[HN Gopher] FedNow FAQ
___________________________________________________________________
FedNow FAQ
Author : hnburnsy
Score : 187 points
Date : 2022-08-18 14:58 UTC (8 hours ago)
(HTM) web link (www.federalreserve.gov)
(TXT) w3m dump (www.federalreserve.gov)
| vivegi wrote:
| In India, we have UPI, a tokenized peer to peer payments network
| powered by the National Payments Corporation of India (NPCI).
|
| Banks participate on the NPCI payment network.
|
| I can assign a Virtual Payment Address (VPA) such as
| payxyz@mybank and give that VPA to anyone that needs to transfer
| funds to me. At the moment, there are no transaction fees with a
| transaction limit of INR 200,000 (approx. $2500). This makes it
| unnecessary to share any sensitive bank routing numbers / account
| numbers etc., One can create different VPAs for different
| purposes/payers.
|
| UPI has had impressive growth in transaction volume (both # and
| monetary value) since its inception in 2016.
| https://www.npci.org.in/what-we-do/upi/product-statistics
|
| The transfers are instantaneous (i.e., completed within seconds)
| and accounts debited/credited. The system works transparently
| across banks due to the network being managed by NPCI.
| miohtama wrote:
| Why bank routing numbers would be sensitive? Aren't they public
| information?
| Gaelan wrote:
| Routing numbers aren't, but account numbers are:
| traditionally in the US it's possible to use a
| routing+account number to withdraw from someone's account.
| bergenty wrote:
| Afaik FedNow heavily borrows from UPI based on Google's
| statement on it.
| Brystephor wrote:
| Is UPI a protocol, an interface/set of messages, or is it an
| actual payment rail?
|
| Like, could I use a credit card with UPI?
| vivegi wrote:
| Banks implement the UPI protocol (an API essentially) to talk
| to the NPCI infrastructure network. Your UPI VPA is linked to
| your bank account. Most banks in India are already on the
| NPCI/UPI network.
|
| Thirdparty apps can also implement the API to provide
| services on top of UPI eg: bill pay, ticket booking for
| buses, trains, movies etc.,
|
| Payment processors provide UPI as a payment method (in
| addition to debit cards/credit cards/netbanking/digital
| wallets etc.,).
|
| To answer your question on credit cards usage with UPI: No,
| you only need a bank account. UPI is a p2p payment overlay
| over the banking network.
| westurner wrote:
| W3C ILP Interledger Protocol [1] specifies addresses [2]:
|
| > _Neighborhoods are leading segments with no specific meaning,
| whose purpose is to help route to the right area. At this time,
| there is no official list of neighborhoods, but the following
| list of examples should illustrate what might constitute a
| neighborhood:_
|
| > `crypto.` _for ledgers related to decentralized crypto-
| currencies such as Bitcoin, Ethereum, or XRP.
|
| > `sepa.` _for ledgers in the Single Euro Payments Area.*
|
| > `dev.` _for Interledger Protocol development and early
| adopters_
|
| From "ILP Addresses - v2.0.0" [2]:
|
| > _Example Global Allocation Scheme Addresses_
|
| > `g.acme.bob` _- a destination address to the account "bob"
| held with the connector "acme"._
|
| > `g.us-fed.ach.0.acmebank.swx0a0.acmecorp.sales.199.~ipr.cdfa5
| e16-e759-4ba3-88f6-8b9dc83c1868.2` _- destination address for a
| particular invoice, which can break down as follows:_
|
| > - Neighborhoods: _us-fed., ach., 0.
|
| > - Account identifiers: _acmebank., swx0a0., acmecorp., sales,
| 199 (An ACME Corp sales account at ACME Bank)*
|
| > - Interactions: _~ipr, cdfa5e16-e759-4ba3-88f6-8b9dc83c1868,
| 2_
|
| And from [3] "Payment Pointers and Payment Setup Protocols":
|
| > _The following payment pointers resolve to the specified
| endpoint URLS:_ $example.com ->
| https://example.com/.well-known/pay
| $example.com/invoices/12345 ->
| https://example.com/invoices/12345 $bob.example.com ->
| https://bob.example.com/.well-known/pay $example.com/bob
| -> https://example.com/bob
|
| The WebMonetization spec [4] and docs [5] specifies the
| `monetization` <meta> tag for indicating where supporting
| browsers can send payments and micropayments:
| <meta name="monetization"
| content="$wallet.example.com/alice">
|
| [1]
| https://github.com/interledger/rfcs/blob/master/0001-interle...
|
| [2] https://github.com/interledger/rfcs/blob/master/0015-ilp-
| add...
|
| [3] "Payment Pointers and Payment Setup Protocols"
| https://interledger.org/rfcs/0026-payment-pointers/
|
| [4] https://webmonetization.org/specification.html
|
| [5] https://webmonetization.org/docs/getting-started/
| beorno wrote:
| I wish they'd also implement IBAN and get rid of all the
| routing/transit/etc crap.
| clcaev wrote:
| The FAQ does not address fraud or charge backs. This is
| worrisome.
|
| The FAQ had a link to a community site, but that link is already
| broken.
|
| I'd like to see a critical service like this fully open source so
| that it can be inspected and referenced.
| adrr wrote:
| Thats the problem with instant money transfer. With ACH you
| have time to claw back the money before it settles on the other
| side.
| greenail wrote:
| If you are not a fan of big government do you view expanding the
| power of the federal reserve as dangerous?
| mixmastamyk wrote:
| No, nothing of note is changing other than speed and ubiquity
| of transactions. If you believed sloth and paper checks were
| providing you privacy, think again.
| i13e wrote:
| Am I understanding this correctly? It seems like this simple
| feature if added to US bank accounts would make Zelle, Venmo,
| cash app, maybe even PayPal, completely irrelevant
| skippyboxedhero wrote:
| It doesn't. Some countries in Europe have this already. The UK
| has FASTER which is instant transfers between UK bank accounts
| (I seem to remember these transactions are settled instantly
| interbank at the BoE, so good tech if I have remembered right).
|
| For non-P2P stuff like PayPal is very good because bank
| transfers are non-reversible. You can do G&S on PayPal and
| reverse that if you need to.
|
| For P2P, stuff like Revolut, PayPal, whatever is still easier
| because you don't need to remember your bank account number.
| There is also no interoperability between banking apps either
| (the only interaction is through FASTER and your number). So
| you end up needing someone in the middle, like PayPal, which
| (in the end) is just doing bank transfers...not ideal but it
| is, at least, cheap.
|
| Reason would suggest the latter will eventually change, but
| that day is not today.
|
| Also, cross-currency transfers are significantly easier with
| apps. I agree that it is all a bit unnecessary but...banks are
| banks. In the UK, there has been a lot of competition and
| services are still (imo) dire.
| twic wrote:
| > (seem to remember these transactions are settled instantly
| interbank at the BoE, so good tech if I have remembered
| right)
|
| No, participants have nostro/vostro accounts with each other,
| and payments are immediately settled using those.
| Participants shuffle money between those, including via
| accounts at the Bank of England if necessary, to maintain
| sufficient liquidity; they do that throughout the day, with a
| big cleanup at the end of the day, but it's not part of the
| transaction.
|
| Which means that banks need to keep track of their balances
| with other participants, and not send customers' payments if
| that would take them overdrawn. Obviously this would be
| highly undesirable, so they work hard to keep those accounts
| topped up.
| cube2222 wrote:
| In Poland we have BLIK for a few years already.
|
| All major banks participate in it, and it's both P2P (send to
| target phone number, which will behind the scenes resolve to
| a bank account) and web payments (use a one-time code from
| your bank app and then confirm in the app, without sharing
| any permanent data like card numbers).
|
| Also, it's instantaneous and free.
|
| And in fact almost _nobody_ in Poland uses Revolut nor PayPal
| for P2P, everybody uses BLIK. People do use Revolut for their
| great exchange rates though.
| skybrian wrote:
| As I understand it, this is settlement infrastructure for
| banks. How the consumer experience is actually implemented is
| up to each bank.
|
| Perhaps Zelle will switch to it for settlement without changing
| the user experience? Some limits might be removed, but then
| again I'd guess that the limits are at least partly there for
| security purposes (to prevent bank accounts from being drained
| too easily) and the risks don't go away just because settlement
| is easier.
|
| (In a similar way, ATM transactions have daily limits and it's
| not because there's any technical reason for daily limits to
| exist.)
| mr_tristan wrote:
| We can only hope that the US doesn't let a corporate interest
| put limits on this a la Intuit with free tax filing.
|
| Otherwise, yes, it sure seems like this would pretty much
| obsolete a lot of payment platforms.
| notch656a wrote:
| To some extent crypto too. HN constantly shits on me for saying
| I use crypto for this purpose, but there are vendors in the US
| I legitimately use crypto for because it is the only low-fee
| way for me to send something that will clear in under 30
| minutes.
| brewdad wrote:
| Most pot dealers will take cash. ;-)
|
| Seriously though, what kind of vendors are you finding crypto
| useful for that no other payment method can match or beat? I
| haven't found a single need for crypto in my life, aside from
| pure financial speculation. Maybe I just don't run in the
| right circles.
