What does a development environment look like, both architecturally and simply visually?
Like: Do developers spin up entire fake economies with two banks and the fed on their latop, or is it all incremental changes to individual microservices in a big permanent test setup? Do other banks / service providers / the fed run test instances of their systems with fake money for other companies to do interop with, like a "global test financial network", or do you generally test with "real" money?
What do you see on your screen in day to day developer live? Are there like dummy online banking web interfaces? Or is it all text logs?
Is it just normal software development like anywhere else, or is there anything that really sets it apart in terms of developer workflow?
Once the service provider is connected to the Fed (a somewhat complex process), it's normal software development. The client uses either MQI or JMS to send and receive messages; the messages are essentially ISO20022 XML. The development environment could be anything (any OS, any IDE). You interface those messages with your system of accounts. The Fed also provides a simple web UI and a testing network where you can test with other participants and run regression tests.
From a software development perspective, it's really quite normal.
In front of your eyes: TSO-ISPF for everything. IDz for the 5 seconds per month that code is actually written
Test env: Separate permanent envs. From playground where nothing matters, env with some fake data in similar databases and variants of all systems, to mirror of prod with anonymised data, then prod
There are dummy online banking web interfaces
What sets it apart is that the operating system is painful to use and never stops being painful to use. And your employer is paranoid and keeps you in a digital prison for security so very few permissions so there is no creativity or off-road improvisational innovation just assemblyline style development
> I'm happy to share anything that is not under NDA.
Meta-questions that you quite possibly can't answer: broadly speaking, what parts of this system are under NDA? Why would any part of this system be under NDA? Did any government agencies impose the NDA, or was it private companies? Is the NDA intended to protect those running the system, or is it intended to protect those using the system (IOW, is it security by obscurity)?
In my line of US government coding (no relationship with this project), NDA is orthogonal to security. NDA is used to protect confidential vendor information. For example: that they have a contract with the government at all (in the case of a stealth startup), specific technical capabilities they don’t want broadcast to their competitors, the size of the contract vs. committed resources, etc
Basically everything that is not publicly documented on the Federal Reserve's website. Unfortunately, it is really common in the financial services space to overuse a NDA. Things like specific fraud safeguards, hardware information, network diagrams, etc. are all under NDA.
Is the eventual end-game that I can send money from my account at Bank A, to a friend's account at Bank B to split a check at dinner without using a third party like Venmo?
Yes, that is absolutely a use case. Similar to Venmo, there is also a Request for Payment (RFP) mechanism. I'm on the Request for Payment (RFP) Work Group that is composed of a number of financial institutions, service providers, and billers.
Netflix is part of the RFP Work Group. So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. Instead of Netflix paying ~$0.50 in credit card processing fees per U.S. subscription they'll probably be able to find a bank willing to charge them < $0.25. It also gives consumers more control as they have to authorize each charge.
I had to read this twice - is it really not like in the UK? Is this the first US implementation of "Faster Payments"? Sure people in the UK sometimes use PayPal, Revolut, but most of the time its always just a friend gives (and you save on your banking app) their bank account number and sort code, and you instantly send it across. edit: with no fee
It sounds very much like some of the Interac services that we have here in Canada (and have had for ages). We can do what is called "email money transfer" where as long as I know your email address I can go into my bank app, transfer money to you and it will automatically show up in your bank account.
Not OP, but I thought FedNow will do this on day one for participating banks. Someone correct me if I’m wrong. FedNow will also settle faster than Venmo currently does (unless you pay for Venmo’s instant settlement) because it’s instantaneous. To be fair to Venmo, their bottleneck was precisely the lack of FedNow. I assume Venmo will make instant settlement free. But they will need to add more features now that people might substitute with FedNow. Anyway, this is a big deal for Americans and was a long time coming.
From the perspective of most people from other developed countries, it’s honestly incredible that the US hasn’t already had this for years like we all have…
Tell us as much as you can about the tech stack. What is going to be able to handle truly massive volumes of transactions? Database, hardware, communications channels, programming lang, everything.
What is innovative and/or well engineered there? Could any bank or financial institution connect seamlessly with the system? How does it handle security keys, transparency, and transaction log duration?
As I see it, the innovative part is that the service is push-only. With ACH and most other systems in the US, payees can pull from accounts, while FedNow has no support for forceful debits. That's a significant shift in the way we think about payments (for the better, IMHO). This has been done before by other service providers, but not by someone with this kind of influence and clout in the US.
Super curious, were you involved in the implementation of ISO20022 from software perspective or were you more on the hardware end? Asking because naturally entire banking in US is kinda waiting to see hows its implementation going to turn out ( for non-fednow payments ).
Is there anything special about the IBM MQ implementation which makes it worth naming them? It looks like you can connect to it using AMQP so I wonder why they wouldn't just say something generic like "MQ" or "AMQP protocol".
I assume IBM Message Queue Interface (MQI) is the only supported protocol in this installation. Don't know of any other compatible brokers to support MQI.
It’s a little especially strange as IBM hasn’t exactly made a great reputation for themselves over the last several years. Name dropping IBM makes me think that the reserve is generally not confident and is ready to blame IBM for what they expect to happen.
Last time, a decade ago, I played with RabbitMQ and similar open source queue system they didn't handle congestion and rate limitation well (crashed). From my little experience with classical IBM systems like MQ they knew about that stuff.
I think that it's a pretty handy format to be familiar with, and is quite simple to work with too.
If the Fed or participating banks decide to open up the system like European banks have done so, it can be handy to get familiar with it for us financial hackers out there!
Ironical that same system in Russia, was built (around 5 years ago) using _exactly_ same set of technologies (and many others of course). Central Banks fucking loves IBM
Man I was talking about how badly IBM fumbled the last ten years of AI between getting Watson on TV and then getting sent back to the minors by every other player. And yet here they come with a bajillion dollar government contract to keep them afloat for another 100 years. Gotta tip the cap.
What is your opinion of the FedNow Service bespoke flavor / enhanced message schemas vs what is formally defined in ISO 20022? Do you foresee any impact those differences having on how future versions of ISO 20022 can evolve? Is there an aspect of ISO 20022 you wish was different in some way?
TLDR: Nearly all payments will irrefutably settle within a handful of seconds
Strictly speaking the primary means in which money moves in the United States from a volume perspective is ACH today. That system is a T+1 day from a default perspective, but it has offered the option to same-day settle during a handful of batches throughout a business day. However, ACH is not irrefutable and so it is common to have holds associated with this movement of money.
