37 ms·

FedNow Is Live

• 98codes 3y ago
  Zelle: Fuck
• mydriasis 3y ago
  > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
  • lisper 3y ago
    > Is this akin to government-backed Venmo, or something? Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
    • iudqnolq 3y ago
      > On the other hand, it's going to let the government see every transaction you make Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
      • caseysoftware 3y ago
        If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
        • iudqnolq 3y ago
          > If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo. If you owe the US government money right now they can take it out of your bank account. > Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds. > Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. Yes, but this already exists. https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists https://ofac.treasury.gov/specially-designated-nationals-and... > *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited. Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
          • jonhohle 3y ago
            If the government could stop cash transactions entire classes of crime would be significantly more impractical (while at the same time significantly invading the privacy of all citizens).
            • id0ntw4ntit 3y ago
              Can't stop cash, cash is a fact.
              • cryptonector 3y ago
                Sweden joins the chat
      • lisper 3y ago
        The magnitude of the change is somewhat in the eye of the beholder. On the one hand, the government already has a lot of visibility into your finances. On the other hand, this removes some friction that currently exists for certain kinds of transactions. This matters more to some people than others. There is also concern that this might be a step towards the eventual elimination of cash.
        • iudqnolq 3y ago
          I find it annoying that we have these endless debates in the US where it's assumed that if there's some magnitude it of course must be more than epsilon. I would be interested in if anyone can give a example where the friction increases in such a way as a person would experience an actual difference, or how this would actually make cash easier. Otherwise this sounds to me like the endless silly arguments against a national id card by people. (State ID cards that then go into a federal database are no more private but come with annoying downsides like ID.me)
          • didntcheck 3y ago
            I wrote a comment on another thread today about this wrt surveillance. Reduced friction in surveillance definitely is something to be feared, as the evidence is that if the government/police/alphabet agencies can use a power (literally, not necessarily legally), they will. The only thing holding them back in the pre-digital age was the high cost of physical surveillance and even data storage, when "files" were things you held. The difference in quantity of possible surveillance has become a difference in quality, where it's just "common sense" that the government can easily pull your movements from cell tower records, and that they'll do so regardless of whether they're allowed to (or say "terrorism!" allows them to)
      • carlosjobim 3y ago
        Automated surveillance and automated interference. If you think YouTube's algorithms for determining copyright or Facebooks algorithms for "community standards" are bad, wait until you have your bank account locked and can't buy food.
      • EgregiousCube 3y ago
        It lowers the cost of the government performing wide surveillance of financial activity; the fear is that lowering this cost will enable more advanced forms of detection and enforcement that ultimately look and feel like harassment.
        • culopatin 3y ago
          What makes you think the government can’t look over the current system as easily?
          • EgregiousCube 3y ago
            As mentioned by a few folks elsewhere in these comments, if FedNow is wildly successful and takes a meaningful portion of payments, it centralizes information about lots of peoples' financial activity in one place, across banks and across payment platforms. This potentially leads to FedNow being a one-stop OLTP shop for governments to run queries against realtime data, or even build stream processing agents that filter or take action on patterns. Currently, it would be more difficult to build this database as it's hodgepodged together from suspicious activity reports and subpoenas. There's of course the unknowable possibility that law enforcement and security agencies have secret ways of building a comprehensive realtime dataset - but, if they do exist, their secret nature reduces the scope of situations in which they can be used.
            • culopatin 3y ago
              How is that different from ACH?
              • EgregiousCube 3y ago
                ACH is slow and coarse, FedNow is capable of being realtime and fine-grained. Two institutions might have one giant ACH per day between them that includes a ton of smaller transactions that are all invisible to the ACH system itself.
    • delfinom 3y ago
      The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement. That's on top of reporting requirements banks already have for your transactions.
      • jsmith45 3y ago
        The Fed only runs FedACH, which is one of two ACH networks running the same protocol. The other is The Clearing House Payments Company's Electronic Payments Network. Indeed there used to be more private network operators, but the other two eventually folded, leaving just these two remaining.
    • mixmastamyk 3y ago
      Govt can already see any bank transaction made as it chooses already. Question is, why does this fact get brought up everytime as if it’s novel?
    • cameldrv 3y ago
      I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
      • lisper 3y ago
        The new system is faster.
    • seydor 3y ago
      paypal , visa and the like have proven to be worse than most governments
    • mlsu 3y ago
      Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
      • imilk 3y ago
        That's just not true and conspiracy nonsense.
        • booleandilemma 3y ago
          Maybe not that specific example, but it's very true generally. You can get your account blocked for specific words in your Venmo payments: https://www.inc.com/tess-townsend/venmo-reportedly-blocking-payments-that-use-the-word-persian.html https://www.inc.com/tess-townsend/venmo-reportedly-blocking-... https://angelinatravels.boardingarea.com/2017/05/04/careful-venmo-descriptions-venmo-account-frozen/ https://angelinatravels.boardingarea.com/2017/05/04/careful-... I tested one of these and had to send Venmo customer support an email explaining I was not a terrorist.
          • yieldcrv 3y ago
            which once again has nothing to do with the government and everything to do with Venmo incorporated (Paypal Inc.) choosing to operate that way out of fear of the government
            • sudosysgen 3y ago
              Current finance laws are such that if PayPal stopped having this kind of fear of the government it would likely go under. It's just a loophole to get around the 4th amendment.
      • yieldcrv 3y ago
        Thats actually a private corporation having an excessively skittish interpretation of federal regulations. The government would still need to go out of their way to know about that transaction. And the liability would only come after you or the organization got in trouble for something else.
    • s3p 3y ago
      Ok but.. ACH
    • bhdlr 3y ago
      > > Is this akin to government-backed Venmo, or something? > Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay. No, exactly wrong. It's a gov Blockchain
  • rvz 3y ago
    > Whoa. Is this as awesome as it sounds? No. A possible CBDC rails in the US is nothing to get excited about. Unless you want savings limits and expiry dates on your money. > Is this akin to government-backed Venmo, or something? Yes, but even worse.
    • imtringued 3y ago
      >Unless you want savings limits and expiry dates on your money. I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well. This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation. Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
      • nimbleplum40 3y ago
        Savings and debt in an economy are related, but not 1:1. See the money multiplier [1]. [1] https://en.m.wikipedia.org/wiki/Money_multiplier https://en.m.wikipedia.org/wiki/Money_multiplier
        • spiralx 3y ago
          Which, as the article says, is an inaccurate model of how modern monetary economies actually work. Bank loans create new money, they don't lend out existing deposits, and repayments destroy that money. Reserve requirements - in countries that have them - don't affect whether a loan can be made or not.
          • nimbleplum40 3y ago
            > Bank loans create new money, they don't lend out existing deposits Do you mind clarifying? I agree banks create new money, but they do that by lending out existing deposits. A bank can’t lend out money that don’t have on their books…
  • bhdlr 3y ago
    > > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. > Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something? No, under the hood it's a government Blockchain
    • everfree 3y ago
      Does it use cryptography to digitally sign its messages?
