The Federal Reserve has already launched a small test of near-instantaneous financial transactions. Every time they talk about payments as a future feature of X/Twitter, I wonder if they know that’s getting Sherlocked.
Many countries, including those in the developing world, have had instant payments systems for years. They’re very convenient, especially those that provide an “overlay” service (usually coming with a standardized app) that allows sending money to registered phone numbers, without dealing with bank account numbers.
Characteristically, the US version of instant payments seems half-assed. It’s initially supported by only 35 banks (not including Citi and Bank of America). And it apparently does not provide a standardized overlay service. Many big financial stakeholders, including the credit card companies, no doubt view it as a threat and would be very happy if it does not catch on.
It’s honestly amazing how quickly a lot of developing countries have embraced this stuff. Hell, even roadside hawkers in a country like India accept instant bank transfers. It’s ridiculous that the US is so far behind.
No, because corporations like PayPal and Meta lobby against it. They got it don’t worry about it.
/s
Yes, writing this from Western Europe Americans not being able to wire each other money instantly is so confusing.
As far as an overlay service goes, Zelle basically fills that niche, and it’s increasing in popularity. I think FedNow is more for larger payments.
Zelle still takes a few days to complete transfers in my experience
It is hard to get away with the crimes the bankers and other big finance entities have grown accustomed to committing as a part of their day to day business with instant resolution. Read up on failing to deliver, or as entities like Citadel like to term it, “sold, not yet purchased", like they did to the tune of 60B dollars.
It is like selling someone a house that you don’t own and may not even really exist. They can do this because they have a time period in which they have some leeway before they have to deliver the “deed" so to speak. It goes deeper than that but that is a simplified high level overview of the scam.
Simply put, the stock market is all fake and nothing is valued appropriately because price discovery us impossible with naked shorting and the use of OTC and dark pools.
interesting stuff. I wonder how it’s developed since that article was published.
It launched at a few banks a couple of days ago. https://techcrunch.com/2023/07/21/fednow-is-finally-live-in-the-us/
So, I guess it’s in late beta stage where a limited private beta will happen for a bit and then we’ll see how it goes.
It’d honestly be great for small businesses and workers. No more waiting multiple days for a payment to clear and money to become available.
It’s also great for splitting checks at restaurants, paying for odd jobs, and paying street vendors. Many countries already have instant payments, so it would be nice if it caught on in the US, but you never know — lots of nice things don’t catch on in the US for one reason or another.
for one reason or another
Money. The reason is money.
Tech Crunch’s recent article indicates it may be costly. https://techcrunch.com/2023/07/23/fednow-may-finally-be-live-but-will-it-be-too-costly-for-businesses-to-adopt/
Depends on how you look at it. According to the article, FedNow is more expensive than automatic clearing house. 4 cents vs half a cent. But if FedNow is competing with Venmo and Paypal, they charge a lot more than the Fed’s $0.04. That’s also cheaper than what the credit card companies charge businesses.
The banks might choose to make it costly. The fed charges 4 cents per transaction. Ultimately, if your bank charges 25 cents and my bank charges 4 cents, I’ll just decline to use your bank for FedNow
While it’s cool and groovy the the Fed is finally seeing the light that crypto currencies have some merit, fat chance a US govt backed coin will be trusted to replace cash by the world at large (considering the USD being the world reserve currency).Turns out I misread the entire thing, apologies.
FedNow isn’t a cryptocurrency. It’s a real-time funds clearing system, with a centralised ledger. It’s not supposed to replace cash, but rather old school bank transfers that take days to clear.
You might be thinking about digital currencies which are something else the Fed is trialling and is not yet very far along.
Wait. Do… Do you guys not have e-transfers? Holy shit, this is why Venmo’s a thing, isn’t it?
yes, and it’s why Venmo won’t be a thing much longer. Expect a lot of bitching from Venmo et al in the coming months
Ah gotcha, thanks for clarifying.
