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Is the eventual end-game that I can send money from my account at Bank A, to a friend's account at Bank B to split a check at dinner without using a third party
by aidenn0 3y ago
Is the eventual end-game that I can send money from my account at Bank A, to a friend's account at Bank B to split a check at dinner without using a third party like Venmo?
- keenmaster 3y agoNot OP, but I thought FedNow will do this on day one for participating banks. Someone correct me if I’m wrong. FedNow will also settle faster than Venmo currently does (unless you pay for Venmo’s instant settlement) because it’s instantaneous. To be fair to Venmo, their bottleneck was precisely the lack of FedNow. I assume Venmo will make instant settlement free. But they will need to add more features now that people might substitute with FedNow. Anyway, this is a big deal for Americans and was a long time coming.
- HoyaSaxa 3y agoYes, that is absolutely a use case. Similar to Venmo, there is also a Request for Payment (RFP) mechanism. I'm on the Request for Payment (RFP) Work Group that is composed of a number of financial institutions, service providers, and billers. Netflix is part of the RFP Work Group. So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. Instead of Netflix paying ~$0.50 in credit card processing fees per U.S. subscription they'll probably be able to find a bank willing to charge them < $0.25. It also gives consumers more control as they have to authorize each charge.
- ke88y 3y ago> they'll probably be able to find a bank willing to charge them < $0.25 I guess that includes some very small values, but the upper bound seems ridiculously high.
- govg 3y agoHave you looked at other systems across the world for inspiration / design choices, and if so, could you elaborate on how this system compares? For example, the use case mentioned is probably the prime use case for UPI in India, which has now been extended to become a full fledged payment network alongside CC networks etc.
- kelnos 3y ago> So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. I do wonder how stuff like this will shake out. I will use a credit card, always, with any vendor that doesn't pass along credit card fees to the customer in some way. (Why would I choose otherwise? The credit card gives me rewards, and better fraud protection.) But more and more, I see companies charging "convenience fees" for credit card usage or offering "discounts" for cash/debit. Hell, T-Mobile just started requiring you not use a credit card to get their $5/mo autopay discount. So this is all cool (and perhaps would make it easier for people who don't have a credit card to pay for Netflix), but I don't see why I'd use anything but a credit card to pay for my Netflix subscription, unless they offer discounts for using FedNow. Which... they probably won't?
- LadyCailin 3y agoCredit card fees that aren’t passed through to you are a bit tragedy of the commons. Probably good for them to go away. It’s fine if you choose to pay them, and it’s still worth it to you, but otherwise you’re forcing everyone around you to subsidize your credit card rewards. That’s not fair.
- oorza 3y agoAlternatively, everyone not taking advantage of the credit card protections isn't taking advantage of what's offered around them. Everyone should be subsidizing everyone else, because no one should be using a debit card to make direct consumer purchases in 2023. It's too fraught with risk comparatively, and even the scummiest of the sub-prime credit cards give you a grace period to not accrue interest.
- paradaux 3y agoNo one? That's a rather brash statement to make. Here in Ireland I can count on zero hands how many people use credit cards on a day to day basis. Debit cards are the norm in much of the EU I would assume.
- buzer 3y agoI hope they extend that to actual invoicing standard, i.e. pass the invoice details in that RFP message, like something similar to https://www.finanssiala.fi/en/topics/finvoice-standard/ https://www.finanssiala.fi/en/topics/finvoice-standard/
- TylerE 3y agoThat sounds odd. I can't imagine netflix giving up the stickiness of automatic recurring billing to say <2% of the transaction cost.
- di4na 3y agoYou realise you can do this over bank account? At least in the EU, a recurring billing over bank transfer is totally a thing...
- TylerE 3y agoFrom the GP: "Netflix is part of the RFP Work Group. So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. Instead of Netflix paying ~$0.50 in credit card processing fees per U.S. subscription they'll probably be able to find a bank willing to charge them < $0.25. It also gives consumers more control as they have to authorize each charge." NB that last sentense. FedNow does NOT support recurring.
- pyuser583 3y agoThat sounds great!