  • TRiG_Ireland 3y ago
    So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement. * Any IBAN from a SEPA country, at least.
    • pragmatick 3y ago
      "Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
    • Nemo_bis 3y ago
      A large portion of SEPA bank accounts can now use TARGET Instant Payment Settlement (TIPS) on TARGET2/T2. https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm... My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).
• lockhouse 3y ago
  My concern is that this is a trial run for an official CBDC that will eventually replace cash.
  • lavp 3y ago
    What is it about CBDCs you find concerning compared to cash?
    • lp0_on_fire 3y ago
      It's bad enough that banks have virtually unlimited insight into my spending habits that we need to give the Feds the same access. I should have the right to buy a big mac without some government server getting pinged.
      • 1001101 3y ago
        Another concern I have heard voiced is that CBCD could be programmed - eg. you can't buy X, or you can only buy Y at certain times, or for certain prices, etc. and has the potential for reduced liberty vs. cash.
        • lockhouse 3y ago
          It can also be programmed with an expiration date to encourage you to spend it to stimulate the economy instead of saving it.
          • prometheus76 3y ago
            It could also be geofenced. Can't use your phone to buy fireworks from out of state because it's illegal in your state. Or you can only spend this money at a local store, but not at a store in another town.
            • imtringued 3y ago
              How to get voted out of office immediately.
• EGreg 3y ago
  Here we go. CBDCs are next, and also national Digital IDs. https://m.youtube.com/watch?v=uwRSzNTp2ko https://m.youtube.com/watch?v=uwRSzNTp2ko Real ID + needing it to browse anything on the Internet: https://community.qbix.com/t/the-coming-war-on-end-to-end-encryption/214 https://community.qbix.com/t/the-coming-war-on-end-to-end-en... From what I see people on HN writing, by and large they downplay the risks of these as well as AI. Or alternately seem to suggest that CBDCs and national IDs are not coming, and that it’s a conspiracy theory. However, the “enshittification of Big Tech platforms” is already a fact, so they simply complain about it, but anytime solutions involving open source, decentralization, and utility tokens are introduced, they are violently voted down. So — since no solutions are welcomed, I guess many denizens of HN support hurtling toward extreme centralized control. After all, we’ll be able to complain about it once it’s in place, and that’s enough! Edit: literally 5 seconds after I posted it, I received downvotes. Not fast enough for a human to read the message let alone explore the links. I wonder if it’s even automated by keyword now.
  • solardev 3y ago
    I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls. Similarly with digital payments, I'd much rather trust the government with that than some rando cryptobro of the week. There is nothing extreme about this. The government already does both functions in the analog world. It's about time they caught up digitally. Meanwhile some YouTuber screeching about some Bible quote... not a convincing start Edit: didn't downvote you btw, just don't agree that this is a bad thing
    • WeylandYutani 3y ago
      I agree I'm more concerned about Silicon valley tech bros than my own government. I can vote for Parliament I can't vote for PayPal's board of directors.
      • drivebyhooting 3y ago
        PayPal doesn’t have a military and doesn’t extract taxes from you though.
• jjclane 3y ago
  Check out https://explore.fednow.org/ https://explore.fednow.org/ for more information and an interesting use of Google Maps :)
• ragnot 3y ago
  I'm glad the US is finally catching up the rest of the world...India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown. Banks already have to settle transactions between banks through reserve transfers via the Fed...this will just help automate that process so we can send money from bank account to bank account. Like a Zelle or Venmo, but government backed! [0] https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface
  • skybrian 3y ago
    India’s system is more usable, though, apparently. This seems like an improvement but it doesn’t do the same thing? > Because UPI is designed to be intermediated by computers rather than by humans, transactional information gets captured by the payments company while the transaction is in progress, and that can tell the clerk (or cron job) that the payment succeeded without them needing access to the bank account. > This is a fun engineering challenge in many countries, which are often overlaying bank transfers as a payment method on top of bank transfers as a settlement method. […] > Bank transfers are an extremely small percentage of customer-to-business payments in the U.S. In addition to the speed issue, which might get improved by FedNow when it launches (wags have referred to it as FedLater), bank payments have no consistent way to receive metadata, and despite being no-cost they compete with well-developed credit card ecosystems which credibly offer better-than-free pricing through rewards schemes (to the customer, who generally gets to choose which payment method they use to transact). https://www.bitsaboutmoney.com/archive/bank-transfers-as-a-payment-method/ https://www.bitsaboutmoney.com/archive/bank-transfers-as-a-p...
    • toomuchtodo 3y ago
      Reward schemes are funded by interchange fees funded by higher product prices. They are a tax on the entire economy. Merchants can push the CC fees to customers who opt to pay with CCs vs cheap or free instant payment systems. T-Mobile has dropped autopay discounts if you use a credit card vs deposit/bank accounts for payment, for example. Walmart wrote public comments on this topic supporting the FedNow implementation. Reward systems won’t last as merchants push towards FedNow as a payment alternative and charge you to use a credit card. Nor should they last. https://news.ycombinator.com/item?id=36012866 https://news.ycombinator.com/item?id=36012866 > Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.
• kak3a 3y ago
  why? don't we already have Zelle and Venmo that does just that?
  • delfinom 3y ago
    Zelle is closed to the few banks that partner with the private banks that run it. Venmo is a private company that siphons your data for sale. FedNow is a long-term replacement of ACH, which the Fed Reserve banks already run. This system is open to all US financial entities. The platform also uses a ISO standard https://www.frbservices.org/financial-services/fednow/prepare-for-fednow/iso-20022-what-you-need-to-know https://www.frbservices.org/financial-services/fednow/prepar...
    • maerF0x0 3y ago
      It surprises me because in Canada the Interac e-transfer system has been flawless in my anecdotal cases. Albeit one known issue is reversals allowing fraud, but I assume any non-cryptographic solution will have the same issue.
    • bl4kers 3y ago
      Zelle has been a nightmare to use. Apparently they rolled out a major update that caused many financial institutions to drop support. Because of that, my phone number is now unusable/blocklisted in their system because it's in a limbo state that neither Zelle nor my bank can fix
      • latchkey 3y ago
        Zelle is being dropped by banks because it is a massive source of fraud. https://www.wfla.com/8-on-your-side/better-call-behnken/zelle-fraud-cases-explode-customers-lose-millions/ https://www.wfla.com/8-on-your-side/better-call-behnken/zell...
      • Tommstein 3y ago
        It's a coin flip whether Zelle will actually work any time I try to use it.
• nodesocket 3y ago
  Will banks be able to charge fees to their customers for using FedNow like wire transfers?
  • toomuchtodo 3y ago
    They could theoretically, but it is unlikely due to each transaction costing a few cents and the monthly FedNow fee being $25 (it is a utility run on a cost recovery basis). No banks charge for Zelle payments to my knowledge, for example. This eventually replaces checks, money orders, Zelle, Venmo, ACH, and probably credit card payment volume over time (as seen with UPI in India and PIX in Brazil). Every deposit account can send to other deposit accounts instantly.