FedNow is truly 24/7/365 and push only.
All payment flows are subject to an end-to-end payment timeout clock of 20 seconds, starting from the creation timestamp to the point at which the recipient FI (almost always really a Service Provider on their behalf) sends a formal response that they intend to accept or reject the message.
An accepted payment must then be posted to the receiving account "as soon as practicable, but no longer than a few seconds” unless there are compliance/fraud concerns.
In practice, it should rarely take 23 seconds and will likely take 1-5 seconds from an end-to-end perspective depending on the processing speed of the originator, receiver and FedNow Service itself.
The problem is, which "database"? If you know the data is always going to be in the range of ~1TB, use Postgres or some other ACID database. But I don't know of any petabyte scale ACID compliant database.
Also I'm not sure if ACID is sufficient or not for banking systems.
Was it difficult avoiding using an ESB? I've heard stories about how requirements to use those were listed as an example of an interoperable system in law and then ended up being mandated across DoD for everything.
Is there going to be a universal SDK / API we can use with this? This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win.
Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
> This would cut alot of middle companies out of the payments industry
Not really. All it will do is let the same companies change the way they handle average citizens' payments.
It's the same as Open Banking in Europe. It is supposed allow small businesses to leverage this to enable innovation and all that stuff, but when you want to use these APIs you find there are limitations on who can actually use it. For example, you can only put your service to production by being on a "directory" of approved providers, and to be on that directory you need something 25k or 50k in an account. So, not really that useful for a small startup wanting to make a product out of it.
Banking systems are the backbone of world power dominance, big players won't let small people share it.
> So, not really that useful for a small startup wanting to make a product out of it.
I mean, 50k puts it out of “a couple people starting something in their garage”, but it doesn’t really lock out much beyond that. That’s pretty close to the franchise fee for opening a McDonald’s.
Yes, it could be more equitable, but if that’s the only barrier to access, it’s… pretty open for even quite small businesses.
50k is small peanuts, even for a friends and family round. I’d expect any startup dealing with banking transactions on my or my businesses’s behalf to have at least that much in a bond or escrowed away for counterparty risk.
A lot of people complain that 50k isn't much of a hurdle. Yes, I also agree that I as an individual can actually get that loan tomorrow if I want, but the point is "open" banking is meant to open up opportunities and should have as little hurdles as possible and the 50k is just one example.
Look into going into the business and you will realise other hurdles like having some insurance that will cost you tens of thousands, and more costs. When you compare that to, say, creating an app and putting it up on an app store, we can agree that there is a huge difference.
Of course I understand that banking means playing with people's money and therefore measures need to be put in place. But instead of requiring financial assets maybe the 'measure' should all be around technology and your service will need to have gone through extensive testing to ensure it won't be exploited. Otherwise 50k is peanuts like someone said when it comes to covering any financial loss incurred if your service is messed up. So that 50k is just to filter out a huge majority of individuals wanting to create something for themselves.
Currently this works between banks only. Banks have reserves at the Fed, and those reserves are what gets adjusted when a FedNow transaction happens. The banks then adjust their own records on their customers' behalf.
The fed lists a number of service providers on their page. I assume they will now roll out some interfaces. Glad to see the US banking system start to catch up with the rest of the world ca mid 90s.
It won't take long before all banks are using it. Once the banks are using it, employers will begin making payments using it. Once employees are receiving digital currency payments from employers, cash will end soon after.
> Is there going to be a universal SDK / API we can use with this?
There is probably a neobank opportunity in providing this. FedNow is, reasonably, administered by banks. (The Fed doesn't want to provide end-user customer service nor incur liability for fraud.)
Right. I suppose that makes sense. I’m thinking about ease of startup costs for institutions that want to use it financially. The Fed would need to support that anyway. Perhaps by not limiting a qualifying institution to just banks but also opening up access to financial service firms would be enough. They could just have some sort of fair priced qualifying program that a company has to maintain to access it or something
> Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
If FedNow can fit in with ApplePay, then it can displace credit cards in the first place! The corollary I’m drawing, is from India where “UPI” payments (something similar to FedNow) was launched about 7 years ago and today is the more dominant payment mode than credit cards.
Shameless plug, but Moov offers a single API for payments. The clearing house's RTP system will be supported shortly, and FedNow is coming soon after. Check out out here: https://moov.io/
No. This is an interface for banks to settle between themselves.
A bank does not want to interact with you in the same channel as it interacts with another bank.
What there will be are services provided by banks which utilize this for instant transfers.
The middle companies between transfers you want. Most of the actual work is fraud prevention and dispute resolution... unless you want the only means of settling a dispute is through the courts.
> Wish we could do the same for the credit card companies.
FedNow can replace credit cards for cases where chargeback or actual credit isn't necessary. So for many ordinary cashless payments.
Arguably even for many cases (small to medium amounts of money) where the possibility of chargeback seems useful FedNow could be better in expectation, because the fees are lower. The credit card companies are making money after all. Using them for chargeback is like buying insurance for things you can replace out of pocket: On average, you make a loss.
however, the payment itself is almost besides the point. the tricky part is the scheme / governance surrounding payments. who is liable for what, preventing fraud, etc. these large payment actors + the middlemen are more about fostering trust networks than moving the actual dollars and cents.
fraud in P2P payment networks (e.g. Zelle) is already a huge issue because a lack of a governing actor like a card network.[0] a different question is would the government ever provide this mediating role / lay out guidelines? would we want it to?
Even when offered a more competitive option, consumers love credit cards - the merchant gets soaked, while they get cash back. Given how the networks are, you'd have to have an unprecedented collusion of merchants to break the credit networks open.
> consumers love credit cards - the merchant gets soaked, while they get cash back
It's never the merchant that gets hosed. It's the people not using credit cards.
Because, of course, the merchant just takes his banking expenses and forwards them right back to all customers by increasing prices across the board.
And it's not only the people not using credit cards that get hosed. Even the people with credit cards lose out - because the cash back is practically always smaller than the fee the merchant payed and forwarded to the customer.
As always, the real winner is only the bank. There's a reason for the market cap of MasterCard and Visa...
Credit cards also have really good consumer protection laws around them. I have 30 days to report any fraudulent transactions and on my card and the bank MUST give me my money back.