| notch656a wrote:
| metal bullion. If you have free wire transfers, some of the
| time it might clear as fast for cheaper, but then again
| usually not and none of my banks offer free wires.
|
| Most bullion dealers charge absurd markups for cards
| because people will steal credit cards or paypal account
| and drain it buying metals, which means the fraud premium
| for credit is sky high. Crypto is irreversible so you don't
| get stuck paying insurance premiums for fraud you're not
| engaging in.
| bobthepanda wrote:
| Funny enough, the pot shops really embraced BTC in their
| infancy because anything to reduce cash was good (banks
| will not touch them due to the federal gov't), but they've
| all since dropped it due to volatility being too expensive
| to deal with.
| [deleted]
| cecilpl2 wrote:
| Yes. None of those are a thing here in Canada in my experience.
| We have Interac E-Transfers which is allow you to send money to
| anyone just by knowing their email address or phone number.
|
| Either the person gets an email/text with instruction to
| deposit the money, or they can register their email in a
| central database which allows for automatic deposit and nearly
| instant transfer.
| koblas wrote:
| Payments Canada is working on their real-time system, in
| theory this will be deployed this year.
|
| https://www.payments.ca/real-time-rail-payment-system
| digianarchist wrote:
| Nearly instant depending on your bank. Waiting 45 minutes to
| an hour is not unheard of. They do a really poor job of
| assessing risk e.g. sending money to myself routinely still
| results in slow transfers.
|
| There's also ridiculously low limits on daily/weekly/monthly
| transfers making it useless for say moving a house deposit
| between banks.
| aidenn0 wrote:
| This doesn't replace Venmo for P2P since it requires $25/month
| fee if you want to receive credits. It can certainly replace
| paypal &c. for payments though
| rexreed wrote:
| It's $25/mo per _routing transit number_ , which means
| basically per bank or financial institution, since each bank
| has usually one or a handful of routing numbers, even if they
| have millions of accounts.
|
| I'd like clarification but from the wording and this release,
| it seems that it's about $0.05 per transaction and the bank
| has to pay a $25/mo fee per routing number:
| https://www.pymnts.com/news/faster-payments/2022/fed-
| release...
| aidenn0 wrote:
| Oh, I missed that it was per RTN, and just focused on the
| "that can receive debits" part; yeah, that's super cheap
| then, particularly since they don't take a percentage of
| the transaction value and it has a default maximum
| transaction limit of $100k.
| candiddevmike wrote:
| Wouldn't be surprised if banks or credit unions waved the fee
| as a benefit for their members
| rexreed wrote:
| The fee is so minimal ($25/mo per bank / $0.05 per
| transaction) that any bank that even attempts to pass it
| through is really doing a disservice to their account
| holders. That said, I put nothing past Wells Fargo or Bank
| of America.
| aidenn0 wrote:
| Given that the _sender_ pays the bulk of the transaction
| fee, and smaller customers are more likely to send a lot
| than receive a lot, I suspect the $0.045 to be passed
| through. Of course, merchants might want to eat the fee
| by charging $0.045 less in order to encourage people to
| use this instead of credit cards (which are far costlier
| to merchants, and can incur chargebacks).
| 46Bit wrote:
| The existence of most of those apps has long seemed crazy from
| a UK perspective. Our bank transfers take seconds to hours, to
| pretty much anyone. Payments are one of the banking areas where
| the US has been stuck far in the past.
| toomuchtodo wrote:
| They were shims around Congress not providing the Fed the
| authority to establish instant payment infra until very
| recently (~3-4 years ago). With instant payment utility
| capabilities, you can eliminate the need for these shims and
| other antiquated financial infra previously supporting faster
| settlement (RTP, Zelle, credit/debit cards, etc).
|
| Very pleasant to see the US catch up to the developed world
| in this regard [1].
|
| [1] https://www.moderntreasury.com/journal/real-time-
| payments-ar...
| [deleted]
| scarface74 wrote:
| Zelle is owned and controlled by seven of the largest banks in
| the US. It was basically created the fill the gap and create a
| standard for consumer bank to bank transfers.
| legitster wrote:
| This is specifically a behind-the-scenes product offered to
| banks that replaces the existing clearinghouse system. I can't
| imagine it being offered directly to consumers, but we might
| see it in the form of faster deposit/withdrawal times.
| Tyrannosaur wrote:
| It blows my mind how badly Zelle has failed. It _already_ is
| integrated to US bank accounts. It started as a cooperative
| venture over a decade ago by several US banks with the explicit
| goal of being integrated with your bank so you don 't need a
| separate account!
|
| And yet it comes across as a mere clone of Venmo.
|
| https://en.wikipedia.org/wiki/Zelle_(payment_service)
| jacobmarble wrote:
| The problem with Zelle seems to be that no one knows about
| it. Yet, I'm using it more and more all the time.
|
| For example, the person who cuts my hair only takes cash. I
| asked if we could try Zelle (I rarely carry cash). She
| agreed, and we haven't looked back.
| dannyincolor wrote:
| I feel like the branding really shot it in the foot. If
| they'd named it something less "startup-y" sounding, and
| marketed it as secure, instant transfers backed by the banks
| themselves, they might be in a better position.
|
| I still use it all the time since it's a superior to any
| other offering for instantaneous high-dollar transfers, but
| it always feels like a "Venmo got embedded in my banking app"
| type of interface vs. "my bank is offering a direct payment
| service to it's other networked banks".
|
| Hard to define, but I do think the marketing/branding/rollout
| were more to blame than the merits of the service itself
| (IMHO, Zelle is great).
| datavirtue wrote:
| Yeah, if it had piles of VC money shoving it down people's
| throats it might have been received better.
|
| The banks don't make money on it...so boring to them and
| therefore neglected from a marketing perspective.
| squeaky-clean wrote:
| Chase used to call it "Chase QuickPay", which was a great
| name. And when they joined Zelle and started supporting
| other banks it became "Chase QuickPay With Zelle". I don't
| know why it needed 2 product names but at least one of them
| told you what it did. And now it's just Zelle...
| kyrra wrote:
| Since EWS (The company that runs zelle) is effectively co-
| owned by a bunch of the large banks in the US, which has
| caused many of the small and mid-sized banks don't want to
| take part. They worry transaction information and the size of
| their bank (based on traffic) when leak its way to the large
| banks giving them some kind of advantage.
| toomuchtodo wrote:
| Zelle does roughly $490B/year in transaction volume (1/4 of
| total annual US card volume, ~$2T). If that's failure, I want
| to fail too! Venmo is closer to $230B in volume.
| granzymes wrote:
| Has it failed? Zelle's volume is more than twice that of
| Venmo and Zelle is growing faster.
| clumsysmurf wrote:
| > with the explicit goal of being integrated with your bank
| so you don't need a separate account!
|
| The goal of Zelle was to prevent the likes of Square Cash,
| Venmo, etc from dis-intermediating the banks from their
| customers.
| coldpie wrote:
| My bank offers me like 50 garbage services every time I log
| in. Zelle falls into that bucket. I've never used it and
| barely know what it is, I just assume it's a scam like
| everything else banks offer.
| bergenty wrote:
| It looks like a garbage service but it's kind of great. It
| what I use to send money. It's instant and free.
| digianarchist wrote:
| Funny I tried to setup Zelle with TD Bank the other day and
| they told me not to use it to send money to myself.
|
| How do Americans send money from one bank to another for
| accounts they operate?
| dannyincolor wrote:
| Most services I use integrate Plaid. I believe Plaid is
| just a federated authentication glue that accesses your
| bank's systems and is granted access to account balances
| and ACH details (routing/bank account numbers).
|
| It always struck me as an odd product, since I can just
| plug my ACH info in directly, but it does provide some
| level of convenience by allowing, say, a roboadviser app to
| show the embedded balances of my other accounts.
| LetsGetTechnicl wrote:
| Yeah Zelle doesn't really work well for that because I
| think you can only ever have one Zelle-enabled account
| because it's based on phone number or email.
|
| Some banks offer external bank transfers through their
| online portal, and sometimes with a small transaction fee.
| I've been told by my bank with that transaction fee that
| you can avoid it by using the "bill pay" feature and just
| inputting your other bank account's routing and account
| information. I think that all works over ACH anyways.
| digianarchist wrote:
| I was hoping to use my catch all domain to resolve that
| e.g. td@mydomain.com, wellsfargo@mydomain.com which is
| what I do with Interac. Looks like it got me flagged.
| jjnoakes wrote:
| Most bank accounts I've ever had in the US let you set up
| bank-to-bank transfers via the web site. It only requires a
| routing number and an account number.
| digianarchist wrote:
| TD too but that takes 24-48 hours and you have to go
| through a weird validation process. Two deposits are made
| to the receiving bank under and you're asked to confirm.
|
| TD also wanted me to come into a branch with a bank
| statement from my other bank. Not ideal since they don't
| operate west of South Carolina and I'm in California.
| TYPE_FASTER wrote:
| Yeah, honestly I didn't know it wasn't bank specific until I
| opened an account at a local credit union and it showed up as
| an option for transferring funds.
