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Thousands ofAmericans got caught in fintech and lost access to bank accounts
- jowea 2y agoSo, there was a big failure of paperwork, but as the co-founder say, why is there a million dollar shortfall? Where did the money go? I wonder if having fdic.gov basically say "beware of fintechs" is going to negatively impact the sector: https://www.fdic.gov/resources/consumers/consumer-news/2024-06.html https://www.fdic.gov/resources/consumers/consumer-news/2024-... Remember when Voyager said it was FDIC insured?
- dralley 2y agoI wish so much that FedNow would put CashApp, PayPal, Venmo, etc. out of business. We don't need to gamify finance. Just make it fast, easy and safe to transfer money between parties, please.
- marcosdumay 2y agoIt seem to have launched an year ago. How is its adoption? Do people know about it? Is it easy to use it? I believe the US is the last of the largest economies to deploy something like FedNow. (The UK uses the EU one, doesn't it?) I imagine the credit card processors have put a huge fight.
- Animats 2y agoYes. Many banks are putting in receive-only FedNow - money can come in that way, but not go out. The U.S. Treasury supports send-side FedNow, so they can send Social Security, Medicare, tax refunds, etc. to bank accounts enabled for it. So that takes care of many routine transactions. Send-side FedNow at the consumer level has problems. Credit card transactions are tied to something of value being transferred from the merchant to the buyer. That info is carried along with the money transaction. So claim-handling and error reversal work reasonably well. Like wire transfers, but unlike credit cards, PayPal, and ACH, FedNow is irrevocable. When you send money with FedWire, it's gone. Fraud control will be tough. There's no merchant transaction associated with the money transfer. There are plans to add that, so a company can send someone a bill and they can pay that bill with FedNow. But the ability to send your entire bank balance to anybody with a few clicks, with no recourse, worries banks.
- figassis 2y agoSeems like something banks can handle locally no? Adding necessary metadata and limits? At least until it’s updated systemwide?
- Animats 2y agoThat's the plan. Here's the general spec for bill pay.[1] [1] https://explore.fednow.org/resources/rfp-market-practices.pdf https://explore.fednow.org/resources/rfp-market-practices.pd...
- Animats 2y agoReports of major trouble back in 2020.[1] Evolve, the bank that actually stores the money, says "Synapse’s abrupt shutdown of essential systems without notice and failure to provide necessary records needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law.".[2] So much for "money as a service". [1] https://www.forbes.com/sites/jeffkauflin/2020/04/01/broken-synapse-why-employees-and-customers-are-fleeing-this-andreessen-backed-fintech-startup/ https://www.forbes.com/sites/jeffkauflin/2020/04/01/broken-s... [2] https://www.getevolved.com/about/evolve-responds-to-fridays-court-hearing/ https://www.getevolved.com/about/evolve-responds-to-fridays-...
- darby_nine 2y agoI don't think there's anything wrong in theory with digital-only banks but I just haven't found anyone I'm willing to give my money to. Maybe the first digital credit-union will get my cash.
- marcosdumay 2y agoWell, the problem is that those things aren't banks.
- darby_nine 2y agook, sure. I prefer credit unions to banks. How could any rational person trust a for-profit institution?
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- andylynch 2y agoAre these US payment startups not regulated? Here and unblock the EU payment systems are themselves regulated , distinctly from banks but along very similar lines. A big motivation for this was to avoid such failures.