This is usually never the way it happens. The government does not make market ending decisions on a whim. It would have already met with the biggest stakeholders and fedNow is likely the result of many considerations and compromises. Visa will likely not be threatened any time soon.
Yeah. Unlike UPI in India, FedNow is not mandatory for anyone. But companies could still offer "discounts" to customers when they use FedNow, as they save on credit card fees.
> This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win.
> Wish we could do the same for the credit card companies.
I have no idea about fednow but you can directly transfer an unlimited amount of USDC to someone in about a second for $0.0025 right now on Solana.
This is a bit off topic for the post, but relevant for some of the comments here.
For those who are commenting about payment systems in India and comparing this to UPI (Unified Payments Interface), this is not like UPI in a few ways.
Firstly, this is more closer to a faster version of RTGS (Real Time Gross Settlement) in India, which is operated by the RBI (Reserve Bank of India). Speaking from experience, RTGS in India can take several minutes or even 20 minutes or longer, belying the “real time” in its name (this is true even now). The FedNow system is supposed to be real time (we’ll soon know how well it performs in comparison).
Secondly, UPI is a payments system by a consortium called NPCI that’s owned by private, public and foreign banks in India. It is not owned by RBI. FedNow is owned by the Federal Reserve, and not by a bunch of banks.
With both RTGS (and the slower batched transfer system called NEFT) in India and FedNow in the US, the interbank settlement is done via the central bank (RBI or Federal Reserve).
Anyone with an euro bank account is probably using TIPS in some fashion. In most cases, you can send a bank transfer anywhere in the euro area within 10 seconds for zero fees. Some banks may charge an extra fee on the sending side, and the receiving side might be a bit slower (in which case the payment might take a few hours to show up or act like a normal bank transfer). It's also used by merchants like Amazon or payment systems like PayPal to reduce fees on their payments.
Another difference is the use of phone numbers and simple email like identifiers in UPI. That doesn’t seem to be part of FedNow itself. What makes UPI very usable is that entering the phone number or a simple UPI id brings up some metadata about the person to confirm that the transfer target is accurate. In FedNow such a layer has to be added by Zelle or similar layer above, it appears.
Well, given that FedNow has nothing to do with UPI, per the parent's comment, and it's about inter-bank settlement, it makes sense for an application layer like Zelle to provide that.
To clarify, the Federal Reserve is owned by the 12 Federal Reserve Regional Banks which are in turn “owned” (as in stock that pays a dividend but can’t be traded) by the commercial banks in that region.
the ownership and stocks are entirely legacy symbolic gargoyles on a standard central bank. independent government agency. it's a loosely coupled top-down public institution, the monetary policy is set by a public committee,
I don't think you are drawing the right parallels here. RTGS is only meant for transactions where sums to be transferred are very large. It only accounts for 0.24% of all transactions. While UPI and IMPS guarantee instant payments and account for 57.27% of all transactions.
The announcement is very unclear. What I as layperson will get from it?
Is it an app FedPayPal/Fedmo that I will be able to use for sending funds? Is it something that will be used by other apps to have cheaper funds transfer? Because if it is latter then I'm afraid that entrenched players will just keep doing what they're doing, keeping the profits but offloading processing to that system if it will be cheaper.
The fees by Paypal/Square/Stripe even Visa and Mastercard are enormous. Personally, I strongly believe that if one will dig deep enough he will find cartel there that sets prices. And when that will happen, LIBOR scandal is going to be a kindergarten play.
This is not a consumer-facing, social payment platform (e.g. Venmo), it is another payment rail (e.g. ACH, wires).
Laypeople are not the target audience for this, payment rail users are (i.e. entities who regularly utilize ACH/wire transfers or build services on top of them).
As I understand it, eventually this should lead to ubiquitous, cheap/free, instant payments, similar to UPI in India. That can be very convenient and useful.
Now, obviously there are various competing services for this kind of use case already: Venmo, Cashapp, Zelle, etc. So maybe it won't be better enough to feel like an improvement, but that's the aim.
> No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features on their mobile apps, banking websites, or other interfaces such as those used for business payments. Bank and credit union customers will probably not even see the name "FedNow" on their bank's instant payments platform as the FedNow Service is the high-speed highway that helps payments move from one financial institution to another. Banks and credit unions build new products for their customers that connect to the highway.
Amazing news. Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
In Switzerland we build an awesome eBill system ontop of the equivalent thing to FedNow. Its all run by Six Group which is the biggest Stock Exchange but it is jointly owned by the big banks and government. So they all agreed to add this eBilling system. Its so much superior to having paper come in the mail all the time.
So much is possible once you have instantly confirming transactions supported by all banks. Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
> Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
I wish I, and anyone else, could get a bank account directly with the federal reserve bank.
> According to a 2021 report by the Federal Deposit Insurance Corporation (FDIC), an estimated 7.1 million adults in the United States do not have a bank account. This number represents about 2.4% of the adult population.
You could even place limits to "child-proof" such accounts.
I'd be ok with not allowing the account balance to get below zero or exceed the FDIC insured limit.
My only condition is nobody should be banned from it or kicked out for any reason.
You could say this account earns no interest (as long as there are no account maintenance fees or transaction fees).
> Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
Given Stripe's role in the system, it doesn't make sense for them to support it until there's sufficient support from the banks as well. Until banks support it, it doesn't matter if Stripe (or any payment platform) does, because the users won't see any benefit.
> Driving the news: "We're tracking it closely," President of Product and Business Will Gaybrick says, noting the company is not actively working on anything related to FedNow. "I really do think real-time payments are going to be a big deal."
> "As I understand FedNow, there isn't yet a mandate, so banks don't have to implement it," he added. "For things to completely change the landscape of payments, you need universal coverage."
> If, for instance, only 30% of banks support FedNow, then it's unlikely to become a priority for merchants to adopt the system.
> The Financial Technology Association, which represents fintechs including Block, Marqeta, Stripe and Wise, among others, is urging the Fed to make direct access to the new faster payments system, called FedNow, more widely available so fintechs can tap the new service without going through banks.
> Generally, only licensed banks have access to the Fed’s master accounts, giving them clearance to use FedNow’s faster payments system when it’s available, but nonbank fintechs argue it’s shortsighted to exclude them from the same direct access to the new public system. While there is also The Clearing House’s rival RTP Network, the new FedNow system may provide more cost-effective services.