| fishpen0 wrote:
| The annoying thing with zelle is that every bank has
| different limitations. USAA for example has a 1k daily zelle
| limit. So it's completely useless for things like paying rent
| to a landlord unless you want to split a rent payment up over
| several days.
| xeromal wrote:
| I don't think Zelle has failed. I use it to pay my rent and
| to people who do odd jobs around my place.
| Thev00d00 wrote:
| In the UK at least Zelle, Venmo, cash app are not a thing in my
| experience.
|
| We have the wonderful Faster Payments System[0], that allows
| near instant payments to any account. Banks have nice phone
| apps, with push notifications and emoji.
|
| Paypal is a thing usually just a way to avoid putting in card
| details directly.
|
| 0. https://en.wikipedia.org/wiki/Faster_Payments
| Symbiote wrote:
| Britain also has PayM, to send money using a phone number as
| an identifier, but at least in my bank's app the interface is
| hidden several menus deep.
|
| Denmark's equivalent, MobilePay, is very widely used. I even
| use it for some online purchases, as the flow is so smooth:
|
| - Select pay by MobilePay
|
| - (They probably already have my phone number (e.g. for
| delivery notifications), if not I must enter it. It's 8
| digits.)
|
| - A notification appears on my phone, with the amount and
| recipient
|
| - Fingerprint and swipe to confirm
|
| - That's all.
|
| The website doesn't keep any card data, but I still get a
| very quick checkout process.
|
| To send money to friends or family (or small businesses) is
| also fast:
|
| - Open app, unlock with fingerprint
|
| - Type in amount, e.g. 100, press Next
|
| - Choose a recent recipient, or scroll through my contacts,
| or type a phone number
|
| - See confirmation -- the amount and the person's name as on
| their bank account, not their name in my address book
|
| - Send.
| michaelt wrote:
| Faster payments is good in a way but also.... weird. At least
| the way my bank implements it.
|
| Want to pay someone new? Better have your smartphone with the
| app, _and_ your bank card _and_ your card reader. Be ready to
| provide your fingerprint _and_ your card PIN number. _And_
| they 'll send you a text message telling you a new payment
| recipient has been added. That's a fine level of security if
| you're paying thousands of pounds - but if you're paying PS5
| for lunch the process is just as strict.
|
| And despite all that security, it's _still_ limited to
| payments <PS10,000 for some reason.
| Closi wrote:
| The level of 'user' security is defined by your bank,
| rather than the faster payments protocol.
|
| Monzo for instance just requires that you are signed into
| the app and can face-ID on iOS.
| kevin_thibedeau wrote:
| Forcing people to use a smartphone is still a fail.
| blibble wrote:
| it used to by the bank, now the minimum security is
| defined by the Payment Services Directive
|
| which is quite specific
| digianarchist wrote:
| Any transfers that fall into the allowance of a tap payment
| shouldn't have to go through the same amount of security.
|
| I miss the Faster Payments network immensely. The systems
| in Canada and the United States are a mess in comparison.
| beojan wrote:
| The UK has a Zelle like service called Paym that works on top
| of Faster Payments and means you don't need to share your
| bank details.
| __derek__ wrote:
| The Fed has no interest in direct retail access (see narrow
| banking[1]). This is all about improving the plumbing for those
| services, not replacing them.
|
| [1]: https://www.bloomberg.com/opinion/articles/2019-03-08/the-
| fe...
| notsahil wrote:
| In India we have UPI https://www.npci.org.in/what-we-
| do/upi/product-overview which also integrates with third-party
| apps.
| josemando wrote:
| In Brazil, we have PIX, a way to make instant transfers 24/7 that
| is always free for individuals. It was launched in Nov/2020 as
| last month alone it had 1.8B transactions on its network.
|
| It's really ubiquitous right now, as you can pay pretty much
| anything using it.
|
| [edit] for those who like numbers, here are the stats from the
| federal bank (ps: it's in Portuguese):
| https://www.bcb.gov.br/estabilidadefinanceira/estatisticaspi...
| eliseumds wrote:
| And they recently launched the ability for trusted apps to
| start a Pix transaction. It'll open your banking app with the
| recipient and amount pre-filled, and all you have to do is
| authorise it.
|
| They're working on an offline version now, we'll see... that'd
| be amazing.
|
| All in all, I'll keep using credit cards for security (Pix
| transactions can't be disputed) and miles.
| Brystephor wrote:
| > As with current Federal Reserve Bank services, the FedNow
| Service will be available to depository institutions eligible to
| hold accounts at the Reserve Banks under applicable federal
| statutes and Federal Reserve rules, policies, and procedures.
|
| I wish this would be more available to directly connect with
| versus having to go through an existing bank. It also leads me to
| believe that adoption won't be widespread for a few years after
| release.
|
| With Real time payments (RTP, the clearing house instant payment
| rail) it still has banks onboarding to the network each month.
| RTP was launched in late 2017
| divbzero wrote:
| I recently initiated a transfer from a American Express Business
| Checking account to a business checking account at a different
| bank. The funds were deposited the same day which seemed way too
| fast to be ACH. Does anyone know how the funds could be
| transferred so quickly?
| pachouli-please wrote:
| Your receiving bank can very quickly get notification of the
| incoming transfer, and 'spot' you an arbitrary amount (or all)
| while it _actually_ clears in the background.
| phyzix5761 wrote:
| Most likely they used same day ACH. They could have also used
| some form of RTP (Real time payments). But it's probably same
| day ACH.
| stazz1 wrote:
| Bitcoin, for all its flaws, did force an update to archaic money-
| moving technology.
| jrm4 wrote:
| Hard to not think the advent of crypto might have pushed this?
| rvz wrote:
| The truth and the fact is that it already has and only a few
| crypto projects are compliant with the ISO 20020 standard such
| as XRP (RippleNet), Algorand, Stellar Network, etc which are
| becoming compliant with the standard to be used for that use
| case.
|
| The furthest and the most compliant crypto project compatible
| with the ISO 20020 standard which fits this use-case so far is
| XRP.
| jlongr wrote:
| Judging by the article, it sounds like they are reaching for
| technological parity with other governments around the world:
|
| >In fact, among the many countries that have either developed
| or are in the process of developing instant payment
| capabilities, the vast majority have done so with the direct
| operational involvement of their central banks. This progress
| means that the U.S. retail payment system lags behind systems
| in other countries.
|
| Furthermore, they don't have confidence in the private sector
| to achieve this sort of thing:
|
| >Based on its assessment, the Board concluded that private-
| sector real-time gross settlement services for instant payments
| alone were unlikely to provide an infrastructure for instant
| payments with reasonable effectiveness, scope, and equity. In
| particular, private-sector services are likely to face
| significant challenges in extending equitable access to the
| more than 10,000 diverse depository institutions across the
| country.
| pjkundert wrote:
| himeexcelanta wrote:
| Huh? What's your point?
| supernova87a wrote:
| The most important questions to me are:
|
| 1. Are the transfers irreversible?
|
| Why? Because one big problem with our current system is the fraud
| (and mistrust) that results from ACH/checks being sent under the
| impression they are guaranteed funds, but being reversed by the
| sender or because they didn't actually clear, days (up to weeks)
| later. This is a big source of scams. People are out lots of
| money because of this, and continuing every day that this doesn't
| get resolved. Not saying that we can protect everyone from
| everything, but this is a no-brainer. Are the transactions final
| (unless there is legal action and both parties are identified)?
|
| 2. Is it a "push" only system?
|
| Push, obviously meaning that only the account owner can initiate
| a transaction to transfer funds out of the account. I figure it
| must be, if things are instantaneous and irreversible (but that
| is to be confirmed). I don't want any more of our current system
| where someone knowing my bank account numbers can accidentally or
| purposefully withdraw money from my account and it's up to me to
| detect and ask for that to be fixed. This is ridiculous that we
| still have a system that allows that.
|
| ------
|
| Of course, this new system means that people will need to be
| educated/trained on some of the dangers that may not be apparent
| when a system changes. Like, if someone gets duped into sending
| money, it is now irreversible. Or if fraud is committed somehow,
| there is no recovering from it. It probably (hopefully) will have
| to come with new types of account protection given these facts.
| Some problems will now be prevented, but new problems may be
| caused. An updated diligence on the part of users (and the
| system) will also be needed.
|
| I think it's a welcome and overdue development though.
| connicpu wrote:
| It seems the idea here is that they are irreversible as
| settlement and clearing both happen instantaneously, and both
| the sender and recipient should have that information updated
| for them immediately.
|
| It didn't seem entirely clear, but it seems like request-for-
| payment is a supported feature, and that they will charge 1
| cent per RfP transaction. The wording as a "request" makes it
| sound like the one paying will still have to approve the
| transaction on their side for it to go through
| abrylov wrote:
| Actually yes, FedNow will only support one way transfers
| (push credits), when the owner of the account can initiate a
| transfer. Request for Payments supposed to support this as
| well, when merchant can send you a request to pay for
| something, but the account owner is the one who authorizes
| the transfer (ad oppose to direct debits in the ach world).
| NordSteve wrote:
| Lots of FedNow jobs, if this sounds interesting. I have friends
| who have worked at the Fed and it's a pretty decent gig.
