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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 cr

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
  > The expectation in the industry is that there will eventually be interoperability between these systems Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
  - rowls66 3y ago
    The Clearing House and the Fed both operate ACH networks, and they inter operate. I expect that we will get a similar outcome in instant payments.
finfrastrcuture 3y ago
the entire reason FedNow exists is because (simplifying somewhat) the large banks launched their own real-time payments system (RTP through the Clearing House) and small banks in the US lobbied the govt HARD to get a government option out of the reasonable concern they would get squeezed by the majors. nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.
ashconnor 3y ago
In the UK if a financial institution didn't support FPS it would fallback to the existing system with 3-5 days clearance. Eventually they all got on-board and now money is sent in seconds between accounts. It didn't replace credit cards or direct debit but it's the reason why nothing like Zelle exists in the UK. There's also some added benefits like being able to withdraw money from Paypal pretty much instantly.

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
> The expectation in the industry is that there will eventually be interoperability between these systems Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
- rowls66 3y ago
  The Clearing House and the Fed both operate ACH networks, and they inter operate. I expect that we will get a similar outcome in instant payments.

finfrastrcuture 3y ago

the entire reason FedNow exists is because (simplifying somewhat) the large banks launched their own real-time payments system (RTP through the Clearing House) and small banks in the US lobbied the govt HARD to get a government option out of the reasonable concern they would get squeezed by the majors. nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.

ashconnor 3y ago

In the UK if a financial institution didn't support FPS it would fallback to the existing system with 3-5 days clearance. Eventually they all got on-board and now money is sent in seconds between accounts. It didn't replace credit cards or direct debit but it's the reason why nothing like Zelle exists in the UK. There's also some added benefits like being able to withdraw money from Paypal pretty much instantly.