How could stripe adopt this? Accounts are limited to depository institutions, aka banks. Stripe is a money transmitter, and their customers are businesses.
I've been receiving and sending all my bills and invoices by e-mail for the last decade, without any need for some awesome or amazing system. I'm sure millions do the same.
> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
> Is this akin to government-backed Venmo, or something?
Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
> On the other hand, it's going to let the government see every transaction you make
Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement.
That's on top of reporting requirements banks already have for your transactions.
Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
> > Is this akin to government-backed Venmo, or something?
> Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement.
"Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).
> > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
> Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
>Unless you want savings limits and expiry dates on your money.
I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well.
This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation.
Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.
Are you under the impression that ACH, the thing FedNow is replacing, is free from government influence?
This is what's bizarre to me about the FedNow hysteria. It's not a government system replacing a private market system. It's a government system replacing an older, worse government system. It's like having a panic attack because the Federal Reserve is updating their PCs to from Windows XP to Windows 10.
Ignoring the fact that FedNow doesn't change much in this regard...
I'm torn on this. Visa, MasterCard, Venmo (aka PayPal), etc. all know about large subsets of my transactions, and they go and sell my personal data to other companies in sleazy ways to cover their costs.
Is that better or worse than the government knowing all this stuff? Sure, the government can also legally use force against me and deprive me of my freedom and possessions, and might pervert my transaction history into justifying doing bad things to me. But that's a risk, not a certainty. Private companies selling my data and using it in nefarious ways is a certainty.
Seems to me people is failing to understand what CBDCs will bring, especially even more “bad money” and economic slavery caused by “incentives” to spend.
Please explain to me what FedNow changes compared to the current ACH system in regards to government recording of transactions? Please explain to me how FedNow prevents cash transactions from occurring, or otherwise justify your statement “every financial transaction I make”?
You are already starting to pigeonhole people with your stereotype. I'm as liberal as they come and I find the thought of a CBDC to be an unimaginable Orwellian nightmare. A boot stamping on the face of civil liberties and privacy forever.
The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing. Same for importing drugs from other countries. And on and on.
The ISP duopoly/monopoly is worse from a consumer perspective and functionally equivalent from a civil rights perspective. To think otherwise is naive.
In fact, the private sector solution is perhaps even worse from a civil rights perspective.
Consider a prosecutor in Jurisdiction A hell-bent on violating the civil rights of a citizen in Jurisdiction B, and suppose Jurisdiction B is sympathetic to this citizen. This isn't even hypothetical in the USA. Abortion, immigration, civil disobedience, etc. In the corporate duopoly setup, Jurisdiction A can compel the ISP to comply -- either by physically entering the property of the ISP and taking data by force, or by threatening market access. In the muni ISP case, Jurisdiction B says "shove it".
And that's before noting that corporations such as modern ISPs are -- like governments -- also large bureaucracies endowed with incredible power that are de facto impossible to opt out of. Except at least in representative government you have some sort of voice, however small, which isn't dependent on amassing vast sums of cash.
> The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing.
Many of the arguments revolve around concerns that the government will gain too much control, power, and personal information. It the government directly controls financial transactions they know every transaction we make, and more importantly can deny transactions they don't like.
Arguably the US government effectively has these powers today, but beingtthat they don't directly own our banks there is a level of red tape they have to go through. As long as they are technically separate there is also the opportunity for us to change the laws and strip them of that access, once combined we give up that possibility.
The US was originally design with a very strong distrust of our own federal government. For the last 80 years we've completely flipped the script and given more and more power to a massive federal government, but the undertone of distrust is still around for quite a few Americans.
IRS auditing targeting has been at the explicit behest of Republican controlled Congresses. That is, they were told to stop/reduce targetting high net worth individuals, or face even further cuts to their budget.
What benefit would targeting low wealth individuals have to the IRS? I worked on a state tax system briefly at Accenture and they offered the product for a percentage of reclaimed taxes. They started with high debts with good credit scores. Since they had skin in the game (which it could be argued the IRS doesn’t), they wanted to maximize the unpaid taxes they collected.
The press release lists a few big banks like Chase, Wells Fargo, BNY Mellon, US Bank and Fiserv, along with a dog's breakfast of random service providers and credit unions.
Since free realtime payments presumably would still require both the sender and the receiver to use a participating financial institution, instead of all participants just transacting directly through the Fed, how is this supposed to work if most of the industry isn't participating?
There are already other options for instant payments in the US. The Zelle network and The Clearings House's RTP have been running for several years, and provide pretty good account reachability today. FedNow is the result of smaller banks and credit unions wanting an alternative to Zelle and RTP which are both owned by consortiums of the big banks. The expectation in the industry is that there will eventually be interoperability between these systems, and it will not make much difference to consumers which one their bank uses. Similar to how paper check and ACH clearing works in the US today.
Zelle isn't a good comparison because it's not made for things like paying employees or other businesses. It was made specifically for payments between individuals and in fact, the big banks that run Zelle could very well change the terms to specifically forbid using it for things like payroll (actually, they might already forbid it but I'm not sure).
FedNow is good for basically everything: Payments between individuals, employeers/employees, B2B, etc. More importantly, the fees are so low it might as well be considered free ($0.045/transfer) which is HUGE.
> The expectation in the industry is that there will eventually be interoperability between these systems
Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
the entire reason FedNow exists is because (simplifying somewhat) the large banks launched their own real-time payments system (RTP through the Clearing House) and small banks in the US lobbied the govt HARD to get a government option out of the reasonable concern they would get squeezed by the majors.
nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.
It takes time for adoption. These were the early adopters, who wanted to participate in the design and also be prepared from a business standpoint to ready at launch. If it proves it’s worth, broader adoption will follow. Like anything else.
In December 2019, noting the success of UPI, Google suggested the US Federal Reserve Board to follow UPI as example in developing FedNow,[22] a real-time payment system for United States.[23]
It will be interesting to see how this affects "toxic," deplatformed, and to some degree debanked (at least from PayPal and CC processors) entities, like the KiwiFarms. While this page is somewhat vague about the private/public status of the Fed: https://www.federalreserve.gov/faqs/about_14986.htm
I think KiwiFarms is a cesspool and I think Null in particular is an extremely crappy human, but despite that I disagreed with the credit card processors pulling them, because they really did have a near-monopoly for online payments, meaning that this could be considered stifling of free speech.
However, I think I'll have less of an issue for it if there's the government-backed means in which to send them money; at that point I think the "it's a private company!" defense would actually apply to the credit card companies.