- konschubert 3y agoWhy should they not be able to find a bank that charges <$0.05? Other than with credit cards, there are no costs for customer kickbacks and chargebacks.
- tivert 3y ago> I'm on the Request for Payment (RFP) Work Group that is composed of a number of financial institutions, service providers, and billers. I'm just randomly curious: do you know which Federal Reserve Bank FedNow was developed at?
- mattsan 3y agoI had to read this twice - is it really not like in the UK? Is this the first US implementation of "Faster Payments"? Sure people in the UK sometimes use PayPal, Revolut, but most of the time its always just a friend gives (and you save on your banking app) their bank account number and sort code, and you instantly send it across. edit: with no fee
- cj 3y agoI can think of 0 occasions where I’ve given anyone my bank account info who isn’t a commercial organization (employer, electric company, etc). I had no idea it was the opposite in the UK. Edit: with the exception of writing physical checks, of course. I use those when the receiver doesn’t accept Venmo or Apple Pay.
- grepfru_it 3y agoI am currently disputing an international payment and wire transfer (or walking/driving my happy ass to their office and paying cash) is the only method allowed by the lawyer representing me. That's at least one occasion you are not accounting for (a foreign entity that needs the equivalent of cash to proceed)
- cj 3y agoRight, but it’s likely a law firm you’re wiring to, not an individual. The GP was saying they use wire transfers between friends day-to-day which isn’t the case in the US.
- grepfru_it 3y agoTouche
- ericpauley 3y agoTo clarify: they only take wire transfers and not ACH debit/credit? This seems highly unusual.
- goralph 3y agoIs this not possible currently in the US? That’s quite surprising!
- TulliusCicero 3y agoNo, US bank to bank transfers/payments are quite slow, and not commonly used for small transactions. But there are a couple substitutes that are used: * Zelle is basically better bank transfers and is already supported by many (most?) US banks: https://en.wikipedia.org/wiki/Zelle_(payment_service) https://en.wikipedia.org/wiki/Zelle_(payment_service) * Random 'third party' money transfer services like Venmo, Cashapp, Paypal, etc. But similar to messaging in the US, the main issue is fragmentation. There's isn't quite a national consensus like some other countries have.
- astrange 3y agoDebit cards can be used for instant payments and are used to eg pay Uber drivers. Or wire transfers. And Zelle is a bank to bank transfer network, not a third party service.
- TulliusCicero 3y ago> And Zelle is a bank to bank transfer network, not a third party service. That's...what I said? Well, I guess I should've contrasted it better with the old, 'traditional' bank transfer payments.
- monkeywork 3y agoIt sounds very much like some of the Interac services that we have here in Canada (and have had for ages). We can do what is called "email money transfer" where as long as I know your email address I can go into my bank app, transfer money to you and it will automatically show up in your bank account.
- mighmi 3y agoThe US already has Zelle which does this. However the roll out was botched, many banks don't seem to use it and most people (including me until a few months ago) thought it was a paypal competitor - but it's actually a government based system system which renders free transfers between bank accounts (your own or others) with a cap of 3 or 5k/month. The interface is very weird. Many people can't figure out how to use it. I ended up having to set up new email addresses and assign them to different bank accounts in order to distinguish my accounts.
- eru 3y agoCan't you already send money from bank A to bank B without Venmo? Isn't that the whole point of bank transfers?
- sgent 3y agoThere are three methods to do so: 1) Write a physical check (2-10 days from deposit, usually 2) 2) Use ACH (a virtual check) (2-10 days, usually 2) 3) Fedwire which costs $10-$15 to both the sender and receiver (15 minutes).
- rubyskills 3y agoZelle exists and you can scan a check that was written to you (check 21)
- zrail 3y agoThere are some banks that give free Fedwire transfers, often just to higher account tiers. Fidelity Investments gives free Fedwire to everyone, though.
- deleted 3y ago[deleted]
- kome 3y agowow americans can't do that already????
- krab 3y agoThat's how it works in the EU.
- stephen_g 3y agoFrom the perspective of most people from other developed countries, it’s honestly incredible that the US hasn’t already had this for years like we all have…