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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.
    - Tommstein 3y ago
      At a whole $25 per bank, why even bother charging anything?
      - xxpor 3y ago
        Yeah, that's why I asked. Either it's insanely expensive, or insanely cheap!
- staringback 3y ago
  Given how generous credit card rewards are in the US, combined with the interest rates that get charged to people who buy things they can't afford, I don't see it replacing credit cards.
  - DeRock 3y ago
    You need to see it from the merchants perspective. What if they offered you a 5% discount for paying with FedNow?
    - staringback 3y ago
      5% is still in the realm of cashback rewards, I use my Citi Custom Cash card to purchase gas and receive 5% back (it is cheaper this way even though the credit price is usually 10c higher per gallon)

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.
  - Tommstein 3y ago
    At a whole $25 per bank, why even bother charging anything?
    - xxpor 3y ago
      Yeah, that's why I asked. Either it's insanely expensive, or insanely cheap!
staringback 3y ago
Given how generous credit card rewards are in the US, combined with the interest rates that get charged to people who buy things they can't afford, I don't see it replacing credit cards.
- DeRock 3y ago
  You need to see it from the merchants perspective. What if they offered you a 5% discount for paying with FedNow?
  - staringback 3y ago
    5% is still in the realm of cashback rewards, I use my Citi Custom Cash card to purchase gas and receive 5% back (it is cheaper this way even though the credit price is usually 10c higher per gallon)