|
| https://rb.wd5.myworkdayjobs.com/en-US/FRS/details/FedNow-In...
|
| Plus -- how many other large tech employers have a real police
| department to guard their giant pile of gold?
| https://www.federalreserve.gov/faqs/does-the-federal-reserve...
| bearjaws wrote:
| I am a betting man, and I bet all the major banks, Venmo, PayPal,
| Zelle will all go to court, probably all the way to the supreme
| court (or does it go to Senate now?) to rule that this is beyond
| the powers of the Fed.
|
| We will either implement nothing or we will implement a system
| that lets all these companies profit.
|
| Meanwhile every major country in the world solved this issue 8+
| years ago.
| vonwoodson wrote:
| The Federal Reserve is independent, in the sense that monetary
| policy and related decisions are made autonomously and are not
| subject to approval by the federal government.
| mtoner23 wrote:
| None of that matters if the supreme court sees the issue.
| "congress didnt explicitly delegate this to the fed,
| therefore its unconstitutional"
| heartbreak wrote:
| Why would a Federal Reserve member bank fight the Fed on this?
| legitster wrote:
| This is specifically about interbank clearinghouses. Not sure
| why payment companies would care?
| nickvanw wrote:
| I would bet money on the opposite happening: The Fed is not
| going to release a social app that interrupts the network
| effects of all of those systems. Zelle may be the one that has
| the most to worry about, because it is partnered with big banks
| and powers a lot of their transfer systems.
|
| PayPal, Venmo, etc. will all start to use FedNow in the backend
| to provide for a better product experience and charge the same
| fee, but spend less on settlement.
|
| These are better payment rails, not the wholesale replacement
| of how people send money to each other in the USA.
| gamblor956 wrote:
| Zelle isn't partnered with the big banks. It is literally
| owned by them as a joint venture created for the sole purpose
| of facilitating the bank-to-bank transfer system.
| Bytewave81 wrote:
| So... it's America's Interac?
| ru552 wrote:
| It's owned by a few of them and then partnered with the
| rest of them.
| hathawsh wrote:
| Venmo, PayPal, and Zelle are all consumer-facing products.
| FedNow is a service for interbank settlement only, not a
| consumer product. FedNow does create an opportunity for banks
| to provide instant payments for their customers, but that just
| means banks (even small banks) will be able to compete well
| with Venmo and others. That seems like a win for everyone to
| me.
| __derek__ wrote:
| Adding onto this, the Fed has proposed opening up Fed Master
| Accounts to non-bank fintechs (e.g., PayPal/Venmo). That
| would allow them to improve their own services by moving off
| of ACH.
|
| For those interested in the Fed Master Accounts topic, I
| recommend this Macro Musings podcast episode with George
| Selgin.[1]
|
| [1]: https://macromusings.libsyn.com/george-selgin-on-
| inflation-f...
| gzer0 wrote:
| I think many are forgetting that Paypal has owned Venmo since
| 2012 [1].
|
| [1] https://en.wikipedia.org/wiki/Venmo
| nominusllc wrote:
| All? No. A lucky few? Absolutely.
| plibither8 wrote:
| The Indian Reserve Bank (RBI) and NPCI introduced UPI (Unified
| Payment Interface) back in 2016, similar to FedNow. This
| potentially disrupted the business and product that Paytm
| (similar to Venmo) offered.
|
| Interestingly, NPCI also allowed third-party apps to integrate
| UPI payments directly into their app. Users could use both the
| Paytm wallet and UPI for transactions. These apps that
| integrated UPI saw a huge rise in daily usage and volume of
| transactions, which was ultimately beneficial for them (they
| could channel promotional coupons/offers through the apps). UPI
| was generally preferred over online wallets as the medium of
| payment because of direct bank-to-bank transactions.
|
| So if the Fed does something similar, might just be a win-win.
| keepquestioning wrote:
| There is always a negative externality to such things.
| Everyday people are now spending more than they ever did
| because it's easier.
| dubcanada wrote:
| Easier then what? Giving someone a $5 bill?
| cuteboy19 wrote:
| NPCI itself is a consortium of banks, similar to Zelle, but
| better at just about everything
| TakeBlaster16 wrote:
| FedNow has been in the works since 2019 (at least). If someone
| were taking them to court, shouldn't it have happened by now?
| bearjaws wrote:
| To me this is the first formal announcement that the Fed is
| going to solely operate this system, which makes many of
| these companies redundant.
| [deleted]
| rvz wrote:
| > The Federal Reserve is committed to using the widely accepted
| ISO 20022 standard and other industry best practices to remove
| unnecessary and burdensome incompatibilities that could be a
| barrier to payment routing, a model of interoperability.
|
| So the underlying technology that is going to basically power and
| be compatible this standard will most certainly be in
| collaboration of the creators of XRP, (RippleNet), Stellar
| Network, Algorand and XDC chains as they are notable
| cryptocurrency technologies and ledgers that are gaining general
| compliance with the ISO 20020 standard. [0]
|
| So like it or not, there is a compliant few cryptocurrency DLT
| technologies that are already being evaluated and are being
| considered for this use-case.
|
| [0] https://investorplace.com/2021/10/iso-20022-crypto-
| list-5-co...
| eric4smith wrote:
| This is one of the best things about living in Southeast Asia.
|
| Instant bank transfers.
|
| Because of this you csn just scan the QR code of your taxi, the
| fruit seller on the street, transfer to your friends.
|
| Everyone gets it instantly.
|
| Now this is not third party services. It's bank account to bank
| account. As a result things like PayPal or Cash app make no sense
| in this part of the world and have no uptake here.
|
| In fact it's a downgrade to use those kinds of services.
|
| Remembering the bank issues in North America is quite painful.
| Hope it really happens next year.
| [deleted]
| happyopossum wrote:
| > This is one of the best things about living in Southeast
| Asia. > Instant bank transfers.
|
| Really? One of the BEST things? That sets a pretty darned low
| bar.. I mean, I've never once been even remotely inconvenienced
| by the US way of handling money and payments.
| VHRanger wrote:
| I imagine your payments experience is largely as a retail
| consumer then
| paxys wrote:
| This will never happen in North America because the existing
| payments establishment is collectively worth _trillions_ of
| dollars (think Visa, Mastercard, Paypal, Square, Stripe, all
| credit card issuing banks, all smaller second and third degree
| players) and will be ready to spend a big chunk of it to lobby
| and keep themselves relevant. Look at the case with tax
| filings, for example.
|
| The US government will never be permitted to enter a business
| area and displace existing corporations regardless of whether
| it makes life easier for citizens or not.
| throw10920 wrote:
| > will be ready to spend a big chunk of it to lobby and keep
| themselves relevant
|
| Or worse than just lobbying?
|
| https://news.ycombinator.com/item?id=32511170
| dan-robertson wrote:
| There are basically easy bank transfers in the U.K. which are
| almost always very fast but they aren't used for most
| payments. You'd use them to transfer between friends/family
| and paying for something like rent (with a standing order) or
| moving money between accounts.
|
| While the payments industry (ie Mastercard/Visa) is a big
| one, they do actually provide a service. The cards allow
| people to buy things on credit (so stores can let people buy
| things on credit without needing their own collections
| departments or taking on default risk) and they provide
| various consumer protection mechanisms (which consumers want
| even if they won't care about buying things on credit and
| paying back the loan over a long time).
|
| It also isn't obvious to me that this market won't see
| disruption. There are a lot of BNPL firms trying to get in on
| it, for example.
| pfranz wrote:
| In the US, I've generally avoided debit cards (but still
| would recommend them to people who aren't good at
| budgeting) because while disputes are settled you're
| missing the money.
|
| My brief experience in other European countries is that
| debit cards are common, but credit cards aren't. I've heard
| this is because of strict caps on fees, which means few
| promos and benefits (like the US has). Sweden has a digital
| p2p service called Swish. Small businesses seemed to prefer
| it, but was a little annoying because you had to key in the
| code or use your camera to scan their QR code. This wasn't
| a huge hassle for sending money to friends. From what
| another commenter said, the UK requires you to manually key
| in the sort-code and account number. I can see that
| preventing adoption for casual purchases.
|
| I was never sure of what protections I had around fraud
| with other payment options. I imagine consumer trust will
| be difficult to build.
| rufusroflpunch wrote:
| I think you're wrong. The credit card system's days are
| numbered. In 5 years I think digital wallets will be common
| in the US, and it won't be because of anything the government
| did except get out of the way.
| PaulDavisThe1st wrote:
| What is a credit card if not a kind of digital wallet?
| rufusroflpunch wrote:
| I'm referring to a payment network outside of credit card
| rails entirely.
| adventured wrote:
| > The US government will never be permitted
|
| Then why don't corporations regulate the government, instead
| of it being the other way around? Why did the minimum
| corporate tax rate just go up to 15%? Why is there any
| corporate tax at all? The US government pushes companies
| around anytime they see fit. They're a superpower with the
| world's most powerful military, the FBI, CIA, NSA, and dozens
| of prominent regulatory agencies that control every aspect of
| the US economy.
|
| When they decided to go after Google, guess what happened?
| The founders of Google immediately ran away in fear. They
| promptly resigned simultaneously and shrank from view. They
| knew what would happen and they got out in front of it.