This is a dramatic whitewashing of KiwiFarms. KiwiFarms was not deplatformed for wrongthink or because people disagreed with their ideas. They were deplatformed for coordinating harassment campaigns that resulted in at least three confirmed suicides. That is not protected speech.
Isn't it the case that you still have to have a relationship with a bank to have an account to transfer into or out of via FedNow in the first place? In that case I don't think this would change the picture at all. It's not the intention to help the unbanked pariahs, that's for sure.
Yes, one doesn't have an account with a participating bank in order to receive and send payments via FedNow. It is same with Zelle; with Zelle, one sends money to an email or a phone number of an intended recipient. Both senders and receivers of Zelle need to registered with Zelle from their banking apps. USBank and Chase are notorious to close accounts who use Zelle heavily, because they see such activities as nefarious. Maybe, other banks use Zelle transaction history as another point to in order to debank people.
I don't want my banks to know who I send money to via Zelle; but they do. If banks are happy with customers writing checks to 'problematic' people, why they think that frequent Zelle activity as source of risk, as long as customers are not depositing or withdrawing cash/money orders.
The Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term. There is no term limitation for this office.
The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.
>>Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term
Sorry but no... You can not be a "Private Company" and have your leadership appointed by the President like any other Government Agency
The Fed is a Government Agency,
>>The reason the US government has a national debt is because that debt is owed to the Federal Reserve,
Incorrect
Some of the Debt is owned by a Federal Reserve, more recently as no one want to buy US Debt any more but....
>>which is a private bank that loans the US government money
Again FALSE....
The Federal Reserve can not Loan the US Government anything
The US Dept of Treasury issues Bonds which are sold on the Open Market, 3rd parties then Buy these Bonds, then the Fed Buys them
The Fed can not legally buy Bonds directly from the US Government. How do you think Black Rock got to be do big...
>The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.
I'm pretty sure every holder of US Treasuries (including me) is owed money by the US government.
trusts, foundations, and a host of other entities are ‘orphaned’ entities and is essentially a third category which is more accurate for the Federal Reserve as well
The Board of Governors is a public entity with an appointment, and the rest of the entity has a rotation of members and pretty full autonomy on how it runs on the inside at the employee level
A discussion forum similar to, say, Something Awful (or indeed HN), with a focus on mocking online misbehaviour and a reputation for unpopular political views.
It is crazy how much credit card companies get paid just for making sure that money goes from A to B.
Yes, they also offer fraud protection and chargeback, but in 90% of purchases, I don't need those. I have other means of establishing trust and recourse, and I just want to send money, instantly.
Paying $200 on the internet should cost $0.01, not $10.00.
I think there is tremendous opportunity in unbundling payment and fraud protection.
My intuition is that the existence of fraud protection probably lowers the incidence of people attempting fraud.
I'm someone who (still!) believes in the Bitcoin project but I'm hesitant to use it for online payments because if someone rips me off there's no one I can go to for help.
I hope so, when it trickles down to the commercial bank user level.
That's how it works in pretty much the entire rest of the world. PayPal is mostly incomprehensible to Europeans, it solves a problem that they never had.
This isn't strictly true, at least in NL. Most domestic online businesses use iDeal for instant payments, but if you aren't shopping at an online retailer that explicitly supports it, you need to use a real credit card or Paypal as a pass-thru. Some businesses will support you sending a payment via IBAN, but then you're waiting days potentially for someone to reconcile the ledger manually and deliver your digital product.
Since I don't particularly enjoy having debt, Paypal is a nice middle ground as long as the fees aren't outrageous.
The hope is that banks open it up for their consumers to use. Log into your bank app -> send money to friend's bank and it will all happen over FedNow under the hood.
How can a consumer actually try this to send money? This says Wells Fargo is live now but after logging into Wells Fargo I don't see any obvious new feature.
Think of it more as an alternative method to fulfill the kinds of things that ACH and Wire Transfers are used for. You'll probably never see 'this is a fednow function' on any consumer facing documentation, but billpay, payroll etc will use it.
I'm assuming that banks and payment services will add it to their services. Everything that goes over ACH will gradually switch to FedNow. There will be no noticeable difference to users except that transfer will be instantaneous instead of taking days.
It is live on star one credit Unions mobile app. On their interface, it still requires you to specify the target’s routing and ac number like an ACH transaction. So not the most usable now.
> “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true.
Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
I actually don't have a strong opinion about the digital dollar. I learned about it as a concrete idea in this very article. My opinion is: sounds reasonable, probably pretty complicated to pull off. I am opinionated when it comes to bad, weasely non-answers to questions though, if that's what you mean.
Consider "We have every intent of creating a digital dollar and are actively planning and working on that project BUT FedNow has NOTHING to do with that project".
Founder of a developer bank, Column N.A. here. If people are interested in starting to build on FedNow hit us up. column.com/fednow and my email is william at column dot com .
Do you support cannabis business? Or rather, those of us who provide services too cannabis businesses? Some folk (eg: Stripe, Twilio) frown on even using their platforms for things next-to (but not touching) cannabis.
So, is the cost of moving money at the retail level zero to almost negative at this point? I mean, literally, we as a society have invested tax dollars to reduce money movement to something that's damn near minimum entropy.
We've had something similar (OSKO/PayID) in Australia for a couple of years now. In our case it wasn't the government, but the private banks getting together to launch it themselves.
Unfortunately its a big target for scammers. Once the cash is instantly transferred, there is little to no chance of getting it back. There are no chargebacks like with credit cards and the instant nature of it means payments can't be reversed like the old bank transfers.
So its good for sending money to friends, family and trusted people, but not so great for buying anything online as your protections are basically zero.
You have to remember that the instant payment also stops the scam of "it will be in your account in a couple of days". You can see right there and then that the payment went through.
I hope it's a success - but I am doubtful in the US payment landscape, as absurd incentives persisted so long:
- C2B payments (everything from cable to insurance) is dominated by credit card payments, as consumers chase rebates/miles/cash back [paid for by the people who don't pay their card in full every months]
- C2C payments, because it was virtually impossible for an average person to pay another bank account to bank account, a whole shadow banking system like Venmo, PayPal, Zelle, CashApp was created.
- B2B could always pay via ACH, doing it in real time for vendor payments has no advantage
- B2C payments, maybe - when you insurance company settle a claim same day (just kidding...).
