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This system is one of the reasons PayPal's stock has imploded massively over the past ~18 months. FedNow will all but directly kill their primary business. Pay

This system is one of the reasons PayPal's stock has imploded massively over the past ~18 months. FedNow will all but directly kill their primary business. PayPal was around $290 / share in August 2021. Now $63 / share. Their business got larger in that time, not smaller. The market is front-running the end of the necessity (or general usefulness) of services like PayPal in the US. The stock is back to where it was in 2017, when PayPal was a far smaller business, and it's now trading for 14 times operating income. They better find a new, large business, fast.

toomuchtodo 3y ago
> FedNow will all but directly kill their primary business. Good riddance. Come for Visa and Mastercard next. $57B in combined revenue in 2023.
- adventured 3y ago
  Interestingly the market isn't regarding FedNow as a serious threat to Visa & Co. at all. Visa's stock is at an all-time high ($569 billion market cap, making them the most highly valued financial services company in the world). The belief must be that credit cards will retain their utility (purchase protection being one), both in the US and globally. I would expect Visa's extraordinary margins to get damaged by FedNow.
  - toomuchtodo 3y ago
    Agreed. “There's no particular reason why this kind of financial intermediation should be a $100 billion industry, rife with inefficiencies.” https://news.ycombinator.com/item?id=36012866 https://news.ycombinator.com/item?id=36012866 https://www.axios.com/2023/07/22/fednow-instant-payments-credit-cards https://www.axios.com/2023/07/22/fednow-instant-payments-cre... https://www.usbank.com/corporate-and-commercial-banking/cfo-insights/surging-business-interest-instant-payments.html https://www.usbank.com/corporate-and-commercial-banking/cfo-... https://www.moderntreasury.com/journal/bank-payments-as-a-credit-card-alternative https://www.moderntreasury.com/journal/bank-payments-as-a-cr...
  - bombcar 3y ago
    Purchase protection is a minor thing. The credit card companies let you spend money to don’t have, and that is valuable to both sides of the transaction.
    - deleted 3y ago
      [deleted]
  - krab 3y ago
    The market may be looking at the Europe where instant wire transfers are free and people use them (paying rent, phone, anything recurring, paying for larger items like a car). Often people use them to split a lunch bill. Mastercard/Visa is a huge thing here in retail but PayPal is really niche. No app leveraging the instant wire transfers is getting much traction. The network effects are huge and the card fees apparently aren't that high.
    - messe 3y ago
      Card fees here in Europe are capped on consumer cards at 0.2% for debit and 0.3% for credit.
      - krab 3y ago
        This doesn't seem right. At least from the small business point of view. The banks here in CZ charge around 1 % + $10/month for the device and card acceptance.
        padthai 3y ago
        He is talking about the card network, your fees include the card issuer and other things
        krab 3y ago
        I see. But the business owner will compare the whole amount vs. an alternative system's fees.
ianburrell 3y ago
I think PayPal will do fine. FedNow requires a frontend for UI and to find contacts. PayPal and Venmo have that and people are used to using them. Instead of ACH transfers, they will do FedNow transfers. They had to compete with banks and Zelle, and did fine. I think Zelle is doomed.
- wiml 3y ago
  I thought Zelle was just a friendly frontend to ACH?
  - toomuchtodo 3y ago
    Zelle runs on multiple networks (ACH, RTP, etc). https://www.narmi.com/insights/getting-real-about-real-time-payments https://www.narmi.com/insights/getting-real-about-real-time-... > Zelle is an example of a P2P option, but with one major difference from those outlined below; its transactions can be cleared via The Clearing House’s RTP rail. If both the payee and the recipient use banks that leverage the RTP rail, the transaction will settle instantly. If not, it will typically settle in a matter of minutes. Since users can send money to recipients outside of their bank and the funds settle in real-time (or nearly), it is considered to be an open (rather than closed) loop payment. > Notably, Zelle has seen massive growth since its launch in 2017 and is now available to nearly 80% of the U.S. population, with adoption by over 1,600 financial institutions. Similar to The Clearing House, Early Warning Services (owner of Zelle) is privately held by 7 major banks. https://danakivis.medium.com/the-state-of-faster-payments-in-the-u-s-ddb39158373f https://danakivis.medium.com/the-state-of-faster-payments-in...