    • xxpor 3y ago
      is the fee on a per bank or per account basis?
      • toomuchtodo 3y ago
        Per routing number, so effectively per bank. Edit: (throttled, can’t reply) GSIPs (globally systemic important banks) like JPMC with multiple routing numbers are the exception, not the rule.
        • nodesocket 3y ago
          Typically banks have many routing numbers[1], but it seems like they grossly undercharging banks here. Should be like $500/mo per routing number, that's still chump change for banks. [1] https://www.gobankingrates.com/banking/banks/chase-routing-number/ https://www.gobankingrates.com/banking/banks/chase-routing-n...
      • jaywalk 3y ago
        Per bank. $25/month/account would be insane.
• ChrisArchitect 3y ago
  Title could include "instant payments system"
• natas 3y ago
  I am very worried when the government knows/governs money transfers; look at china.
  • tedivm 3y ago
    This is basically just replacing ACH with a faster system.
    • atlgator 3y ago
      Like Apple photo scanning was basically just for CSAM detection, right?
      • piperswe 3y ago
        What risks does FedNow have that FedACH doesn't have?
        • riskable 3y ago
          I know you're making a point but there is a distinct difference in risk: FedNow transactions happen instantly, therefore fraud can take place faster. That's all though. That's not a good reason to stay on FedACH. For the HN crowd the best way to describe the difference between FedACH and FedNow is migrating from a batch-based system that settled transactions a few times/day to a real-time system. Just like such migrations developers and engineers encounter in many normal IT environments, real-time systems have their own issues but are also capable of so much more and are generally easier to improve/evolve. FedACH was made for big, one-time transfers between bank accounts where it wouldn't matter too much if settlement took a few days. FedNow was made for lots of small(er) instantaneous transactions. At first FedNow will likely be used as a simple replacement for ACH transfers but I suspect that it will eventually replace the back ends that handle debit card payments (because the prize--which would be taken from Visa, MasterCard, First Data, and similar--is too big to ignore).
  • raincom 3y ago
    Feds already get money transfer data without warrants. Recently Chase closed my checking account because I use Zelle so often. Chase knows all Zelle records because they partially own Zelle. I would rather have Feds own the data, rather than banks. When banks own data, they make decisions to close people’s bank accounts without any proof of abuse.
• flotwig 3y ago
  https://archive.ph/FsEaf https://archive.ph/FsEaf
• Mortiffer 3y ago
  Amazing news. Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon. In Switzerland we build an awesome eBill system ontop of the equivalent thing to FedNow. Its all run by Six Group which is the biggest Stock Exchange but it is jointly owned by the big banks and government. So they all agreed to add this eBilling system. Its so much superior to having paper come in the mail all the time. So much is possible once you have instantly confirming transactions supported by all banks. Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
  • carlosjobim 3y ago
    I've been receiving and sending all my bills and invoices by e-mail for the last decade, without any need for some awesome or amazing system. I'm sure millions do the same.
    • nativeit 3y ago
      How does one attach money to an email?
      • carlosjobim 3y ago
        You attach for example a PDF file with the invoice, including bank account number etc. The person receiving the invoice logs into his or her online bank and pays it. Since decent online banks will let you save the details of recipients, in practice it is very smooth and uncomplicated. You could also receive and send invoices by fax, and there's nothing wrong with that.
        • Goronmon 3y ago
          In many cases that is just the bank printing a check that is mailed to the recipient. Sure, it works. But it's super slow and archaic. In the same way some people think people writing personal checks works, but others think its ridiculous.
• TheCaptain4815 3y ago
  So when can businesses start utilizing this to replace ACH? I run a b2b company and right now ACH is our most popular payment option, but the settlement time is a pain.
  • hathawsh 3y ago
    Right away. My organization verified that an account at one of our banks could send thousands of dollars to an account at another bank, in seconds, and then send it back. It's pretty cool. :-)
    • Nemo_bis 3y ago
      Did you have to pay extra fees for the service?
• no_wizard 3y ago
  Is there going to be a universal SDK / API we can use with this? This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win. Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
  • JumpCrisscross 3y ago
    > Is there going to be a universal SDK / API we can use with this? There is probably a neobank opportunity in providing this. FedNow is, reasonably, administered by banks. (The Fed doesn't want to provide end-user customer service nor incur liability for fraud.)
    • no_wizard 3y ago
      Right. I suppose that makes sense. I’m thinking about ease of startup costs for institutions that want to use it financially. The Fed would need to support that anyway. Perhaps by not limiting a qualifying institution to just banks but also opening up access to financial service firms would be enough. They could just have some sort of fair priced qualifying program that a company has to maintain to access it or something
    • imtringued 3y ago
      Isn't this column's whole shtick?
    • ericjmorey 3y ago
      The Fed is not allowed to compete with member banks. That's part of the reason why something like FedNow took so long to emerge.
  • incahoots 3y ago
    I think you know the answer to your question, more than likely this won’t see the light of day outside of federal usage. Far too much lobbying for any REAL competition to shake up the industry. This will be exclusive to the federal government and state governments I imagine.
• Dowwie 3y ago
  Who built this? Dev was obviously contracted out.
  • arizzitano 3y ago
    What makes you think that?
    • Dowwie 3y ago
      Building such a system is not a core competency of the Federal Reserve
      • culopatin 3y ago
        And you know this how?
  • hydrophlask 3y ago
    internally built.
    • deleted 3y ago
      [deleted]
• panarky 3y ago
  The press release lists a few big banks like Chase, Wells Fargo, BNY Mellon, US Bank and Fiserv, along with a dog's breakfast of random service providers and credit unions. Since free realtime payments presumably would still require both the sender and the receiver to use a participating financial institution, instead of all participants just transacting directly through the Fed, how is this supposed to work if most of the industry isn't participating?
  • numbsafari 3y ago
    It takes time for adoption. These were the early adopters, who wanted to participate in the design and also be prepared from a business standpoint to ready at launch. If it proves it’s worth, broader adoption will follow. Like anything else.
  • rowls66 3y ago
    There are already other options for instant payments in the US. The Zelle network and The Clearings House's RTP have been running for several years, and provide pretty good account reachability today. FedNow is the result of smaller banks and credit unions wanting an alternative to Zelle and RTP which are both owned by consortiums of the big banks. The expectation in the industry is that there will eventually be interoperability between these systems, and it will not make much difference to consumers which one their bank uses. Similar to how paper check and ACH clearing works in the US today.
    • riskable 3y ago
      Zelle isn't a good comparison because it's not made for things like paying employees or other businesses. It was made specifically for payments between individuals and in fact, the big banks that run Zelle could very well change the terms to specifically forbid using it for things like payroll (actually, they might already forbid it but I'm not sure). FedNow is good for basically everything: Payments between individuals, employeers/employees, B2B, etc. More importantly, the fees are so low it might as well be considered free ($0.045/transfer) which is HUGE.
