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Fed expects to launch long-awaited Faster Payments System by 2023
- arcticbull 4y agoBetween RTP and FedNow, the US should finally have real-time 24/7 365 free payments between bank accounts. These payments settle instantly with finality. Just like sending USDC but without the high fees and huge delays of using a blonkchain. Or as Europe calls it, 2008, but hey a win is a win.
- tirwander 4y agoWhat huge delays are you running into on the blockchain? I never wait more than a minute or two... occasionally with a bridge maybe.
- colinmhayes 4y agobitcoin only completes one block every ten minutes. If you want to be safe you need to wait multiple blocks. Yes, 99+% of the time you're transaction will be included in the next block, but that's not guaranteed. Waiting a minute is also completely unacceptable. Imagine if you had to wait a minute every time you wanted to sue your credit card, grocery stores would grind to a halt.
- IanCal 4y agoAddressing just the first paragraph, they talked about usdc so they're talking about Ethereum, which has a block time of 10-15s.
- arcticbull 4y agoThat’s glacial in the payments space. Imagine you had to stand in front of the counter at McDonald’s for 30-60 seconds to see if your payment went through.
- tempsy 4y agoseems like it’s more a competitor to Venmo/PayPal/Cash app
- xenospn 4y agonot necessarily, the system still needs a front end.
- deleted 4y ago[deleted]
- ilaksh 4y agoI use the cryptocurrency from MIT (Algorand), which literally costs 1/10 of a penny and confirms within about 14 seconds. Block times moving to 3.7 imminently so that will change to under 12 seconds and then we will get 2.5 second block times a few months after that so confirmation within 7.5 seconds.
- arcticbull 4y agoThis confirms instantly, give or take, and assuming they keep the pricing the same as ACH costs $0.0025 to send and $0.0014 to receive in volume. [1] And it actually goes directly into your bank account. Further, Algorand isn't "from MIT" it was started by an MIT professor, and their actual transaction fee is a sum total of the direct fees (roughly zero right now) plus the block reward divided by total transactions in a block. [1] https://www.frbservices.org/resources/fees/ach-2022 https://www.frbservices.org/resources/fees/ach-2022
- ilaksh 4y agoStarted by an MIT professor, worked on by said professor and others with MIT association, therefore from MIT is an apt description. Most people are hard coding in the 0.001 fee. When you say it confirms instantly that remains to be proven.
- arcticbull 4y agoIt is in no way endorsed by MIT as your phrasing implies. Again the total fee is direct fee plus proportional share of block reward. There’s no reason to think it wouldn’t be instant. SEPA payments are in Europe, Faster Payments are in the UK and Australia has one too. That’s not an exhaustive list. I wouldn’t call it a “google AI” just because it was created by an ex employee who thinks it’s sentient. I wouldn’t call Nest an Apple camera just because it was founded by a group of Apple employees. If I did I’d surely be on the receiving end of a lawsuit seeking to clarify that point.
- ilaksh 4y ago
- JimmieMcnulty 4y ago> The U.S. Faster Payments Council (FPC) is an industry-led membership organization established so Americans can safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability. [0] > The FedNow Service is a new instant payment service that the Federal Reserve Banks are developing to enable financial institutions of every size, and in every community across the U.S., to provide safe and efficient instant payment services in real time, around the clock, every day of the year. [1] for context in case not everyone knows what "Faster Payments Systems" is (or that it's the actual name of the system, apparently). [0] https://fasterpaymentscouncil.org/ https://fasterpaymentscouncil.org/ [1] https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about....
- arcticbull 4y agoThat's the UK one, the Faster Payments Service. In the US it's called FedNow. [1] [1] https://www.frbservices.org/financial-services/fednow/prepare-for-fednow/watch-get-ready-fednow-video https://www.frbservices.org/financial-services/fednow/prepar...
- JimmieMcnulty 4y agoGot it in the edit, thanks!
- arcticbull 4y agoYeah the capitalization in the article title is all wrong so it was hardly your fault. This article doesn't even call it by its proper name. They even refer to the competing service as "The Clearing House" - it's not, it's RTP [1] - that's the name of the company that runs it. Surprisingly FedNow [2] is barely mentioned on Wikipedia. [3] This is probably a better article to have linked for the post. [4] [1] https://www.theclearinghouse.org/payment-systems/rtp https://www.theclearinghouse.org/payment-systems/rtp [2] https://www.frbservices.org/financial-services/fednow https://www.frbservices.org/financial-services/fednow [3] https://en.wikipedia.org/wiki/FedACH https://en.wikipedia.org/wiki/FedACH [4] https://www.pymnts.com/news/payment-methods/2022/fednow-pilot-brings-new-features-use-cases-for-instant-payments-in-23-and-beyond/ https://www.pymnts.com/news/payment-methods/2022/fednow-pilo...