|
| When they went after Microsoft, guess what happened? Bill
| Gates resigned from leading the company that he founded and
| had been in charge of for a quarter century. The most
| powerful, richest private citizen in the US gave up control
| over one of the world's most powerful corporations.
|
| The feds are drastically more powerful than any private
| citizens or corporations. Corporations are run by people, and
| people are very easy to target and easy to break, especially
| when you have powers of an epic scale central government.
|
| Even a company the size of Apple is barely a spec to the US
| Government (a government which is currently engaged with
| Ukraine in smashing the supposed #2 military, Russia, using
| just a modest flex of its weapons and capabilities). Only
| China's government comes close to rivaling the US Government
| for power, corporations are a joke by comparison.
|
| If the feds want to implement an instant payment system, then
| that's exactly what they'll do, whether Visa or PayPal likes
| it or not.
| squeaky-clean wrote:
| > Corporations are run by people, and people are very easy
| to target and easy to break, especially when you have
| powers of an epic scale central government.
|
| This is true of governments too. Tech lobbyists doesn't
| sway the people who make up the government that much. But
| oil, guns, and real estate very much do.
| snarfy wrote:
| The Federal Reserve is not the US government. It is a private
| bank.
| daxelrod wrote:
| It's weirder than that. The Board of Governors of the
| Federal Reserve is an agency of the US federal government.
| The system as a whole has "a combination of public and
| private characteristics".
|
| See the section "The U.S. Approach to Central Banking" of
| https://www.federalreserve.gov/aboutthefed/structure-
| federal... .
| stazz1 wrote:
| Thanks for this clarification. I had a hunch it was a
| weird mix of the two. In reality I'm glad congresspeople
| don't have a lens into the money printing business.
| vesinisa wrote:
| What do you mean by this? As far as I know, the Fed was
| established by an Act of Congress and it is overseen by a
| Board of Governors whose members are appointed by the
| President and report to the Congress. To me it doesn't
| necessarily seem too different from many other government
| agencies, the biggest difference being that it is self-
| funded.
|
| Because of its autonomy it doesn't seem to fall well within
| any of the three classical branches of government, but it
| sure seems to me like a part of the government nonetheless.
| motbob wrote:
| This pessimism is pretty popular, and it's just wrong. It's
| not about whether the U.S. government will "displace existing
| corporations." It's about whether a publicly funded and
| developed solution to a problem is clearly better than a
| private solution.
|
| Should the U.S. have an official tax preparation system? That
| would sure save a lot of people a lot of money, but I'm
| personally grateful for the fact that a bunch of private
| companies have been spending a lot of dough trying to develop
| good online tax prep utilities. Self-service tax prep is in a
| much better place than it was 15 years ago because of the
| efforts of those private companies. And an official option
| for tax prep would undercut those efforts. (At this point, of
| course, it's high time for the IRS to create an official
| option, and they are moving towards that.)
|
| Congress is aware of the above concern. The lawmaking "meta"
| since the Reagan years is to not undercut the normal
| operations of a competitive market unless there's a clear
| reason to. But sometimes there _are_ clear reasons to. That
| 's why we have things like FDA rules that tell companies what
| can or cannot be labeled as "peanut butter" or "milk
| chocolate." It's why we strictly regulate the radio spectrum.
| It's why we have healthy anti-trust, anti-cartel, and anti-
| foreign-bribery laws. Congress understands traditional
| examples of market failures and is very interested in fixing
| them. But the tax prep industry, for example, is not an
| example of a market failure, so Congress is not excited about
| getting involved.
|
| Getting back to FedNow, creating a standardized payment
| system to be used throughout the financial industry is a
| prime example of fixing a market failure: the difficulty of
| coordination, and the obvious benefit of getting every bank
| onto the same payment system. So I am not especially
| pessimistic about the prospects of this system.
| umvi wrote:
| > Should the U.S. have an official tax preparation system?
| That would sure save a lot of people a lot of money,
|
| Would it? Seems like a conflict of interest to me. Down the
| road the government might be tempted to abuse its control
| of both tax laws and ubiquitous tax preparation software.
|
| I think it would be better if:
|
| - Tax laws and tax law updates are required to be released
| in machine-readable format (i.e. JSON) using a machine-
| parsable protocol (i.e. converted from "English" to "Tax
| Grammar")
|
| - IRS was required to maintain a public API for submitting
| returns
|
| This would lower barrier-to-entry of tax filing software
| and weaken incumbents' (i.e. Intuit's) lobbying power.
| Furthermore, IRS is free to build a tool if they want, so
| long as it is both open source and dogfoods the public API
| and public tax law data that everyone else has access to.
| runako wrote:
| > the government might be tempted to abuse its control of
| both tax laws and ubiquitous tax preparation software.
|
| Could you describe a scenario where this could be the
| case? What kind of things would abusive tax prep software
| do? Would it lie to get people to overpay? Why would the
| government take that approach instead of just levying
| directly from people's accounts and/or reducing their
| refunds?
| nightski wrote:
| Well the U.S. tax system is heavily dependent on
| deductions which the IRS often does not have information
| on. So I'd imagine a lot of people would go with the
| default when in reality they might be able to save money.
|
| That said, Trumps tax law greatly increased the standard
| deduction so it's not as big of an issue any more.
| runako wrote:
| > tax law greatly increased the standard deduction so
| it's not as big of an issue any more.
|
| As of 2019, only ~11% of filers itemized. It would be a
| good idea to have a public website where 90% of filers
| could do their taxes for free.
| captainoats wrote:
| The government is naturally incentivized to maximize
| revenue. Individuals are incentivized to pay as little
| tax as they can, legally. Private tax prep software is
| pretty aggressive about identifying all possible
| deductions to reported income. The government would not
| be as motivated in designing their own system. You can
| see this in the paper filing forms, they have detailed
| instructions, but almost nothing on how to reduce tax
| paid, besides things like the child tax credit and earned
| income tax credit.
| runako wrote:
| > The government is naturally incentivized to maximize
| revenue
|
| This is a fundamental misunderstanding of the situation.
| The tax law is what it Congress decides it is. The law
| depends on taxpayers to report their incomes as well as
| deductions and other facets of their financial lives
| (e.g. household size, addresses, etc.).
|
| A government-run tax prep site couldn't necessarily pull
| in all of your deductions, that's correct. But it also
| couldn't necessarily pull in all your income (especially
| business income, offshore income, etc.). It's mostly
| neutral in that respect.
| missedthecue wrote:
| But most Americans have at least a few deductions. How
| many Americans have offshore income? Especially the ones
| that would be relying on gov. tax prep?
|
| In this case, it is mostly one sided
| runako wrote:
| See: https://news.ycombinator.com/item?id=32513370
|
| Roughly 90% of Americans file using the standard
| deduction ($13k for a single person, $26k for a married
| couple filing jointly). Median household income is ~$67k,
| so the median household is not itemizing.
|
| The remaining 10% of people would not be bound to use the
| free public system.
| missedthecue wrote:
| You can qualify for a number of deductions without
| itemizing.
| runako wrote:
| Correct, but in that case there is no impact to your
| taxes.
| pfranz wrote:
| > Self-service tax prep is in a much better place than it
| was 15 years ago because of the efforts of those private
| companies.
|
| I guess, if you're only looking at the US. My understanding
| of the history is very different. In 2001-2002, the US was
| already behind other countries since it had no e-file
| option. The IRS was considering an official tax prep
| service. Because Bush was in office and there was huge
| pushback from the tax prep industry, it was pitched that a
| public/private partnership would be the fastest way to
| "catch up."
|
| In 2019, ProPublica runs a story about TurboTax's shady
| behaviors hiding and up charging for what was agreed to be
| a free service. It should cover 70% of tax payers, but in
| practice is only used by 2-3%.
|
| To me, this looks like an example where the government
| explicitly tried not to replace a large, private industry
| and the result could only possibly benefit 30% of people
| (likely significantly fewer since much of that 30% will
| still require personal tax prep). Even after 20 years of
| fallout and very explicit bad-faith behavior, the threshold
| for change hasn't been crossed.
| hn_throwaway_99 wrote:
| 100% disagree with your comments on tax preparation.
| Something like 80%+ of tax payers could have their 1040s
| _automatically_ generated by the government because they
| only have stuff like wage and bank interest income. The
| proposal was just to have the government send these
| taxpayers a summary that they can accept or amend, the
| default being they wouldn 't have to do anything at all to
| file their taxes.
|
| Intuit et al fought _tooth and nail_ against this, because
| they knew it would cost them big time.
|
| These companies aren't benefiting from "the free market",
| they are rent-seeking regulatory capture organizations.
| motbob wrote:
| "Something like 80%+ of tax payers could have their 1040s
| automatically generated by the government[.] The proposal
| was just to have the government send these taxpayers a
| summary that they can accept or amend, the default being
| they wouldn't have to do anything at all to file their
| taxes."