So I hope that the US gets to a place where it is secure and convenient to pay others bank accounts with the balance in your bank account - but I doubt it.
The working assumption (on the part of the US Federal Reserve) is that eventually all/most US banks will use FedNow and offer it to their customers (probably via mobile/online front-ends developed and sold by B2B third parties).
So when can businesses start utilizing this to replace ACH? I run a b2b company and right now ACH is our most popular payment option, but the settlement time is a pain.
Right away. My organization verified that an account at one of our banks could send thousands of dollars to an account at another bank, in seconds, and then send it back. It's pretty cool. :-)
Yes, that’s the current state of affairs. My bank receives the money in my account from my employer’s bank but it takes a couple days to clear. Right now many banks will make this money available to you right away rather than waiting for it to clear.
I assume you are being snippy, but to actually answer the question: Kinda - if you are paid on Fridays then payroll is submitted on Tuesday or Wednesday.
Zelle is already owned by a consortium of banks. Even if FedNow were to make Zelle obsolete, it wouldn't do anything to harm the banks, so they ultimately wouldn't care.
Meanwhile, Venmo is owned by PayPal, who deserves to become obsolete, so we should all be cheering this on.
Not for Zelle/Venmo/etc.. Zelle is for P2P (person to person) and FedNow is for A2A (account to account). There are no take backs on FedNow so it's not intended to be used for P2P. No take backs means no recourse for fraud etc.. FedNow should supplant ACH waaaaaaaaaaaaaaay down the line.
What I have heard is that the banks that own Zelle will try to convert it into a directory service mapping identifiers like email addresses and mobile numbers to bank account information. The actual payment clearing will move off of Zelle, and all payment clearing and settlement will happen on FedNow or The Clearing House’s RTP system. That makes some sense to me.
Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
Regarding payment systems specifically, people generally don't realize what they're missing.
Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so. They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you. It was very convenient. On the downside, the ATMs were turned off (!) during national holidays, so you had to get cash beforehand.
Checks never took off in Japan because their 1947 Labor Standards Act (Art. 24) actually made it illegal to pay wages by check [1]. So it's not that checks were made obsolete, it's that they were smothered in their crib. Until the advent of electronic payment, it's said that tens of millions still got paid in cash rather than bank transfer in the early 90s [2].
I think it's easy to forget that societies that adopt a technology early might be doing so because the slightly outdated alternative from elsewhere was never brought over. Japan has no shortage of those, like a lot of dining is still cash only. Who knows, perhaps in 10 years those restaurants will skip credit cards and contactless and go straight to face-based automatic payment.
I'm only nominally a grown-up, but I've lived in the US my entire life and I don't think I write a check more than once a year. Most stuff I buy is done with credit cards (which I generally pay with their respective mobile apps with bank transfers), my mortgage is automatically withdrawn from my checking account, and I use CashApp or Paypal to send money to people directly.
I think the last time I actually wrote a physical check was when I refinanced my house in 2021.
I don't think cheques are obsolete in Japan, so much as never having been popular and established in the first place. A lot of things are just done in cash (even e.g. buying houses!) and that's not seen as unacceptably risky the way it is in many countries; COD is an established practice that again just doesn't exist (and wouldn't remotely be considered safe) elsewhere. Furikomi is slow and expensive and cheques would actually be an upgrade in many ways.
> When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so.
And yet in Japan they're still obsessed with using backwards fax machines and paper.
> They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you.
That's intresting to know.
Where I'm at, we had (still have?) a "passbook", a small booklet where you could get all your transactions printed onto.
But AFAIK we couldn't do it ourselves through the teller machine though. Once in a few months or so you go to the respective bank and ask the staff there to update the passbook. They use a machine, however.
Of course, there days it's unnecessary as you can electronically download a list of your transactions for a given period from the bank's website/app.
> Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
This is like comparing candles and lightbulbs. Sure you can light up your home using both methods just fine, but you end up realizing how inconvenient candles were once you've made the jump to the newer technology.
Yes, but in many cases the people using candles fight like hell to insist that electric bulbs aren't better, can't be better, and even if they were better, there's no way to have electricity in the US.
Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).
Interbank payment systems are actually provided by central banks or the government (or affiliated organizations of either) in quite a few cases.
Europe has TIPS (an ECB-operated implementation of the SEPA Instant Credit Transfer scheme), India has UPI (which is pretty close to the central bank, as far as I understand) etc.
In the case of FedNow and TIPS, there are private alternatives as well, such as RTP in the US or EBA Clearing's SEPA Instant implementation in Europe. This is similar to ACH – there's both a public (FedACH) and a private (The Clearing House) implementation/network available.
But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.
>Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
As an American, this definitely isn't true for me. I've found so many large organizations fail to make auto-pay work, transferring money is mind-bogglingly slow, and going from magnet to chip-and-pin instead of straight to tap-and-go was a regression. Some companies are able to bill you after you no longer wish them to bill you, while other organizations make it difficult to find out how much you even owe them in the first place when you want to pay them. Not sure how much the last couple can be solved with incremental tech.
When I want to know what the future of money transfers could look like, I'd ask people from, say the Swahili-speaking regions of Africa, not Silicon Valley.
> Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
I thought FedNow was explicitly inspired by the success of India's UPI?
I haven't learned all the details of the service yet, but I hope this helps eliminate the ridiculous check-based / Zelle fraud that seems to be growing (or at least, seems to be highlighted in news and discussion as growing).
The very fact that we have money that can appear to be yours initially, but then removed from your account if a check is reversed or disputed is costing people in time and $, and benefitting fraudsters. (advance fee fraud, Zelle "mistakes", and similar). 3 day clearing times that give people an opportunity to be scammed.
Although, irreversible + instant payments may open some new types of problems for people, I could totally see that. But people will need to learn how to deal with this more rational system. Other countries are decades ahead of us in that you are the one who has to initiate payments from your account, and only you can do that, and payments are instant and settled.
In India, there’s something similar to FedNow called UPI — “Unified Payments Interface” that really disrupted the market completely about 7 years ago — it is interoperable, works instantly and has no charges. It was phenomenal how that grew and got adopted, keen to see how FedNow changes the American payments systems.
Do you think that eventually UPI will be a vector for more efficient taxation?
IIRC India has relatively high tax rates, but has struggled with collection in the past -- maybe I'm being overly paranoid, but UPI seems like the perfect mix of usefulness and convenience to get everyone hooked, then once it's widely adopted enough (let's say 80/90%+ of payments) a sales tax could be enforced.