- thoweriu2o34234 4y agoIndia's UPI say's hi.
- gtirloni 4y agoAlso Brazil's Pix payment system. A huge success.
- cerol 4y agoMan, Pix doesn't get enough love honestly. A payment system that is so cheap (free), fast and intuitive that people use it as a messaging system (via transaction description field).
- el-salvador 4y agoEl Salvador T365 and UNI say hola :)
- syradar 4y agoSweden's Swish says hej
- 00deadbeef 4y agoUK Faster Payments sends its greetings from 2008
- kibwen 4y agoIs this functionally equivalent to what banks in Europe already do for transfers?
- tirwander 4y agoProbably our entire system here in the US is a joke. I mean Crypto has also been doing immediate transfers for how long now? But we have to wait 3 - 5 business days (sometimes longer) for money to transfer between banks here in the US in... what year is it... 2022?????!!! lol
- xenospn 4y agojust wait until a doctor asks you to physically mail a CD ROM, or fax them something. in 2022.
- eropple 4y ago> I mean Crypto has also been doing immediate transfers for how long now? How do you reverse that charge in case of accident or fraud? ACH isn't great and RTP/FedNow are significant improvements, but there are reasons why reconciliation exists.
- imron 4y ago> How do you reverse that charge in case of accident or fraud? Hard fork :-D
- Animats 4y ago> Hard fork Which is what happens when someone in charge loses money big time. Etherium Classic -> Etherium, LUNA->LUNC, etc.
- abrylov 4y agoI’m not sure you can reverse a FedNow payment as it uses a good funds model. The same way you can’t reverse a wire and the only reversible allowable for ACH is for erroneous files/payments and unauthorized debits (not all fraud is applicable there).
- HaloZero 4y agoI'm curious for the UK, my understanding is that you just need someone's name and some identifiable codes. But do you facilitate the transfer using your local bank's app or is there some app provided by the UK? In the US I imagine it's going to have to be done by each individual bank which might be kind of messy.
- digianarchist 4y agoIt’s done in the bank app using the account number and sort code. I understand name is now checked to prevent accidentally sending the money to the wrong account, because of a typo for example.
- tialaramex 4y agoNot typos. The name check is because there's a popular scam which goes like this: Suppose your grandmother died, and it has been pretty complicated sorting everything out. There's a lot of money that needs to be moved around, a lawyer is involved, Smith, Smith and Thompson. It's not difficult to find people who are involved in such things, after all they might Tweet about it, mention it on Facebook, that sort of thing, "Sorry, grandma Josie died, we're sorting everything out so I won't be at FishCon". One day you get an email, or it could even be a physical letter, and it seems to be from Smith, Smith and Thompson. It explains that they've just switched banks, and so please ensure that any future payments go to their new account, sort code 12-34-56, account 87654321. Well that's lucky, you have £18 500 of grandma's money to send over because her shares in a Singapore company were sold this morning when their market opened and that money now needs to be sent to Smith, Smith and Thompson. So you type in the numbers from the letter, the bank asks you who this payment is for, you say "Smith, Smith and Thompson", and you send £18 500. Unfortunately, account 12-34-56 87654321 is not the new account for "Smith, Smith and Thompson" it was opened in the name of a recent immigrant, Jan and it was empty before your £18500 was transferred, whereupon it was all withdrawn. In a few days when you realise you were scammed, the money isn't there. Your bank might take pity on you, or they might not. If police are called, Jan doesn't have the money, he was given £20 by some guy at a friend's party to do bit of paperwork, easiest £20 he ever made. The cops probably eye him up, then give him a caution and send him on his way, he's just a dupe. So the name check is because while scammers could easily find someone like Jan, they're going to struggle to find people with names like "Smith, Smith and Thompson" which match a suitable business. This was deemed to be a sensible change because people who don't understand IT assumed the reason they were asked for the name was because it was needed, whereas actually it was for their reference. I used to have ones labelled "Mum" and "King Chris" (it's short for "Fucking Chris") but now it's checked.