|
| Sure, that sounds good on paper. But here's a list of
| people who would be hurt by this system unless they were
| sophisticated enough to realize that they should revise
| their return: - Most people with a kid
| - Most people supporting a relative - Most people
| supporting someone who has no income and lives with them
| - Most people who made charitable contributions in 2021
| - Many people with a home energy deduction - Most
| people who participated in post-secondary education
| - Anyone in the gig economy
|
| That's a big list, and it's far from complete. So it's
| not clear that your proposed "do people's taxes, leave it
| up to them whether to acquiesce or not" plan is good for
| consumers overall.
| miohtama wrote:
| Note that some European countries like Nordics already
| operate like the parent comment. These corner cases are
| naturally included in the four page paper where you can
| mark any corrections with tick boxes and amounts. So it
| is definitely doable, and not very hard, because other
| countries manage to do it as well.
| hn_throwaway_99 wrote:
| Agree with SideballOfDoom. Other countries do this, this
| isn't hard. Besides, most of your examples are specious.
| First off, it's not hard for the first page of this to be
| "any changes to your life situation?" which would be
| simple, straightforward, and account for the vast
| majority of deductions/credits in the real world (i.e.
| dependents).
|
| Most of your other examples aren't really valid because
| the vast majority of people take the standard deduction
| anyway, so things like charitable contributions, home
| energy deductions etc. don't matter.
|
| But most importantly, the whole proposal always leaves
| the "You're welcome to do your own taxes if you have
| anything we haven't addressed." It's just that Intuit
| didn't want to even allow this option because they know
| the vast majority of people don't have complicating
| factors, and they hadn't gotten really good at scamming
| "free filing!" users into buying upgrades they didn't
| need.
|
| This isn't hard, and tons of other countries do this.
| motbob wrote:
| I shouldn't have called the home energy thing a
| "deduction." It is a credit. And in 2021, some amount of
| charitable contributions could be claimed on top of the
| standard deduction.
|
| "This isn't hard" -- as illustrated by both my and your
| mistake, this is as far from the truth as could be.
| Everything related to taxes is absurdly hard, whether
| it's setting up the right tax prep system, the right
| level of complexity in the tax law, or simply the right
| return to file as a taxpayer. My overarching point here
| is that Congress made a certain value judgment as to one
| of these very hard problems--that a healthy industry
| dedicated to getting people's tax returns correct might
| be in the best interests of both the government and
| taxpayers--and this might not actually be the product of
| corruption.
| hn_throwaway_99 wrote:
| I still don't buy, at all, the argument that "default do
| nothing" is better than "default pay TurboTax".
|
| The fact is the vast majority of taxpayers _do not_ have
| special situations, and it 's straightforward to say "if
| you think you have any custom situation that may apply to
| you, file yourself".
|
| And Intuit's behavior, as well documented in the
| ProPublica report, absolutely point to corruption and
| scammy behavior.
| SideburnsOfDoom wrote:
| > So it's not clear that your proposed "do people's
| taxes, leave it up to them whether to acquiesce or not"
| plan is good for consumers overall.
|
| I disagree, if you want clarity, look at other countries
| (e.g. UK) that already do this kind of thing. There is no
| "how can we know?" argument to be made. And IMHO, It's so
| much better for consumers overall.
| motbob wrote:
| Looking at other countries is unproductive, since their
| tax laws and tax credit systems are completely different.
|
| For example, in the UK, I believe where a child is living
| is tracked through some centralized benefits system
| throughout the year. That hugely changes the calculus as
| to whether an automated tax return makes sense. If the
| U.S. had a similar sort of centralized system for
| tracking dependents or at least children, then an
| automated return would make a _lot_ more sense, since
| claiming children /dependents is a huge part of getting
| the credits you deserve, and it would be great if it were
| possible to do that automatically. But it isn't.
|
| I've already explained why I think automated returns are
| bad in the United States. If you disagree, make
| counterarguments based on how taxes work here, not in
| some other country with an entirely different system.
| srhngpr wrote:
| This has existed in Canada for a very long time via Interac
| e-Transfers and it doesn't cost anything. You can send money
| instantly from one bank to any other bank. You do this by
| sending to someone's email or phone number. The recipient can
| setup auto-deposit so the money is deposited instantly. For
| this reason, Venmo, Cash App, etc. makes no sense in Canada
| either.
| 1-more wrote:
| Zelle is roughly that in the US. Where Venmo is an
| intermediary that makes money by having your money before
| you take the extra step to transfer to your bank (for free
| in 3 days or instantly for a fee), Zelle is bank account to
| bank account. Transfers with it show up as debit card
| transactions in my statement, and I can look people up with
| phone or email.
| mardifoufs wrote:
| Interac is not really the same thing. It's much closer to
| Venmo, but with more integration with your bank. Mostly
| because not all banks are actually in the interac network
| and the transfers are between interac accounts, not bank
| accounts. You can set it up to autodeposit but it's still a
| "third" party layer more than actual interbank transfers.
| badrabbit wrote:
| The problem in east asia is now you are beholden to
| smartphones. You can't even give money to a street beggar
| without a smartphone.
|
| The only convenience added by their way is qrcode scanning as
| opposed to typing up a recipient name. Which I admit is verh
| nice so long as they mandate accepting cash payments as a
| condition of a business participating in commerce. Every
| transaction you make is tracked and being banned from that app
| means you can't even buy basic survival items and services like
| food, shelter and even public toilet access lol. You can't even
| beg people for money because you are banned and your account is
| tied to your government ID. You effectively accept wepay or
| whatever monopoly app as your master. Freaky stuff.
|
| No thanks, cash is still nicer and convenient (to consumer not
| merchant).
| legitster wrote:
| > Everyone gets it instantly.
|
| I have to believe that there is constant, baseline fraud that
| everyone in these areas puts up with.
|
| In the US, if someone steals my phone or credit card, or
| intercepts my payments in any way, I pretty much expect to get
| all my money back. When payments are instant, what's there to
| stop scammers and fraudsters disappearing with my money?
| davchana wrote:
| There is a constant need of OTP for every transaction. That
| sms says again and again Do not share it with anybody or,
| something similar to that. Instant transfers are only from
| bank to bank accounts, and not to any personal wallets. Banks
| have strict KYC requirements to get the documents again every
| few years. So whoever account is getting the money, bank gas
| most of their information.
|
| So even after all those multiple warnings, if somebody gets
| frauded (which happens, because people get greedy, they pay a
| small amount to get a bigger prize, or a work from home job
| etc scams), police in some places now have IT Crime cell,
| which follows up with banks and try to recover the money. No
| guarantee. But there is no constant stream of fraud anymore
| thatln what happens here in US with people who fall for
| scams.
| Aachen wrote:
| Your bank account isn't a personal wallet? It doesn't get
| much more personal than one's bank account for me.
| davchana wrote:
| I mean in India we call wallets to companies like
| PhonePe, PayTM etc. Banks are banks.
| Closi wrote:
| > There is a constant need of OTP for every transaction.
| That
|
| Not necessary - My UK bank (Monzo) allows FASTER payments
| without a OTP (the UK version of this that has been around
| for about 15 years) via their app.
|
| You just sign into the app, put in the bank account number
| you are sending it to, sort code and recipients name, it
| verifies you with Face-ID then sends the cash.
| davchana wrote:
| I awas replying in context of Indian people facing a
| constant stream of fraud, so I mean almost every money
| transfer transaction needs an OTP, which could be an SMS,
| or a number from grid on the back of the card, or from
| bank's own app.
| runemadsen wrote:
| This is a horrible excuse for the terrible banking system in
| the US. We have both instant payments in Denmark and laws to
| require banks to cover fraud.
| adrr wrote:
| How do banks pay for the fraud? Do they charge fees to have
| a bank account?
| Closi wrote:
| UK has instant payments between bank accounts too - no
| fees to cover fraud and fraud is covered.
| adrr wrote:
| UK isn't a good example since they don't have fraud
| protections in place. This bill needs to into effect
| before the banks are on the hook.
| https://bills.parliament.uk/bills/3326
| Closi wrote:
| Most banks are signed up to the "Authorised Push Payment
| Scam Code" and cover fraud, however it's not a legal
| requirement.
|
| But all banks, of course, have a level of fraud
| protection in place (just not the legal obligation to
| replace funds from a scam and compensate/reimburse
| victims).
|
| It's also worth noting that this is a legal decision, and
| not a technology issue.
| j16sdiz wrote:
| They reverse the payment when law enforcement gets in.
| adrr wrote:
| And what if the money is gone by the time law enforcement
| is involved?
| closewith wrote:
| The baseline level of payments fraud is through the roof in
| the States. I have never had a fraudulent transaction on any
| card or service in Ireland. In the US, it's literally a
| monthly event. I have to actually check my statements for the
| fraudulent transactions. That's not normal elsewhere.
| legitster wrote:
| That's not normal in the US either? Where are you banking?
|
| I've had one credit card compromised in my life, and my
| bank alerted me before a dollar left my account.
| jcranmer wrote:
| My sole experience with credit card compromise was almost
| as good--there was one fraudulent charge, but the bank
| reversed it, canceled, and issued a new card before I
| could get a chance to notice it.
| happyopossum wrote:
| > In the US, it's literally a monthly event
|
| I'm calling BS. Virtually everyone I know has either had
| zero, or at most one or two experiences with fraudulent
| charges, and they're cleared up immediately with a phone
| call.