    • msla 3y ago
• mixmastamyk 3y ago
  Fantastic, although not a peep from my bank. Articles seem to imply that it can work in complement to zelle, so that may extend it’s reach quite a bit, no?
  • ProllyInfamous 3y ago
    >not a peep from my bank Why would a for-profit banking institution actively advertise for something that will affect its bottom line (e.g. transfer fees)..?
    • mixmastamyk 3y ago
      My bank doesn’t charge transfer fees. Not sure what that means, credit card fees? That’s charged by the network. Obviates old-fashioned wires I suppose but those are rare and fee sometimes waived. Probably save money by reducing employee headcount.
    • constantcrying 3y ago
      Because customers demand it and any bank which has it can attract customers from banks which don't. A system like that exists in Europe already, banks operate for profit there too.
• ishanjain28 3y ago
  Do they have a simpler use id like india's upi?(userHandle@bankHandle) In the demos I watched, There is account number and routing number
  • mixmastamyk 3y ago
    Address book and search can help with that. Worked in NZ anyway.
    • ishanjain28 3y ago
      well yes but the addressing scheme we use here is so much simpler. I hope they incorporate it at some point
      • mixmastamyk 3y ago
        Hmm, may be biased but don’t feel email address format for bank accounts is a big win. Seems to confuse rather than simplify. On the other hand routing plus account number is kinda long.
        • deleted 3y ago
          [deleted]
  • isignal 3y ago
    Yes, that part is unfortunate. It requires full routing number and account number. Maybe the phone number to account number mapping might be seen as a privacy risk in USA.
• karaterobot 3y ago
  > “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.” What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true. Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
  • CameronNemo 3y ago
    This seems like a very opinionated take. The CBDC is still planned. But way far in the future (couple years, at least). And why wouldn't it solve settlement itself? FedNow is shipping today. If it is not the future solution, that is fine. It gives us better performance now.
    • karaterobot 3y ago
      I actually don't have a strong opinion about the digital dollar. I learned about it as a concrete idea in this very article. My opinion is: sounds reasonable, probably pretty complicated to pull off. I am opinionated when it comes to bad, weasely non-answers to questions though, if that's what you mean.
      • CameronNemo 3y ago
        If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent. The characterization of the Federal Reserve as incompetent is the strong opinion I observed. I personally don't agree with the logic you communicated. I think a completely separate CBDC project that is separate from FedNow is perfectly appropriate. IMO, many policy makers view FedNow as a better ACH. Whereas, CBDC is a much more controversial project for some policymakers. Separating the two projects offers some risk mitigation and ensures we will at least have something usable (1) in the short to medium term and (2) even if CBDC is mired in political non-consensus.
• umeshunni 3y ago
  So, how do we use it?
• tjpnz 3y ago
  I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.
  • lbotos 3y ago
    Because there are many Americans who are small gov and against excessive taxation. A CBDC is "too far" for a lot of people who believe that.
    • bluescrn 3y ago
      Imagine being paid in a ‘programmable’ currency that your employer (or government) decides cannot be spent on alcohol, meat, or fossil fuels. Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
      • candiddevmike 3y ago
        That already exists today, food stamps/SNAP/EBT for low income and dollars for everyone else I'd just as soon give everyone dollars via UBI
        • imtringued 3y ago
          Honestly, if governments paid out all social benefits in a demurrage currency which they accept for tax payments, they would save a lot of money because the velocity and therefore fiscal multiplier of a demurrage currency is very high. Christian Gelleri made this proposal to solve the Greek crisis: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3144910 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3144910
        • realce 3y ago
          Your employer doesn't pay you in food stamps, they pay you in money you can use to buy anything you need in the entire world. The government provides coupons that allow you to buy food which is remediated to the seller in dollars. The authority and funding to provide that service is something that voters can impact or change. These are very different things, not "that already exists" at all.
• rajagopalvr 3y ago
  heard of upi in india? it’s one of the best payment system in the world.
• photochemsyn 3y ago
  The best service the Fed could supply for the average American citizen is a federal checking account paying interest at the listed Fed rate.
  • astrange 3y ago
    The average American citizen probably wants to get a bank loan, which isn't possible if none of the banks have any funds to loan.
• thomas_ma 3y ago
  How can a consumer actually try this to send money? This says Wells Fargo is live now but after logging into Wells Fargo I don't see any obvious new feature.
  • jabroni_salad 3y ago
    Think of it more as an alternative method to fulfill the kinds of things that ACH and Wire Transfers are used for. You'll probably never see 'this is a fednow function' on any consumer facing documentation, but billpay, payroll etc will use it.
    • ianburrell 3y ago
      I'm assuming that banks and payment services will add it to their services. Everything that goes over ACH will gradually switch to FedNow. There will be no noticeable difference to users except that transfer will be instantaneous instead of taking days.
      • deleted 3y ago
        [deleted]
  • deleted 3y ago
    [deleted]
  • ellisv 3y ago
    There's no new feature. It's an old feature (transferring money) but faster.
  • isignal 3y ago
    It is live on star one credit Unions mobile app. On their interface, it still requires you to specify the target’s routing and ac number like an ACH transaction. So not the most usable now.
• rkagerer 3y ago
  Are there amount caps?
  • jsmith45 3y ago
    The network limit is $500,000 per transaction, although individual participants can set specific lower limit, which is defaulted to $100,000. Furthermore any end user interface provided by the bank could have its own limit, since FedNow is just a backend service, frontends are up to each participating provider.
• 2143 3y ago
  Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face. Regarding payment systems specifically, people generally don't realize what they're missing. Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
  • TechBro8615 3y ago
    Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).
    • nordsieck 3y ago
      OK. But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.
      • TechBro8615 3y ago
        There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.
        • chimeracoder 3y ago
          > There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time. I guess there's technically a difference between "sending every transaction to the federal government in real-time" (FedNow) and "sending every transaction to the federal government, in batches three times per day" (the status quo). But from a privacy standpoint, the two are functionally identical.
• bingemaker 3y ago
  India has got pretty good payments system. UPI is miles ahead. Any reason why FedNow can't learn from India and adopt UPI?
• orf 3y ago
  Welcome to 2002 I guess? I’m surprised you couldn’t already do this. What happens when you get paid? It comes several days later?
  • aketchum 3y ago
    I assume you are being snippy, but to actually answer the question: Kinda - if you are paid on Fridays then payroll is submitted on Tuesday or Wednesday.
    • orf 3y ago
      No I’m genuinely asking. You get paid at the end of the month, but it actually arrives in your bank 4 or 5 days later?
      • jrmg 3y ago
        Yes. Or the entity doing the payment initiates it a few days earlier to ensure timely arrival.
      • Spoom 3y ago
        ACH is generally overnight. I don't know the internals, but if I get paid on Friday, I actually get the money in my account on Friday. Perhaps they actually send it a day or two early.
      • relativ575 3y ago
        No. In my case it'd be same days (15th and 1st) as paydays, or earlier if the payday falls in the weekend or holidays.