- tirwander 4y ago
- candiddevmike 4y agoAny chance this can be iterated on and replace credit cards?
- mixmastamyk 4y agoIt will replace debit cards and probably have a gateway at POS to existing bank networks. Not sure how quickly that will roll out, hopefully will not require brand new terminals across the country. It will replace the use case of using credit cards to pay immediately, but not the carrying of high interest debt case.
- bhawks 4y agoWe just got tap and pay terminals to be ubiquitously deployed (and are still a major pain). It took a global pandemic - any point of sale rollout would be decades long.
- mixmastamyk 4y agoHad those in California a year or three before the pandemic.
- lotsofpulp 4y agoWalmart, Home Depot, Lowes, Fred Meyer (Kroger), and Winco (also grocery store) still do not have tap to pay, even though their terminals are capable and have the tap to pay symbol. Infuriating. Every other place I have been to has tap to pay.
- tialaramex 4y agoThat's crazy. I don't think teenagers in the UK ever carry physical credit cards on them. They just wave their phone at stuff. Even the people I buy pizza from, who are literally in a van, in a car park (it's the best pizza in the city, what can I say, the man may not want to run a proper sit-down restaurant but he does know how to cook a really good pizza) have tap to pay. The buses, the corner stores, everything has it.
- recycledmatt 4y agoIs it really a competition if you are doing $73 trillion in transactions and your competitor is at a $80 billion a year run rate?
- pizzathyme 4y agoDepends who you’re asking: the FTC, or Apple/Google?
- hoppyhoppy2 4y agoFedNow was also discussed 12 days ago at https://news.ycombinator.com/item?id=32510581 https://news.ycombinator.com/item?id=32510581
- kshacker 4y ago> The Fed’s new payments system will compete with privately-held The Clearing House, which was launched by a consortium of large banks in 2017. It processed 41.2 million transactions valued at about US$18 billion in the second quarter. For someone like me who only uses Zelle and Venmo, haven't needed others - I wonder if this will make a difference and also when exactly will this private vs Fed gateway make a difference. Would there be any fees? I know private exchange came first but if Fed solution is free or cheaper, would they need to maintain the alternative?
- cheriot 4y agoTransfers within Venmo fake immediacy. If it depends on an ACH transfer (ie the money is coming from a bank account and not an existing Venmo balance) then the money will be taken back if the ACH fails. It's transfers between Venmo and a bank that would get faster.
- eru 4y agoNormal bank transfers can also be reversed, if something goes wrong, can't they? (Eg if there's fraud or whatever?)
- tdeck 4y agoThat's correct. ACH bank transfers can typically be reversed within 60 days, and even beyond that in some exceptional circumstances.
- TMWNN 4y agoDoes Zelle use ACH? My understanding is that Zelle transfers are permanent. (But then I thought that about Venmo.)
- cheriot 4y agoThere are stories of Venmo transfers that do not include ACH (ie the source of funds is a venmo balance) being difficult or impossible to reverse. That's purely a product choice by Paypal.
- Pxtl 4y agoAnybody know if there's corresponding action expected in Canada? They tend to move in lockstep with the Americans on stuff like this.
- sa1 4y agoIsn't Interac equivalent?
- mardifoufs 4y agoNo, interac is a layer on top.
- MAGZine 4y agoA layer on top of what? I'm fairly certain interac is its own network, though transactions CAN be routed over the visa network.
- idontwantthis 4y agoEven Cambodia has instant bank transfers already figured out. I can basically walk around with just my keys and phone and pay for anything I need from groceries to taxis to bar tabs to school fees. Even the local market sellers use it.
- nXqd 4y agopowered by Chinese technology for sure
- loxias 4y agoDoubtful, considering "Chinese" technology is often American technology + state-sponsored espionage. Plus, I think the Buy American Act had the IT waver removed, no?
- tootie 4y agoIt's not actually a technical challenge, more of a regulatory one. Small countries can achieve fast transactions by not having any compliance rules.
- deleted 4y ago[deleted]
- MBCook 4y agoOr just having far fewer banks that need to be involved, instead of the roughly 5k we have in the US.
- eru 4y agoThe US has so many banks thanks to some earlier misguided regulation: In large parts of the US, it used to be illegal for banks to have branches. As you can guess, keeping your banks confined to one office in one city is a recipe for them being vulnerable to the fortunes of a single small area. In contrast, their neighbour to the north, Canada, had a much more stable banking system, that was run by large national chains (just like in most other parts of the developed world). If you want to learn more, George Selgin has written a lot on the topic. Other keywords to look for are 'unit banking' vs 'branch banking'.