I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.
>I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.
UPI connects with your bank account -- that's the only way it works. So the identification that UPI has, will be same as that of what the bank account requires. Typically, higher the amount, more the IDs required to keep the account active.
> IIRC India has relatively high tax rates, but has struggled with collection in the past ....
The way tax evasion primarily happened in india was through cash payments. When you rotate money in cash, it's really hard to trace it back. Now with UPI becoming mainstream, the thing that is now accessible to govt is your day-to-day transaction history.
> once it's widely adopted enough (let's say 80/90%+ of payments)
If the IRS was used against political opponents, this will be too.
I think this is a case where setting a standard and requiring payment processors to adhere would have been a much better idea. More centralizing of power is not what we need right now.
Can you point me to any examples of the IRS being “used against political opponents”? Please specify who the opponents of the IRS are in your examples.
I'm not the person you asked and as an Australian it's difficult for me to find a concrete irrefutable example of the USofA IRS being weilded as a political weapon on short notice.
I can, however, provide two examples of an incredibly
unlikely event that happened to two political enemies of the then seated POTUS:
How does this system impact the normal person? Like who is the customer for this? Can I uninstall Venmo and Paypal? Or is this something banks would use under the hood and consumers would never interact with?
Powell has mentioned[0] that the Fed is unable to affect fiscal policy, which is the fastest and best solution to certain economic crises. Does this bring the Fed closer to being able to simply give people money?
FedNow doesn't change anything other than transaction speed & cost. If your concern is the Fed giving people money directly, they've had the technical capability for a very long time.
Well done America. This has been available for literally decades in Australia. I was doing bank transfers over the phone from a landline in the 90s before mobile phones were common and the internet was all dialup. I don't think I've been paid by cheque (check) since the 80's.
When I started dating my wife, she called me an old man for even owning a cheque book. That was in 2006.
Is there a way to restrict my bank to only allow incoming deposits to use this for my account? I'm scared of VULNs in a new system being abused to withdraw money quickly. Yes, I know the bank is on the hook for making me whole, but recovering from a financial issue like that is more annoying and time consuming than just avoiding it and being a late adopter.
From what I see people on HN writing, by and large they downplay the risks of these as well as AI. Or alternately seem to suggest that CBDCs and national IDs are not coming, and that it’s a conspiracy theory. However, the “enshittification of Big Tech platforms” is already a fact, so they simply complain about it, but anytime solutions involving open source, decentralization, and utility tokens are introduced, they are violently voted down. So — since no solutions are welcomed, I guess many denizens of HN support hurtling toward extreme centralized control. After all, we’ll be able to complain about it once it’s in place, and that’s enough!
Edit: literally 5 seconds after I posted it, I received downvotes. Not fast enough for a human to read the message let alone explore the links. I wonder if it’s even automated by keyword now.
I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
Similarly with digital payments, I'd much rather trust the government with that than some rando cryptobro of the week.
There is nothing extreme about this. The government already does both functions in the analog world. It's about time they caught up digitally.
Meanwhile some YouTuber screeching about some Bible quote... not a convincing start
Edit: didn't downvote you btw, just don't agree that this is a bad thing
> I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
And reintroduce all the chilling effects of knowing everything you say is on a permanent record linked to your name. I know the government wouldn't be running the sites, but they'd have activity metadata, and data breaches could be correlated to work out who the "opaque" ID refers to (perhaps it would be possible to mitigate that by having the IdP identify users to the site as a hash combining the site and the user. Not sure). There are a few types of companies that may have a genuine reason for requiring government auth, but generally we should not make it easy for Facebook or Google to require it
A community with fewer bots and trolls should be accomplished with moderation, and not just allowing a firehose of signups
My concern with digital payments is the elimination of cash. Having the ability to transfer value without it being monitored or blocked is an exceptionally useful property of paper money.
I don't trust the govt quite as much as you, but could see this being a useful govt function if the issuing body didn't maintain any record of when, where, or why an ID was used--and only acted to verify the authenticity of an ID.
> Meanwhile some YouTuber screeching about some Bible quote
Why do you lie when it takes 1 second to verify the facts? I wasn't interested, but clicked on the video and the man is talking in a calm and collected manner, not even close to "screeching". Or is it always "screeching" when somebody says something you disagree with?
Nobody has seriously discussed a CBDC for months in the U.S. FedNow is the American financial system catching up to the 1990s. It has nothing to do with crypto beyond the cursory.
It was obvious from the first line that your post was going to be axe-grindey conspiracy fodder. It's not us, it's you and your and tightly closed epistemological loops.
In this case CBDCs (the interest bearing kind) actually have the potential of disintermediating banks. Or atleast reducing credit/liquidity risk. Grandma's savings/deposits arent going to evaporate the next time a bank collapses. Cause her CBDCs are going to be sitting in her wallet.
It's also wildly inconsistent. The same political factions (vs individuals) that complain about Real ID also complain endlessly about fake ID. They complain about illegal voting, but also support the drive to withdraw their states from ERIC, which has done a good job in detecting illegal voting. Basically they're sometimes against solutions because their complaints infrastructure generates a reliable stream of political and financial capital from the credulous.
It's kind of strange that in other threads HNers will lament the end of the nerd internet and how everything is corporatized and 1984 wasn't a manual, and then here they downvote you.
I see it as an almost total impracticality to transition from our current system to a centralized national identity document.
There is no central database of:
* Citizenship
* Births
* Drivers Licenses
* Marriages
* Deaths (SSA death reporting is voluntary and customary by funeral homes -not required)
* Education history
* Criminal Records
* Firearm Ownership
* Property Ownership
* Vehicle Ownership
The only thing the feds or even the state government has a certain idea of is, how much you made in a given reporting period - not that reporting periods always overlap in any meaningful way. There is no requirement (as far as I can tell) to even request a social security number - most parents do, because they want to claim their children on their taxes.
Now, many of those records do exist - they exist at the county, state or local level in some manner or fashion - and of course, its not standardized either, sometimes its at the county, sometimes the state, sometimes at the county or state for the same record type based on year. (e.g. Marriages from 1902-1962 are in county records, and 1962 to current in state, or the other way around.)
Trying to link all of this data in a meaningful way, would be a monumental task that would likely require a vast amount of manual data matching - and it would still be wrong 40% of the time.