  • jbnorth 3y ago
    Yes, that’s the current state of affairs. My bank receives the money in my account from my employer’s bank but it takes a couple days to clear. Right now many banks will make this money available to you right away rather than waiting for it to clear.
• killjoywashere 3y ago
  So, is the cost of moving money at the retail level zero to almost negative at this point? I mean, literally, we as a society have invested tax dollars to reduce money movement to something that's damn near minimum entropy.
• wtmt 3y ago
  This is a bit off topic for the post, but relevant for some of the comments here. For those who are commenting about payment systems in India and comparing this to UPI (Unified Payments Interface), this is not like UPI in a few ways. Firstly, this is more closer to a faster version of RTGS (Real Time Gross Settlement) in India, which is operated by the RBI (Reserve Bank of India). Speaking from experience, RTGS in India can take several minutes or even 20 minutes or longer, belying the “real time” in its name (this is true even now). The FedNow system is supposed to be real time (we’ll soon know how well it performs in comparison). Secondly, UPI is a payments system by a consortium called NPCI that’s owned by private, public and foreign banks in India. It is not owned by RBI. FedNow is owned by the Federal Reserve, and not by a bunch of banks. With both RTGS (and the slower batched transfer system called NEFT) in India and FedNow in the US, the interbank settlement is done via the central bank (RBI or Federal Reserve).
  • bleuchase 3y ago
    > FedNow is owned by the Federal Reserve, and not by a bunch of banks. Sorry I have to ask. What do you think the Federal Reserve is?
  • isignal 3y ago
    Another difference is the use of phone numbers and simple email like identifiers in UPI. That doesn’t seem to be part of FedNow itself. What makes UPI very usable is that entering the phone number or a simple UPI id brings up some metadata about the person to confirm that the transfer target is accurate. In FedNow such a layer has to be added by Zelle or similar layer above, it appears.
    • umeshunni 3y ago
      Well, given that FedNow has nothing to do with UPI, per the parent's comment, and it's about inter-bank settlement, it makes sense for an application layer like Zelle to provide that.
    • toomuchtodo 3y ago
      FedNow intends to support aliases such as phone number and email identifiers in the near future.
• ArlenBales 3y ago
  Question: Can this be used by a consumer to more conveniently and securely, and without 3rd party fees, sell things online or in-person? Example 1: Sell a graphics to someone on /r/hardwareswap. Currently using PayPal. Example 2: Sell car in-person. Currently go to bank and have buyer hand over cash to deposit in bank.
  • loeber 3y ago
    Not yet for consumer banking. Expect this to get rolled out first for transfers between banks and financial institutions, then regular businesses.
  • ke88y 3y ago
    The end users of FedNow are financial institutions, so not directly.
    • hydrophlask 3y ago
      The hope is that banks open it up for their consumers to use. Log into your bank app -> send money to friend's bank and it will all happen over FedNow under the hood.
  • H8crilA 3y ago
    I hope so, when it trickles down to the commercial bank user level. That's how it works in pretty much the entire rest of the world. PayPal is mostly incomprehensible to Europeans, it solves a problem that they never had.
    • yurishimo 3y ago
      This isn't strictly true, at least in NL. Most domestic online businesses use iDeal for instant payments, but if you aren't shopping at an online retailer that explicitly supports it, you need to use a real credit card or Paypal as a pass-thru. Some businesses will support you sending a payment via IBAN, but then you're waiting days potentially for someone to reconcile the ledger manually and deliver your digital product. Since I don't particularly enjoy having debt, Paypal is a nice middle ground as long as the fees aren't outrageous.
• hnburnsy 3y ago
  FedNow Payment Flow diagram... https://www.frbservices.org/binaries/content/assets/crsocms/financial-services/fednow/fednow-product-sheet.pdf https://www.frbservices.org/binaries/content/assets/crsocms/...
• efnx 3y ago
  Here in NZ you can do this with your bank. Just enter the person’s acct number and the amount to send in online banking.
  • PaulDavisThe1st 3y ago
    The working assumption (on the part of the US Federal Reserve) is that eventually all/most US banks will use FedNow and offer it to their customers (probably via mobile/online front-ends developed and sold by B2B third parties). We'll see if that actually happens.
• deathanatos 3y ago
  From the FAQ, > No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features See y'all in another 25 years, when banks get around to implementing this.
• HoyaSaxa 3y ago
  For those curious, it is really using IBM MQ[1] under the hood and uses a bespoke flavor of the ISO 20022 specification. The FedNow Service itself is the tip of the iceberg in terms of what actually happens from an end-to-end perspective. We've been working to become a Certified Service Provider so feel free to ask me anything. I'm happy to share anything that is not under NDA. [1] https://www.ibm.com/products/mq https://www.ibm.com/products/mq
  • wslh 3y ago
    What is innovative and/or well engineered there? Could any bank or financial institution connect seamlessly with the system? How does it handle security keys, transparency, and transaction log duration?
    • amelius 3y ago
      Do you call those things "innovative"?
      • yencabulator 3y ago
        American Innovation™. U.S. banking is so far behind the rest of the world. This development is very much welcome.
    • hathawsh 3y ago
      As I see it, the innovative part is that the service is push-only. With ACH and most other systems in the US, payees can pull from accounts, while FedNow has no support for forceful debits. That's a significant shift in the way we think about payments (for the better, IMHO). This has been done before by other service providers, but not by someone with this kind of influence and clout in the US.
      • TulliusCicero 3y ago
        Hmm, surely there's some kind of support for a pull request that has to be approved, no? It seems like requiring the consumer to manually set up a push payment to a company would probably be annoying and error prone, compared to having them entering their details on a website and then the company requesting payment.
• ejz 3y ago
  I know that these are famous last words on Hacker News, so I post them very hesitantly...but presumably this is bad news for Plaid, right?
  • pezdeath 3y ago
    Wouldn't it also be real bad news for Zelle? And in theory Venmo/Cashapp/etc
    • ru552 3y ago
      Not for Zelle/Venmo/etc.. Zelle is for P2P (person to person) and FedNow is for A2A (account to account). There are no take backs on FedNow so it's not intended to be used for P2P. No take backs means no recourse for fraud etc.. FedNow should supplant ACH waaaaaaaaaaaaaaay down the line.
      • cowgoesmoo 3y ago
        There's also no take backs on Zelle, Venmo, or Cash App.
        • ru552 3y ago
          I can't speak to Venmo/Cashapp, but Zelle does take backs. It's for specific areas of fraud such as the fraudster impersonating a government official/agency, or things like fake not for profits.
        • randerson 3y ago
          There are takebacks on Venmo. Someone recently paid me and then asked Venmo Support to reverse it. Venmo pulled the money out of my account without even checking with me. I'd have happily reversed the transaction if the sender had just asked me. If you're selling something to a stranger, nothing beats cash.
