouses. Not sure why payment companies would care?
nickvanw 4y ago
I would bet money on the opposite happening: The Fed is not going to release a social app that interrupts the network effects of all of those systems. Zelle may be the one that has the most to worry about, because it is partnered with big banks and powers a lot of their transfer systems. PayPal, Venmo, etc. will all start to use FedNow in the backend to provide for a better product experience and charge the same fee, but spend less on settlement. These are better payment rails, not the wholesale replacement of how people send money to each other in the USA.

Brystephor 4y ago

> As with current Federal Reserve Bank services, the FedNow Service will be available to depository institutions eligible to hold accounts at the Reserve Banks under applicable federal statutes and Federal Reserve rules, policies, and procedures. I wish this would be more available to directly connect with versus having to go through an existing bank. It also leads me to believe that adoption won't be widespread for a few years after release. With Real time payments (RTP, the clearing house instant payment rail) it still has banks onboarding to the network each month. RTP was launched in late 2017

rvz 4y ago

> The Federal Reserve is committed to using the widely accepted ISO 20022 standard and other industry best practices to remove unnecessary and burdensome incompatibilities that could be a barrier to payment routing, a model of interoperability. So the underlying technology that is going to basically power and be compatible this standard will most certainly be in collaboration of the creators of XRP, (RippleNet), Stellar Network, Algorand and XDC chains as they are notable cryptocurrency technologies and ledgers that are gaining general compliance with the ISO 20020 standard. [0] So like it or not, there is a compliant few cryptocurrency DLT technologies that are already being evaluated and are being considered for this use-case. [0] https://investorplace.com/2021/10/iso-20022-crypto-list-5-compliant-names-that-will-benefit-as-fed-adopts-new-format/ https://investorplace.com/2021/10/iso-20022-crypto-list-5-co...

josemando 4y ago

In Brazil, we have PIX, a way to make instant transfers 24/7 that is always free for individuals. It was launched in Nov/2020 as last month alone it had 1.8B transactions on its network. It's really ubiquitous right now, as you can pay pretty much anything using it. [edit] for those who like numbers, here are the stats from the federal bank (ps: it's in Portuguese): https://www.bcb.gov.br/estabilidadefinanceira/estatisticaspix https://www.bcb.gov.br/estabilidadefinanceira/estatisticaspi...

eliseumds 4y ago
And they recently launched the ability for trusted apps to start a Pix transaction. It'll open your banking app with the recipient and amount pre-filled, and all you have to do is authorise it. They're working on an offline version now, we'll see... that'd be amazing. All in all, I'll keep using credit cards for security (Pix transactions can't be disputed) and miles.
dudus 4y ago
There's also a trend of kidnaping people in Brazil to force them to execute PIX transactions using their phones. It hasn't been exactly smooth sailing.
- cuteboy19 4y ago
  I mean at that point no system is safe.

rexreed 4y ago

It would seem from the article here [0] that pricing for FedNow is $25/mo per routing number (which generally means per bank not per account, since many accounts at a bank share the same routing number) and about $0.05 per credit transaction. Not sure how that will be passed thru in costs from the bank(s) or if they will absorb what seems to be a small cost? "The service will include a $25 monthly participation fee for every routing transit number enrolling in the service. Then there will be a $0.045 per credit transfer and one cent for a RFP message to be paid by the requestor." And a routing transit number is a 9 digit number that identifies the bank, not the variable number that identifies each individual account [1] "A routing transit number is a nine-digit number used to identify a bank or financial institution when clearing funds for electronic transfers or processing checks in the United States. A routing transit number is also used in online banking and clearinghouses for financial transactions. Only federally chartered and state-chartered banks that are eligible to maintain an account at a Federal Reserve Bank are issued routing transit numbers. " [0] https://www.pymnts.com/news/faster-payments/2022/fed-releases-fednow-pricing-schedule/ https://www.pymnts.com/news/faster-payments/2022/fed-release... [1] https://www.investopedia.com/terms/r/routing_transit_number.asp https://www.investopedia.com/terms/r/routing_transit_number....

ars 4y ago
That's a strange pricing model, I would have expected a much higher per routing number cost, and a lower per transaction cost.
- rexreed 4y ago
  The # of banks and financial institutions stays fairly stable so that covers the ongoing fixed costs. The number of transactions is highly variable so that covers the variable costs. According to https://bank.codes/us-routing-number/bank/ https://bank.codes/us-routing-number/bank/ there are around 18,000 current routing transit codes active, which would amount to about $5.4M annually if all 18,000 were enrolled in FedNow. According to https://www.statista.com/statistics/871706/zelle-payments-number-per-quarter/ https://www.statista.com/statistics/871706/zelle-payments-nu..., Zelle processed 436 Milion payment transactions in Q2 2021 alone. If FedNow were to do the same volume, they would net $19.62M per quarter, around $78.5M a year.