| wizofaus wrote:
| Fraud is still very much a real problem though (not just
| in the US). Maybe the circle of people you know aren't
| typical and actually take reasonable steps to protect
| their account details.
| jazzkingrt wrote:
| I'm not an expert in this area. But a fairer comparison would
| be a US service like Venmo. In my experience Fraudulent
| payments with venmo are much harder to recover.
|
| I think a lot of fraud prevention tech can reasonably be done
| in a matter of seconds. FedNow also proposes to be domestic
| only for the time being, which means the recipient accounts
| are in US jurisdiction and easier to shut down and prosecute.
| Finally, there's no reason a wait-period/cooldown can't be
| implemented in another layer.
| legitster wrote:
| > easier to shut down and prosecute
|
| The problem is when someone spins up a scam account, gets a
| fraudulent payment, and then cashes it and shuts down the
| account. If they already have the money in cash, it may be
| impossible to prosecute.
|
| Any fraud prevention is going to have to be privacy
| intrusive by it's nature.
| beorno wrote:
| Similar to what China did in 1994?
| https://en.wikipedia.org/wiki/Banking_in_China#Electronic_ba...
| RC_ITR wrote:
| I hear this a lot, but Visa/MC do the exact same thing (though
| it has died down now that Westerners see universal NFC pay as
| rightly superior to QR codes)
|
| And before you tell me they charge for it, I agree they do, but
| I also get fraud protection that's 1000x better than anything
| in SEA or on Venmo/Cash app.
| cuteboy19 wrote:
| > universal NFC pay as rightly superior to QR codes
|
| Why though? You can print out QRs and send them around
| digitally. No extra tech is needed to handle QRs. Why is NFC
| better?
| wizofaus wrote:
| Does anyone seriously think QR codes will still be around
| in 10 years? They always struck me as clunky. They often
| don't work, require holding your phone in awkward positions
| for uncomfortably long periods of time and in many
| circumstances (e.g. a cashier wishing to expose a
| dynamically generated QR code to a customer) aren't
| practical. It's only because we haven't come up with
| cheap/reliable alternatives that all manufacturers agree to
| support that they're still in use.
| cuteboy19 wrote:
| Oh I understand now. It's the fault of the implementation
| of the QR reader that you use.
|
| For example all UPI apps have near instant qr recognition
| at any angle. In fact on my phone, it takes longer for
| the camera to start than for the QR recognition to
| finish.
|
| I also think there are a lot of things that QRs can do
| but NFC cannot. But the opposite is not true
| wizofaus wrote:
| Currently, yes. But in principle NFC or alternatives
| (that could be cheaply/ instantly generated anywhere,
| including by non-digital physical objects like pieces of
| paper) should be better and I'm willing to bet will be in
| the foreseeable future.
| westurner wrote:
| FedNow is for _US_ , _interbank_ transactions only.
|
| Do your country's favorite banks implement ILP Interledger
| Protocol; to solve for more than just banks' domestic
| transactions between themselves?
| https://github.com/interledger/rfcs/blob/master/0001-interle...
| scottiebarnes wrote:
| > Now this is not third party services. It's bank account to
| bank account. As a result things like PayPal or Cash app make
| no sense in this part of the world and have no uptake here.
|
| Aren't WeChat Pay and AliPay basically embedded versions of
| paypal/cash app?
| j16sdiz wrote:
| WeChat and AliPay exist because China had the same problem.
|
| In India, Singapore, Hong Kong, this is a solved problem.
| navanchauhan wrote:
| I feel like they are talking about the UPI (unified payment
| interface) that exists in India. It works way better than
| Zelle because you don't need to use your bank's app (you can
| if you want to, but most people use PayTM/Google
| Pay/PhonePe), and you can add multiple bank accounts in your
| preferred UPI client.
|
| You just get a UPI ID that looks like whatever@yourapporbank.
| Then for online payments you can just enter that ID and
| approve/deny the transaction request in your UPI client. You
| could also just generate a QR code for that transaction and
| scan it with the UPI client
|
| I see that a lot of people are unaware about UPI on HN, I
| might summarise my experience in a separate post and
| comparing it to Zelle
| toomuchtodo wrote:
| > I see that a lot of people are unaware about UPI on HN, I
| might summarise my experience in a separate post and
| comparing it to Zelle
|
| Please do! I would buy you a coffee or similar for doing
| so. Likewise if someone wants to create and maintain a
| Wikipedia page listing instant payment systems and their
| details (because FiServ keeps taking down their marketing
| enumerating this information while also excluding it back
| from Wayback Machine[1]), I'd be willing to throw some fiat
| at that.
|
| [1] https://www.fisglobal.com/en/flavors-of-fast (404s,
| don't bother clicking, Modern Treasury has some content
| marketing that refers to it)
| ra7 wrote:
| Previous UPI discussion on HN from 2 years ago:
| https://news.ycombinator.com/item?id=24094323. It links
| to posts explaining UPI in detail.
| shafyy wrote:
| We have also instant transfers with many (most?) EU banks, even
| between countries (SEPA). Granted, it's not yet used to pay
| taxis or fruit sellers, at least not in Germany.
| m463 wrote:
| I think fraud would be a problem.
|
| I remember reading Matt Ridley's book "The Rational Optimist"
| and he said that society only progresses when we trade, and we
| only trade productively when we have trust.
|
| So basically I think there must be trust otherwise it will
| hamper the growth of society.
| dannyincolor wrote:
| So, the current situation if you get scammed via Venmo/PayPal
| or other electronic payment methods is for the FBI / local
| law enforcement to subpoena the provider for records about
| the incident.
|
| Now, imagine all that data is sitting on Federal servers by
| default. No subpoena required, and fraud systems would be
| integrated directly with investigative services at the
| Federal level. This integration should strike fear in the
| heart of anyone who currently scams via 3rd-party payment
| providers.
|
| I am bothered that fraud isn't directly addressed in this
| page, but it's only an FAQ and it'd be silly to think the Fed
| wouldn't build industry standard (or better) fraud
| protections into a system they're building from scratch.
| ceeplusplus wrote:
| No, the current situation if you get scammed via a credit
| card or PayPal is that you file a chargeback, and PP/card
| company reverses the transaction, because withdrawing money
| takes time. And if the transaction is not reversible, then
| PP/CC company take the hit on their own bottom line.
|
| Is the federal government going to take on that risk? What
| makes you think they can afford to hire programmers who are
| skilled enough to build out a sophisticated fraud detection
| system? The highest GS pay scale is lower than what a new
| grad makes at Stripe/PayPal.
| justthinkhn wrote:
| > _So, the current situation if you get scammed via Venmo
| /PayPal or other electronic payment methods is for the FBI
| / local law enforcement to subpoena the provider for
| records about the incident._
|
| Imagine so confidently posting something so wrong. No,
| that's not how it works in the US. Every credit card
| company (and PayPal-like company) has a massive anti-fraud
| department that both automatically detects fraud and
| responds to consumer complaints. If I see a charge I don't
| recognize, or a seller fleeced me, I call my credit card
| company and they give me my money back and fine the shit
| out of the seller's account unless the seller can prove to
| them that the charge is legitimate. Yes, ultimate recourse
| is to court, but very rarely is that necessary.
| [deleted]
| odiroot wrote:
| > This is one of the best things about living in Southeast
| Asia.
|
| UK also has near-instant bank transfers. It usually just takes
| me about 30s to receive one. But you do have to specify the
| sort-code and account number by hand.
| Tyrannosaur wrote:
| I frequently ask people "If all major American banks got together
| and implemented a system where you could send money from one bank
| account to another in a payment system much faster than ACH,
| would it be big news?"
|
| And yet they did, but it was not big news. There is currently an
| instant payment system integrated with all major American banks
| for person-to-person transactions, and yet they somehow fumbled
| it so Venmo takes all the publicity.
|
| Zelle https://en.wikipedia.org/wiki/Zelle_(payment_service)
| TakeBlaster16 wrote:
| imo Zelle has a horrible user experience. I tried paying my
| rent with Zelle at one place and it showed up as "pending" for
| 6 days. On the 7th, the payment failed and I had to call a
| phone number to find out why: The recipient was not signed up
| for Zelle. Or more likely he had signed up, but became
| unenrolled somehow.
|
| ... Really? You couldn't figure that out any sooner? ACH or a
| paper check would have been faster.
|
| Maybe they've ironed out the kinks these days, but I'm sure
| Zelle would have been bigger news if it worked well from the
| start.
| Qworg wrote:
| Zelle has significant limitations for gross settlement and
| relies on a security model that leaves much to be desired.
|
| Zelle also is a product of TCH, hence why "major banks" carries
| a lot of water. You can't leave behind rural and low income
| Americans.
| lupire wrote:
| dogman144 wrote:
| Yes, the platform is arbitrarily limited to $500 transfers
| and significant disclosures on why/how you want to use your
| money. ACH, checks and Venmo still win out
| paxys wrote:
| No it isn't. All of the major banks allow Zelle transfers
| of anywhere between $2500 to $5000 a day.