    • kibwen 3y ago
      Zelle is already owned by a consortium of banks. Even if FedNow were to make Zelle obsolete, it wouldn't do anything to harm the banks, so they ultimately wouldn't care. Meanwhile, Venmo is owned by PayPal, who deserves to become obsolete, so we should all be cheering this on.
• c0unt 3y ago
  > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. Come on... Being capable of sending money to someone easily should not be based on the bank.
  • ru552 3y ago
    Your money is located somewhere and your recipient has their money located somewhere. The places where your money sits needs to interoperate with whatever "thing" you're using to send money. Presuming that your money sits in a bank/credit union, you arrive at the quoted statement. If your money is paper in a sack somewhere, you can mail it, but it might not make it all the way.
• 634636346 3y ago
  It will be interesting to see how this affects "toxic," deplatformed, and to some degree debanked (at least from PayPal and CC processors) entities, like the KiwiFarms. While this page is somewhat vague about the private/public status of the Fed: https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm it seems pretty well established that federally chartered corporations, like the USPS and Amtrak (e.g., https://en.wikipedia.org/wiki/Lebron_v._National_Railroad_Passenger_Corporation https://en.wikipedia.org/wiki/Lebron_v._National_Railroad_Pa...), are bound by the first amendment, so theoretically the Fed should be as well. That means the usual "it's a private corporation!" defense of corporate censorship is probably off the table.
  • tombert 3y ago
    I think KiwiFarms is a cesspool and I think Null in particular is an extremely crappy human, but despite that I disagreed with the credit card processors pulling them, because they really did have a near-monopoly for online payments, meaning that this could be considered stifling of free speech. However, I think I'll have less of an issue for it if there's the government-backed means in which to send them money; at that point I think the "it's a private company!" defense would actually apply to the credit card companies.
    • ZoomerCretin 3y ago
      This is a dramatic whitewashing of KiwiFarms. KiwiFarms was not deplatformed for wrongthink or because people disagreed with their ideas. They were deplatformed for coordinating harassment campaigns that resulted in at least three confirmed suicides. That is not protected speech.
      • qingcharles 3y ago
        You're right in this scenario, and people need to understand the First Amendment doesn't protect "criminal" speech. OTOH, plenty of sites have been canceled simply due to their fucked-up viewpoints that are protected speech.
• whockey 3y ago
  Founder of a developer bank, Column N.A. here. If people are interested in starting to build on FedNow hit us up. column.com/fednow and my email is william at column dot com .
  • openthc 3y ago
    Do you support cannabis business? Or rather, those of us who provide services too cannabis businesses? Some folk (eg: Stripe, Twilio) frown on even using their platforms for things next-to (but not touching) cannabis.
• ncann 3y ago
  Is this equivalent to Interact eTransfer in Canada?
• mkhalil 3y ago
  Sharing a comment I posted from an earlier submission: https://news.ycombinator.com/item?id=36801977 https://news.ycombinator.com/item?id=36801977 ------------------------------------------------------------ The Federal Reserve announces that its new system for instant payments, the FedNow® Service, is now live. FedNow® FAQ: >> https://www.federalreserve.gov/paymentsystems/fednow_faq.htm https://www.federalreserve.gov/paymentsystems/fednow_faq.htm ------------------------------------------------------------ FedNow® Service Provider Showcase (Incl: Service Providers with APIs) Browse service providers that can help you connect, innovate, and deliver instant payment products using the FedNow Service. >> https://explore.fednow.org/explore-the-city?id=10&building=showcase-theater https://explore.fednow.org/explore-the-city?id=10&building=s... ------------------------------------------------------------ Participating financial institutions that are currently live on the service: >> https://www.frbservices.org/financial-services/fednow/organizations https://www.frbservices.org/financial-services/fednow/organi... ------------------------------------------------------------ Launch Video: https://www.youtube.com/watch?v=wHLnV9wu-5A https://www.youtube.com/watch?v=wHLnV9wu-5A Other Official FedNow® Videos: https://www.youtube.com/@FRBServices/videos https://www.youtube.com/@FRBServices/videos
• openthc 3y ago
  Is this something that one (a business) can now (or soon-ish) use to send or receive payments?
• EMCymatics 3y ago
  I cant help but feeling like this is a huge mistake.
• backtoyoujim 3y ago
  how long until it has a section for tipping ?
• samstave 3y ago
  [flagged]
  • tarsinge 3y ago
    This is not something revolutionary, multiple countries already have instant payment: https://en.wikipedia.org/wiki/Instant_payment https://en.wikipedia.org/wiki/Instant_payment. This is just a technical improvement on existing systems. Regarding your questions the FED is simply providing a facility (https://en.wikipedia.org/wiki/Clearing_house_(finance) https://en.wikipedia.org/wiki/Clearing_house_(finance)) that willing participants (the list of early adopters is in the article) can use.
  • pertymcpert 3y ago
    [flagged]
• nikolay 3y ago
  Another nail in the crypto's coffin.
• the42thdoctor 3y ago
  So is this gonna kill apps like CashApp and Venmo ?
• renewiltord 3y ago
  Can I transfer money now to entities that are not Visa/Mastercard-linked? e.g. weed stores?
  • philipkglass 3y ago
    Cannabis businesses are still kept at arm's length from banking due to federal law: https://www.aba.com/advocacy/our-issues/cannabis https://www.aba.com/advocacy/our-issues/cannabis It looks like a recent proposal to fix this (the SAFE act) is politically stalled: https://www.politico.com/news/2023/07/14/weed-banking-safe-banking-act-00106128 https://www.politico.com/news/2023/07/14/weed-banking-safe-b...
• mikewarot 3y ago
  Does this eliminate the late night flights of Mitsubishi MU2 turboprop cargo planes delivering canceled checks for the Federal Reserve?
  • tjohns 3y ago
    I thought Check 21 (enacted back in 2003) was supposed to eliminate that, allowing digital check images to substitute for physical copies during the clearing process. My understanding was banks (or even sometimes merchants) just scan in the paper checks on receipt these days and process everything electronically. https://en.wikipedia.org/wiki/Check_21_Act https://en.wikipedia.org/wiki/Check_21_Act
    • mikewarot 3y ago
      That could very well be... I remember many a late night run to the airport to help resolve some crisis back in the 80s/90s, to keep them canceled checks flying.
• bluepod4 3y ago
  Something something privacy
• konschubert 3y ago
  It is crazy how much credit card companies get paid just for making sure that money goes from A to B. Yes, they also offer fraud protection and chargeback, but in 90% of purchases, I don't need those. I have other means of establishing trust and recourse, and I just want to send money, instantly. Paying $200 on the internet should cost $0.01, not $10.00. I think there is tremendous opportunity in unbundling payment and fraud protection.
  • hahajk 3y ago
    My intuition is that the existence of fraud protection probably lowers the incidence of people attempting fraud. I'm someone who (still!) believes in the Bitcoin project but I'm hesitant to use it for online payments because if someone rips me off there's no one I can go to for help.
• curiouselephant 3y ago
  Just in time before they layoff 5% of the staff.