- bern4444 4y agoI'm starting to feel more hopeful about the US's digital infrastructure. If this goes well instant payments will be available with no ACH 2 day withdrawal delay. The IRS is exploring a system for people to file taxes online. The State Department is building a system to renew your passport totally online. I think the last two items are a result of the Inflation Reduction Act. I hope this momentum continues and we can continue making as many government services available digitally. While some will complain how bad these systems will be - I'd rather at least have them than not and allow them to improve. The sooner the better.
- deleted 4y ago[deleted]
- ed25519FUUU 4y agoExtremely sad we need to give the IRS $80 billion to accomplish something they should have provided decades ago.
- Ductapemaster 4y agoYou’re way off. The money earmarked for that project is $15 million, and it’s for a study on how the IRS would implement such a system.
- jetrink 4y agoSource (PDF): https://crsreports.congress.gov/product/pdf/IN/IN11977 https://crsreports.congress.gov/product/pdf/IN/IN11977 > In addition, the IRS would receive $15 million under this bill to fund a task force that would study the cost and feasibility of creating a free direct e-file program.
- andsoitis 4y agoAnd the next sentence: "The agency previously committed not to create its own tax filing software as part of an alliance called the Free File Program. In exchange, private tax filing software companies agreed to provide free services to low- and moderate-income taxpayers." And then continues: "Roughly 4% of eligible taxpayers used the Free File Program’s private providers to file their taxes in 2020. Intuit and H&R Block, who previously represented two-thirds of the program’s usage, both left the agreement in the past three years."
- loxias 4y agoHard to tell from the article, is this FedNow moving into production? Implemented the same as FedNow?
- xyst 4y agoI wonder what type of limits would be imposed on the "FedNow" system. Zelle transfers are already restricted to a daily limit of $2000-2500 in my experience. ACH transfers I have seen top out at $25-30K per day.
- waynesonfire 4y agowhat programming language is this being developed in?
- imron 4y agoJavaScript, interacting with a cobol backend
- Consultant32452 4y agoIf there's no VB6 components I will be very disappointed. I mean, how else will you create the Active-X objects for the javascript to interact with?
- nonethewiser 4y agoGreat question.
- hackernewds 4y agoMySQL with a manually maintained spreadsheet on Windows 98 that get held hostage by outgoing presidents.
- lumb63 4y agoI was going to send a job application to work on this a few years ago; I decided against it after discovering it was in Java.
- kumarvvr 4y agoFinally, the US is ready to catch up to India in this aspect.
- hackernewds 4y agoUS financial infrastructure is far more complex yet secure in comparison. The hurdles are natural.
- 2143 4y agoIn what way is it more "secure"? How is India's system any less secure? I think the thing is, because the system in the US was developed much earlier, it might have become more difficult to switch over to newer technology. Leapfrogging [1]. [1] https://en.m.wikipedia.org/wiki/Leapfrogging https://en.m.wikipedia.org/wiki/Leapfrogging
- cuteboy19 4y agoIts really less secure. There is no seperation between identity and authentication so stealing a cc number would be enough to complete a transaction whereas a UPI Id won't help you much to steal money. This is why you need to depend on nasty solutions like chargeback
- StanislavPetrov 4y agoI'll stick with cash which is still instant.
- aaaddaaaaa1112 4y ago
- kibibyte 4y agoI think some parts of this system may already be available to end users today. I noticed recently that Chase allows me to transfer money in real time ("using the US real-time payments network") to an account I own at Bank of America. And indeed, the transfer showed up within minutes.
- lxgr 4y agoThat would be RTP, another recently developed instant transfer system run by one of the US ACH operators, The Clearing House (the other one being the Fed, which runs FedACH).
- EVa5I7bHFq9mnYK 4y agoI did an ACH transfer recently between my own two accounts. It took two weeks. What the hell, it's just one addition and one subtraction operation, taking nanoseconds on modern computers.
- pxue 4y agoIt's incredible how "fast" US is moving on this vs neighbor directly north. Canada is truely and increasingly falling backwards into the stone ages in areas were fed regulation comes before technology. There's no other way BUT bring politics into this since if we want to move forward on federal regulated payment infrustruction, change must come from the government. the current Liberal government want to keep chasing feel good leftwing policies than enable more business of all sizes to compete in a global stage. Sad times.