| notch656a wrote:
| Actually you're both right. The last 3 banks I've had
| have had the $500 limit because if your bank doesn't
| 'natively' support zelle, Zelle themselves limit it to
| $500 per week taken via your debit card. If your bank
| integrates zelle, then the limit seems to be up to the
| bank up to the $5000 or whatever you quoted.
|
| This can be a major problem, because some landlords only
| take their rent by Zelle and if you accidently zelle
| someone at the wrong time and your whole household runs
| out of Zelle limits you're fucked for paying the rent.
| jandrewrogers wrote:
| My bank put a Zelle limit of $5,000 per day and $40,000 per
| month on my account. I didn't ask for it and am a nobody at
| that bank.
| squeaky-clean wrote:
| Zelle is weird, you can't actually directly transfer account to
| account. You transfer to a person's phone number or email, so
| each person can only have 1 Zelle enabled account. Also people
| aren't automatically enrolled, you have to enable Zelle. And
| email/phone is really easy to make a typo. Routing and Acc
| number are easy to typo too, but hopefully any FedNow based
| services will handle that automatically.
| joshstrange wrote:
| One of the most important questions (IMHO) is what the cost is
| going to be. Some googling says it's going to be ~$0.05 which
| would be insane and amazing. I know that middlemen will probably
| be required to build on top of this and take their cut but I'd
| love nothing more than Visa and Mastercard to lose their near-
| duopoly.
| Qworg wrote:
| A2A payments will be huge - the backend benefits over debit is
| where the focus should be beyond a unit cost for transfer.
| Brystephor wrote:
| What does A2A stand for?
| themanmaran wrote:
| Account to account payments
| sbussard wrote:
| Nope nope nope nope nope
|
| Nobody should have this much oversight into individual finances,
| not even the fed. FedNow can go back to hell
| rexreed wrote:
| It would seem from the article here [0] that pricing for FedNow
| is $25/mo per routing number (which generally means per bank not
| per account, since many accounts at a bank share the same routing
| number) and about $0.05 per credit transaction. Not sure how that
| will be passed thru in costs from the bank(s) or if they will
| absorb what seems to be a small cost?
|
| "The service will include a $25 monthly participation fee for
| every routing transit number enrolling in the service. Then there
| will be a $0.045 per credit transfer and one cent for a RFP
| message to be paid by the requestor."
|
| And a routing transit number is a 9 digit number that identifies
| the bank, not the variable number that identifies each individual
| account [1]
|
| "A routing transit number is a nine-digit number used to identify
| a bank or financial institution when clearing funds for
| electronic transfers or processing checks in the United States. A
| routing transit number is also used in online banking and
| clearinghouses for financial transactions. Only federally
| chartered and state-chartered banks that are eligible to maintain
| an account at a Federal Reserve Bank are issued routing transit
| numbers. "
|
| [0] https://www.pymnts.com/news/faster-payments/2022/fed-
| release...
|
| [1]
| https://www.investopedia.com/terms/r/routing_transit_number....
| ars wrote:
| That's a strange pricing model, I would have expected a much
| higher per routing number cost, and a lower per transaction
| cost.
| rexreed wrote:
| The # of banks and financial institutions stays fairly stable
| so that covers the ongoing fixed costs. The number of
| transactions is highly variable so that covers the variable
| costs.
|
| According to https://bank.codes/us-routing-number/bank/ there
| are around 18,000 current routing transit codes active, which
| would amount to about $5.4M annually if all 18,000 were
| enrolled in FedNow.
|
| According to
| https://www.statista.com/statistics/871706/zelle-payments-
| nu..., Zelle processed 436 Milion payment transactions in Q2
| 2021 alone. If FedNow were to do the same volume, they would
| net $19.62M per quarter, around $78.5M a year.
| mbesto wrote:
| Good analysis. If the Gov was bringing in ~$85M/year, that
| seems like a solid amount of operating budget to support it
| technically/operationally.
| digianarchist wrote:
| In Canada the Interac service was a dollar a transfer for
| free/basic accounts and included in most premium accounts.
|
| Around 2018 most banks started including free Interac transfers
| for all chequing accounts and now I only see the fee charged
| for savings accounts.
| lstamour wrote:
| Informally, a senior banker once told me that Interac
| E-transfer reduces bank transfer costs to less than a penny
| each. The $1-1.50 fee is pure profit, hence the availability
| of unlimited transaction plans.
|
| For comparison, Square, which usually charges 2.65% of each
| transaction only charges a flat 10 cents for contactless
| Interac payments. Not technically e-transfers, but one
| imagines that the pricing model is roughly the same per
| transaction.
|
| I should point out that Interac as a method of direct payment
| to online merchants by clicking a button on your vendor's
| website/invoice has not had as much success. Only two banks
| and a handful of credit unions supported Interac Online
| Payment when I last checked, while basically all banks and
| credit unions in Canada now support Interac E-transfer. Going
| to a website and clicking Pay and signing in with your bank
| account to initiate the payment isn't supported by most
| banks. Instead, the Interac E-transfer has to be initiated or
| responded to via the bank's website. It also has nothing to
| do with the bill payments system, which often uses "EFT" (the
| Canadian version of "ACH") to pay utility bills, etc.
| koblas wrote:
| This will be a nice little win for account verification
| processes. Just doing this to connect two accounts and having to
| wait the days for the transfers to show up to verify.
| majinuub wrote:
| Europe and Asia have been doing instant bank transfers for a
| while now.
|
| Bitcoin has been doing 24/7 payments since 2009 and instant
| payments since at least 2018. Not to mention Bitcoin is
| decentralized and not reliant on government and bank bureaucracy
| to function.
|
| The Fed is a little late on this one.
| oneplane wrote:
| Look like the US version of SEPA transfers (technology-wise) like
| (somewhat) described at
| https://www.europeanpaymentscouncil.eu/what-we-do/sepa-payme...
| but instead of just SWIFT (which is what is also ISO 20022
| supported) its more for internal transfers as well.
|
| I do wonder why the 12-year lag in the US implementation of
| essentially the same standards (and the same ones they had
| implemented on SWIFT much earlier) was there to begin with. You'd
| think that with the states in the US not being nation-states it
| would be much easier/faster to implement something like this
| nation-wide.
| Mountain_Skies wrote:
| Let others work out the defects and shortcomings while learning
| from their mistakes to develop best practices for your own
| implementation. In this particular situation, there is no
| "first mover" advantage.
| [deleted]
| __derek__ wrote:
| The US banking system is notably decentralized/fragmented, with
| a fat tail of regional banks. That extends to regulation, where
| banks are chartered at both the federal and state levels (both
| of which jealously guard their authority). Large banks started
| to offer a direct-transfer service called Zelle[1] a few years
| ago, but making it "standard" is a slog thanks to all of those
| regional banks. Instead, most people use third-party apps that
| operate over ACH.
|
| [1]: https://en.wikipedia.org/wiki/Zelle_(payment_service)
| jdmichal wrote:
| I just want to clarify that Zelle was basically a 2017
| rebranding of clearXchange, which existed since way back in
| 2011. Both Zelle and clearXchange were mostly marketing
| failures. The basic use-case of nearly-instant person-to-
| person transfers has been constant and functional throughout
| its existence.
|
| And you're 100% correct that uptake in the long tail of
| smaller banks and credit unions is probably one of the
| biggest "issues" with the service. If your bank isn't signed
| up, there's nothing you can do as an individual except move
| to a bank that is. Systems like CashApp and Venmo don't have
| that issue.
| __derek__ wrote:
| Thanks for that clarification. I had only used regional
| banks or credit unions before a few years ago (when I
| learned about bank account bonuses), so it was a new-to-me
| product when they started to market Zelle.
| jdmichal wrote:
| No worries. It also didn't help that, if I recall
| correctly, clearXchange was also marketed by the
| different banks under their own pet names for the
| service. So there wasn't even a single name for it.
| chirau wrote:
| Is this not what Dwolla has been trying to do all along? Or at
| least was promising at some point?
|
| https://www.dwolla.com/features/real-time-payments/
| TheChaplain wrote:
| Have something similar in Sweden for years called Swish.
|
| Transfers instantly from my account to another person or
| business, all it takes is a phone number or QR code. And I can
| also send request for payment.
|
| Only drawback is there is no protection like with debit/credit
| cards, so no chargeback.
| notch656a wrote:
| >Only drawback is there is no protection like with debit/credit
| cards, so no chargeback.
|
| I see that as an upside though. Fraud (and other protection) is
| essentially an insurance service you pay for, often in several
| percent premium. This service would lose its utility to me if I
| had to pay a premium to cover fraud. We already have
| debit/credit for those who want fraud protection.
| xur17 wrote:
| 100% agreed. Zelle is somewhat similar to this, but overly
| complicated + doesn't always settle instantly.
|
| I'd love to be able to hand folks a simple string or image,
| and have them able to send funds to me instantly,
| irrevocably, with no fees, and in a way that they can't pull
| funds back from my account ( _cough_ checks / ach).
| Qworg wrote:
| RE: Swish - have you found int'l travellers still having issues
| with it? There were many stories about non-Swedish visitors
| being locked out of commerce a few years ago.
___________________________________________________________________
(page generated 2022-08-18 23:00 UTC)