  • bluepirate 3y ago
    Fed is laying ppl off?
• supernova87a 3y ago
  I haven't learned all the details of the service yet, but I hope this helps eliminate the ridiculous check-based / Zelle fraud that seems to be growing (or at least, seems to be highlighted in news and discussion as growing). The very fact that we have money that can appear to be yours initially, but then removed from your account if a check is reversed or disputed is costing people in time and $, and benefitting fraudsters. (advance fee fraud, Zelle "mistakes", and similar). 3 day clearing times that give people an opportunity to be scammed. Although, irreversible + instant payments may open some new types of problems for people, I could totally see that. But people will need to learn how to deal with this more rational system. Other countries are decades ahead of us in that you are the one who has to initiate payments from your account, and only you can do that, and payments are instant and settled.
• vlovich123 3y ago
  Is there a way to restrict my bank to only allow incoming deposits to use this for my account? I'm scared of VULNs in a new system being abused to withdraw money quickly. Yes, I know the bank is on the hook for making me whole, but recovering from a financial issue like that is more annoying and time consuming than just avoiding it and being a late adopter.
  • everfree 3y ago
    FedNow is a push-only system. It cannot be used to pull a debit, only to push a credit.
• ksec 3y ago
  This and IRS Tax filling all happening today. From an outsider perspective the only two major thing left for US to fix is Medical Cost and Public Transport.
• skizm 3y ago
  How does this system impact the normal person? Like who is the customer for this? Can I uninstall Venmo and Paypal? Or is this something banks would use under the hood and consumers would never interact with? e: ah I see the diagram now. more helpful.
  • deleted 3y ago
    [deleted]
• causality0 3y ago
  For those in the know, will this break the stranglehold Visa and Mastercard have over the entire payments industry and help prevent people from being un-personed on a whim?
• geekrax 3y ago
  [flagged]
  • ksenzee 3y ago
    Thanks for posting this excellent example of why you shouldn’t use ChatGPT to summarize documents. Page 4 of the PDF has an understandable diagram and list of steps, and this doesn’t match it.
    • geekrax 3y ago
      Of course it does not, since I asked it to make it absolutely simplest diagram to give a 10k ft view of where FedNow sits. For the actual diagram and documentation, the readers are encouraged to view the linked source.
  • deleted 3y ago
    [deleted]
• hansoolo 3y ago
  I am genuinely curious, how is this news? I can do real time bank transfers since... I dunno... I never touched a check in my life and I get my employers payment mostly even before the end of the month?
• heydenberk 3y ago
  Powell has mentioned[0] that the Fed is unable to affect fiscal policy, which is the fastest and best solution to certain economic crises. Does this bring the Fed closer to being able to simply give people money? [0] https://rollcall.com/2020/06/16/feds-powell-urges-congress-to-spend-on-unemployed-in-pandemic/ https://rollcall.com/2020/06/16/feds-powell-urges-congress-t...
  • petronio 3y ago
    FedNow doesn't change anything other than transaction speed & cost. If your concern is the Fed giving people money directly, they've had the technical capability for a very long time.
  • astrange 3y ago
    The Fed isn't allowed to give people money, so it doesn't matter what they're able to do. The main problem stopping the government from giving you money is that it doesn't know where you'd want them to send the money to.
• natas 3y ago
  I'd Just As Soon Kiss a Wookiee!
• deleted 3y ago
  [deleted]
• xyst 3y ago
  V / MC / AXP / DFS should be scared. So easy to undercut the vast network of middlemen involved with using credit cards and debit cards.
• nozberkman 3y ago
  How much will it cost to do FedNow transfers? Does it depend on the amount or is it fixed fee?
• galkk 3y ago
  The announcement is very unclear. What I as layperson will get from it? Is it an app FedPayPal/Fedmo that I will be able to use for sending funds? Is it something that will be used by other apps to have cheaper funds transfer? Because if it is latter then I'm afraid that entrenched players will just keep doing what they're doing, keeping the profits but offloading processing to that system if it will be cheaper. The fees by Paypal/Square/Stripe even Visa and Mastercard are enormous. Personally, I strongly believe that if one will dig deep enough he will find cartel there that sets prices. And when that will happen, LIBOR scandal is going to be a kindergarten play.
  • mixmastamyk 3y ago
    You go your bank and set up a bank transfer, check the box to save details to your contacts if desired, and then hit the submit button.
  • asd88 3y ago
    This is not a consumer-facing, social payment platform (e.g. Venmo), it is another payment rail (e.g. ACH, wires). Laypeople are not the target audience for this, payment rail users are (i.e. entities who regularly utilize ACH/wire transfers or build services on top of them).
    • system2 3y ago
      So something like Stripe would benefit from this?
      • IgorPartola 3y ago
        Basically you know how you can ACH payments from your account to someone else’s and back but it only happens the next morning as long as the next morning is a business day? Now it would happen instantly on any day.
        • freddie_mercury 3y ago
          ACH has had same day payments since 2016. If your bank takes until "next morning" then that's your bank's problem, not ACH's. https://www.nacha.org/resource-landing/same-day-ach-resource-center https://www.nacha.org/resource-landing/same-day-ach-resource... That said, FedNow is still an improvement over ACH. ACH is fundamentally batch-based processing, they just run the batch multiple times per day now. And all the batch times are East Coast biased, so people on the West Coast get worse service.
• TheBengaluruGuy 3y ago
  In India, there’s something similar to FedNow called UPI — “Unified Payments Interface” that really disrupted the market completely about 7 years ago — it is interoperable, works instantly and has no charges. It was phenomenal how that grew and got adopted, keen to see how FedNow changes the American payments systems.
  • hardwaresofton 3y ago
    Do you think that eventually UPI will be a vector for more efficient taxation? IIRC India has relatively high tax rates, but has struggled with collection in the past -- maybe I'm being overly paranoid, but UPI seems like the perfect mix of usefulness and convenience to get everyone hooked, then once it's widely adopted enough (let's say 80/90%+ of payments) a sales tax could be enforced. I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.
    • TheBengaluruGuy 3y ago
      >I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who. UPI connects with your bank account -- that's the only way it works. So the identification that UPI has, will be same as that of what the bank account requires. Typically, higher the amount, more the IDs required to keep the account active. > IIRC India has relatively high tax rates, but has struggled with collection in the past .... The way tax evasion primarily happened in india was through cash payments. When you rotate money in cash, it's really hard to trace it back. Now with UPI becoming mainstream, the thing that is now accessible to govt is your day-to-day transaction history. > once it's widely adopted enough (let's say 80/90%+ of payments) UPI already is >80% of all consumer digital transactions (as per this article - https://bfsi.economictimes.indiatimes.com/news/fintech/upi-dominates-digital-payment-channel-74-bln-transactions-in-2022-worldline-report/99559453 https://bfsi.economictimes.indiatimes.com/news/fintech/upi-d... )
• all2 3y ago
  If the IRS was used against political opponents, this will be too. I think this is a case where setting a standard and requiring payment processors to adhere would have been a much better idea. More centralizing of power is not what we need right now.