chirau 4y ago

Is this not what Dwolla has been trying to do all along? Or at least was promising at some point? https://www.dwolla.com/features/real-time-payments/ https://www.dwolla.com/features/real-time-payments/

clcaev 4y ago

The FAQ does not address fraud or charge backs. This is worrisome. The FAQ had a link to a community site, but that link is already broken. I'd like to see a critical service like this fully open source so that it can be inspected and referenced.

adrr 4y ago
Thats the problem with instant money transfer. With ACH you have time to claw back the money before it settles on the other side.

divbzero 4y ago

I recently initiated a transfer from a American Express Business Checking account to a business checking account at a different bank. The funds were deposited the same day which seemed way too fast to be ACH. Does anyone know how the funds could be transferred so quickly?

pachouli-please 4y ago
Your receiving bank can very quickly get notification of the incoming transfer, and 'spot' you an arbitrary amount (or all) while it _actually_ clears in the background.
- astrange 4y ago
  Same day ACH has been available since 2017 and expanded in 2021. It's very slightly more expensive for the bank. Whether or not the funds are made available mostly depends on how much the receiver trusts the transmitting account; even if it shows up the same day it still might turn out to be fraud a few days later.
phyzix5761 4y ago
Most likely they used same day ACH. They could have also used some form of RTP (Real time payments). But it's probably same day ACH.

stazz1 4y ago

Bitcoin, for all its flaws, did force an update to archaic money-moving technology.

greenail 4y ago

If you are not a fan of big government do you view expanding the power of the federal reserve as dangerous?

mixmastamyk 4y ago
No, nothing of note is changing other than speed and ubiquity of transactions. If you believed sloth and paper checks were providing you privacy, think again.

majinuub 4y ago

Europe and Asia have been doing instant bank transfers for a while now. Bitcoin has been doing 24/7 payments since 2009 and instant payments since at least 2018. Not to mention Bitcoin is decentralized and not reliant on government and bank bureaucracy to function. The Fed is a little late on this one.

_9hey 4y ago

Nope nope nope nope nope Nobody should have this much oversight into individual finances, not even the fed. FedNow can go back to hell

NordSteve 4y ago

Lots of FedNow jobs, if this sounds interesting. I have friends who have worked at the Fed and it's a pretty decent gig. https://rb.wd5.myworkdayjobs.com/en-US/FRS/details/FedNow-Incident-Coordinator_R-0000010684?q=fednow https://rb.wd5.myworkdayjobs.com/en-US/FRS/details/FedNow-In... Plus -- how many other large tech employers have a real police department to guard their giant pile of gold? https://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm https://www.federalreserve.gov/faqs/does-the-federal-reserve...

supernova87a 4y ago

The most important questions to me are: 1. Are the transfers irreversible? Why? Because one big problem with our current system is the fraud (and mistrust) that results from ACH/checks being sent under the impression they are guaranteed funds, but being reversed by the sender or because they didn't actually clear, days (up to weeks) later. This is a big source of scams. People are out lots of money because of this, and continuing every day that this doesn't get resolved. Not saying that we can protect everyone from everything, but this is a no-brainer. Are the transactions final (unless there is legal action and both parties are identified)? 2. Is it a "push" only system? Push, obviously meaning that only the account owner can initiate a transaction to transfer funds out of the account. I figure it must be, if things are instantaneous and irreversible (but that is to be confirmed). I don't want any more of our current system where someone knowing my bank account numbers can accidentally or purposefully withdraw money from my account and it's up to me to detect and ask for that to be fixed. This is ridiculous that we still have a system that allows that. ------ Of course, this new system means that people will need to be educated/trained on some of the dangers that may not be apparent when a system changes. Like, if someone gets duped into sending money, it is now irreversible. Or if fraud is committed somehow, there is no recovering from it. It probably (hopefully) will have to come with new types of account protection given these facts. Some problems will now be prevented, but new problems may be caused. An updated diligence on the part of users (and the system) will also be needed. I think it's a welcome and overdue development though.

connicpu 4y ago
It seems the idea here is that they are irreversible as settlement and clearing both happen instantaneously, and both the sender and recipient should have that information updated for them immediately. It didn't seem entirely clear, but it seems like request-for-payment is a supported feature, and that they will charge 1 cent per RfP transaction. The wording as a "request" makes it sound like the one paying will still have to approve the transaction on their side for it to go through
- abrylov 4y ago
  Actually yes, FedNow will only support one way transfers (push credits), when the owner of the account can initiate a transfer. Request for Payments supposed to support this as well, when merchant can send you a request to pay for something, but the account owner is the one who authorizes the transfer (ad oppose to direct debits in the ach world).

beorno 4y ago

I wish they'd also implement IBAN and get rid of all the routing/transit/etc crap.

nonameking2026 4y ago

1) Make vulnerable system 2) Repeat scams happen 3) Give government more power to fight scams. 4) Hire 87.000 IRS Agents ?

kevinak 4y ago

I think the comments in here really highlight how little people understand the banking system. This is nothing at all like PayPal, credit cards, WePay or other systems. This is to settle between banks. The thing banks do at the end of the day.