toomuchtodo 3y ago

> FedNow will all but directly kill their primary business. Good riddance. Come for Visa and Mastercard next. $57B in combined revenue in 2023.

adventured 3y ago
Interestingly the market isn't regarding FedNow as a serious threat to Visa & Co. at all. Visa's stock is at an all-time high ($569 billion market cap, making them the most highly valued financial services company in the world). The belief must be that credit cards will retain their utility (purchase protection being one), both in the US and globally. I would expect Visa's extraordinary margins to get damaged by FedNow.
- toomuchtodo 3y ago
  Agreed. “There's no particular reason why this kind of financial intermediation should be a $100 billion industry, rife with inefficiencies.” https://news.ycombinator.com/item?id=36012866 https://news.ycombinator.com/item?id=36012866 https://www.axios.com/2023/07/22/fednow-instant-payments-credit-cards https://www.axios.com/2023/07/22/fednow-instant-payments-cre... https://www.usbank.com/corporate-and-commercial-banking/cfo-insights/surging-business-interest-instant-payments.html https://www.usbank.com/corporate-and-commercial-banking/cfo-... https://www.moderntreasury.com/journal/bank-payments-as-a-credit-card-alternative https://www.moderntreasury.com/journal/bank-payments-as-a-cr...
- bombcar 3y ago
  Purchase protection is a minor thing. The credit card companies let you spend money to don’t have, and that is valuable to both sides of the transaction.
  - deleted 3y ago
    [deleted]
- krab 3y ago
  The market may be looking at the Europe where instant wire transfers are free and people use them (paying rent, phone, anything recurring, paying for larger items like a car). Often people use them to split a lunch bill. Mastercard/Visa is a huge thing here in retail but PayPal is really niche. No app leveraging the instant wire transfers is getting much traction. The network effects are huge and the card fees apparently aren't that high.
  - messe 3y ago
    Card fees here in Europe are capped on consumer cards at 0.2% for debit and 0.3% for credit.
    - krab 3y ago
      This doesn't seem right. At least from the small business point of view. The banks here in CZ charge around 1 % + $10/month for the device and card acceptance.
      - padthai 3y ago
        He is talking about the card network, your fees include the card issuer and other things
        krab 3y ago
        I see. But the business owner will compare the whole amount vs. an alternative system's fees.

ianburrell 3y ago

I think PayPal will do fine. FedNow requires a frontend for UI and to find contacts. PayPal and Venmo have that and people are used to using them. Instead of ACH transfers, they will do FedNow transfers. They had to compete with banks and Zelle, and did fine. I think Zelle is doomed.

wiml 3y ago
I thought Zelle was just a friendly frontend to ACH?
- toomuchtodo 3y ago
  Zelle runs on multiple networks (ACH, RTP, etc). https://www.narmi.com/insights/getting-real-about-real-time-payments https://www.narmi.com/insights/getting-real-about-real-time-... > Zelle is an example of a P2P option, but with one major difference from those outlined below; its transactions can be cleared via The Clearing House’s RTP rail. If both the payee and the recipient use banks that leverage the RTP rail, the transaction will settle instantly. If not, it will typically settle in a matter of minutes. Since users can send money to recipients outside of their bank and the funds settle in real-time (or nearly), it is considered to be an open (rather than closed) loop payment. > Notably, Zelle has seen massive growth since its launch in 2017 and is now available to nearly 80% of the U.S. population, with adoption by over 1,600 financial institutions. Similar to The Clearing House, Early Warning Services (owner of Zelle) is privately held by 7 major banks. https://danakivis.medium.com/the-state-of-faster-payments-in-the-u-s-ddb39158373f https://danakivis.medium.com/the-state-of-faster-payments-in...