  • callalex 3y ago
    Can you point me to any examples of the IRS being “used against political opponents”? Please specify who the opponents of the IRS are in your examples.
    • defrost 3y ago
      I'm not the person you asked and as an Australian it's difficult for me to find a concrete irrefutable example of the USofA IRS being weilded as a political weapon on short notice. I can, however, provide two examples of an incredibly unlikely event that happened to two political enemies of the then seated POTUS: https://www.nytimes.com/2022/07/06/us/politics/comey-mccabe-irs-audits.html https://www.nytimes.com/2022/07/06/us/politics/comey-mccabe-... As outlined the Comey | McCabe audits appear to have all the likelihood of jeering at the president and then being struck by lightning. This does appear to be something specific to a particular POTUS and not a general practice.
    • all2 3y ago
      I was thinking specifically of the Tea Party targeting during the Obama years. https://en.wikipedia.org/wiki/IRS_targeting_controversy https://en.wikipedia.org/wiki/IRS_targeting_controversy
      • krapp 3y ago
        The first several paragraphs of that page imply that targeting didn't actually occur, at least not in the way the Tea Party claimed. Both liberal and conservative groups were selected for scrutiny by the IRS. James Comey - a Republican and FBI Director at the time - found no evidence of wrongdoing.
• 1024core 3y ago
  This sounds like India's UPI[1] [1] https://www.npci.org.in/what-we-do/upi/product-overview https://www.npci.org.in/what-we-do/upi/product-overview
  • kgeist 3y ago
    https://en.m.wikipedia.org/wiki/Instant_payment https://en.m.wikipedia.org/wiki/Instant_payment Here's a list of countries with similar payment systems
• luxuryballs 3y ago
  It sounds like something they will use to send food stamp payments so you can be Fed Now.
• eru 3y ago
  This is really concerning. I wonder why they couldn't have looked into what (if anything) prevents the private sector from offering this service, and fixed those obstacles instead? It seems to me like a government run shoe factory, or a government run mail service.
  • kepler1 3y ago
    This is an incredibly stupid comment.
• egberts1 3y ago
  Ribble?!
• galaxyLogic 3y ago
  Right on Feds! This I assume takes away one use-case from crypto-currencies. No?
• tjmc 3y ago
  Well done America. This has been available for literally decades in Australia. I was doing bank transfers over the phone from a landline in the 90s before mobile phones were common and the internet was all dialup. I don't think I've been paid by cheque (check) since the 80's. When I started dating my wife, she called me an old man for even owning a cheque book. That was in 2006.
  • kylehotchkiss 3y ago
    Americans don't carry around checkbooks. They carry around credit or bank cards.
    • tjmc 3y ago
      With magnetic stripes. Your banks are adorable.
• majestic5762 3y ago
  Does this paves the way for Central Bank Digital Currency?
• aussieguy1234 3y ago
  We've had something similar (OSKO/PayID) in Australia for a couple of years now. In our case it wasn't the government, but the private banks getting together to launch it themselves. Unfortunately its a big target for scammers. Once the cash is instantly transferred, there is little to no chance of getting it back. There are no chargebacks like with credit cards and the instant nature of it means payments can't be reversed like the old bank transfers. So its good for sending money to friends, family and trusted people, but not so great for buying anything online as your protections are basically zero.
  • rcaught 3y ago
    You have to remember that the instant payment also stops the scam of "it will be in your account in a couple of days". You can see right there and then that the payment went through.
    • aussieguy1234 3y ago
      One scam blocked, another enabled. Of course scammers will update their strategy to take advantage either way.
  • cubefox 3y ago
    ... except for buying things from countless trusted online companies? Reminds me of https://astralcodexten.substack.com/p/the-buying-things-from-a-store-faq https://astralcodexten.substack.com/p/the-buying-things-from...
  • AnonMO 3y ago
    zelle is the same thing in the US been around for years ran by banks with lots of scamming going around.
• coding123 3y ago
  When can citizens cut out the upcharging bank middlemen so that we can get out of debt faster?
  • everfree 3y ago
    Upcharging banks aren't the only option, you can use a non-profit credit union.
• foobarbazetc 3y ago
  If this kills Zelle, that would be amazing.
• facu17y 3y ago
  I think FedNow can serve as the inter-bank settlement rails for CBDC, or the wholesale side of CBDC
• m3kw9 3y ago
  So e-transfers are dead?
• prabhu-yu 3y ago
  Seems, it started with Google advising the Fed. https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface In December 2019, noting the success of UPI, Google suggested the US Federal Reserve Board to follow UPI as example in developing FedNow,[22] a real-time payment system for United States.[23]
  • trustingtrust 3y ago
    UPI is a modern marvel tbh. Can't praise it enough.
    • burning_stubble 3y ago
      I agree. I hardly carry cash nowadays.
• gigatexal 3y ago
  Good! It shouldn’t take days to get a deposit or to pay.
• xNeil 3y ago
  Genuine question - is this the US's version of UPI (United Payments Interface) in India?
• simonjgreen 3y ago
  As a non-US person, just to confirm I'm understanding the implications of this, have near instant bank transactions not being a thing in the US until now?
  • snehk 3y ago
    Yes. Bank transfers aren't really a thing in the US. To send money to a friend you have to use a third party service like PayPal, Venmo or CashApp.
    • simonjgreen 3y ago
      Mind boggling. I wonder if the acceptance of the middle layer perpetuates the service economy?
• xvilka 3y ago
  Will services like ACH will be unnecessary eventually then?
• jessfyi 3y ago
  Here are the current participants (honestly I thought the list would be a lot longer): https://www.frbservices.org/financial-services/fednow/organizations https://www.frbservices.org/financial-services/fednow/organi...
• sam345 3y ago
  Most of the comments below are about the tech. Is no one concerned about the privacy concerns that the government now has easy access to all payments made through this?
• carimura 3y ago
  would this now place the Fed in between transactions where it wasn't before?
• akrymski 3y ago
  Why would banks adopt FedNow when it will ultimately eat into their revenue from card interchange?
  • pphysch 3y ago
    The selling point of "use your paycheck immediately" could appeal to customers.
• frankfrankfrank 3y ago
  [dead]
• aunterste 3y ago
  I hope it's a success - but I am doubtful in the US payment landscape, as absurd incentives persisted so long: - C2B payments (everything from cable to insurance) is dominated by credit card payments, as consumers chase rebates/miles/cash back [paid for by the people who don't pay their card in full every months] - C2C payments, because it was virtually impossible for an average person to pay another bank account to bank account, a whole shadow banking system like Venmo, PayPal, Zelle, CashApp was created. - B2B could always pay via ACH, doing it in real time for vendor payments has no advantage - B2C payments, maybe - when you insurance company settle a claim same day (just kidding...). So I hope that the US gets to a place where it is secure and convenient to pay others bank accounts with the balance in your bank account - but I doubt it.