Yes, that part is unfortunate. It requires full routing number and account number. Maybe the phone number to account number mapping might be seen as a privacy risk in USA.
> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
Come on... Being capable of sending money to someone easily should not be based on the bank.
Your money is located somewhere and your recipient has their money located somewhere. The places where your money sits needs to interoperate with whatever "thing" you're using to send money. Presuming that your money sits in a bank/credit union, you arrive at the quoted statement. If your money is paper in a sack somewhere, you can mail it, but it might not make it all the way.
Most of the comments below are about the tech. Is no one concerned about the privacy concerns that the government now has easy access to all payments made through this?
For those in the know, will this break the stranglehold Visa and Mastercard have over the entire payments industry and help prevent people from being un-personed on a whim?
As a non-US person, just to confirm I'm understanding the implications of this, have near instant bank transactions not being a thing in the US until now?
The network limit is $500,000 per transaction, although individual participants can set specific lower limit, which is defaulted to $100,000.
Furthermore any end user interface provided by the bank could have its own limit, since FedNow is just a backend service, frontends are up to each participating provider.
This and IRS Tax filling all happening today. From an outsider perspective the only two major thing left for US to fix is Medical Cost and Public Transport.
I thought Check 21 (enacted back in 2003) was supposed to eliminate that, allowing digital check images to substitute for physical copies during the clearing process. My understanding was banks (or even sometimes merchants) just scan in the paper checks on receipt these days and process everything electronically.
That could very well be... I remember many a late night run to the airport to help resolve some crisis back in the 80s/90s, to keep them canceled checks flying.
I'm glad the US is finally catching up the rest of the world...India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown. Banks already have to settle transactions between banks through reserve transfers via the Fed...this will just help automate that process so we can send money from bank account to bank account. Like a Zelle or Venmo, but government backed!
> India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown.
Yet, India is already working on E-RUPI [0] which is a CBDC on top of UPI by the Reserve Bank of India, also shown in the same Wikipedia link you just used. Eventually, FedNow will just be the rails for a US dollar CBDC.
The next time a protest happens in India after their government does something extremely unpopular, you'll see why CBDCs are a nightmare not to be ignored. This is why governments around the world are working with many central banks with pilot schemes to test them out and eventually roll their own.
> Like a Zelle or Venmo, but government backed!
Look where that went for Zelle. [1] A vehicle for rampant fraud on the system.
> Eventually, FedNow will just be the rails for a US dollar CBDC
This is unfounded. FedNow is a faster classical payment rail. CBDCs involve the central bank taking on a customer-facing role. The Fed has no desire, nor frankly basis in law, to do that. The only reason the two are linked is crypto (a) prompted the first serious discussion about American payments modernization and (b) promoters are using it as a thread by which to hang onto a dream of mainstream crypto.
India’s system is more usable, though, apparently. This seems like an improvement but it doesn’t do the same thing?
> Because UPI is designed to be intermediated by computers rather than by humans, transactional information gets captured by the payments company while the transaction is in progress, and that can tell the clerk (or cron job) that the payment succeeded without them needing access to the bank account.
> This is a fun engineering challenge in many countries, which are often overlaying bank transfers as a payment method on top of bank transfers as a settlement method.
[…]
> Bank transfers are an extremely small percentage of customer-to-business payments in the U.S. In addition to the speed issue, which might get improved by FedNow when it launches (wags have referred to it as FedLater), bank payments have no consistent way to receive metadata, and despite being no-cost they compete with well-developed credit card ecosystems which credibly offer better-than-free pricing through rewards schemes (to the customer, who generally gets to choose which payment method they use to transact).
Reward schemes are funded by interchange fees funded by higher product prices. They are a tax on the entire economy. Merchants can push the CC fees to customers who opt to pay with CCs vs cheap or free instant payment systems. T-Mobile has dropped autopay discounts if you use a credit card vs deposit/bank accounts for payment, for example. Walmart wrote public comments on this topic supporting the FedNow implementation.
Reward systems won’t last as merchants push towards FedNow as a payment alternative and charge you to use a credit card. Nor should they last.
> Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.
They could theoretically, but it is unlikely due to each transaction costing a few cents and the monthly FedNow fee being $25 (it is a utility run on a cost recovery basis). No banks charge for Zelle payments to my knowledge, for example.
This eventually replaces checks, money orders, Zelle, Venmo, ACH, and probably credit card payment volume over time (as seen with UPI in India and PIX in Brazil). Every deposit account can send to other deposit accounts instantly.
Given how generous credit card rewards are in the US, combined with the interest rates that get charged to people who buy things they can't afford, I don't see it replacing credit cards.
Feds already get money transfer data without warrants. Recently Chase closed my checking account because I use Zelle so often. Chase knows all Zelle records because they partially own Zelle. I would rather have Feds own the data, rather than banks. When banks own data, they make decisions to close people’s bank accounts without any proof of abuse.
> No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features
See y'all in another 25 years, when banks get around to implementing this.
This is really concerning. I wonder why they couldn't have looked into what (if anything) prevents the private sector from offering this service, and fixed those obstacles instead?
It seems to me like a government run shoe factory, or a government run mail service.
Zelle has been a nightmare to use. Apparently they rolled out a major update that caused many financial institutions to drop support. Because of that, my phone number is now unusable/blocklisted in their system because it's in a limbo state that neither Zelle nor my bank can fix
The Federal reserve banks are only one operator of ACH, with there also being a second private operator. The fed denies that Fednow will replace ACH.
Not sure if that denial makes much sense, although it certainly could take a long time to replace ACH even if it eventually does, simply due to how many systems interact over ACH, and that many of them will not be high priority to change.
I'm also a little surprised that FedNow went with real-time gross settlement, simply because that means posting every transaction to a Federal reserve account (which would be a large increase in transaction volume for those accounts, relative to say daily or even hourly net settlement). Reading Operating Circular No. 8 tells me that is exactly what they are doing, which is honestly a little impressive.
It surprises me because in Canada the Interac e-transfer system has been flawless in my anecdotal cases. Albeit one known issue is reversals allowing fraud, but I assume any non-cryptographic solution will have the same issue.
Thanks for posting this excellent example of why you shouldn’t use ChatGPT to summarize documents. Page 4 of the PDF has an understandable diagram and list of steps, and this doesn’t match it.
FedNow is a replacement for ACH which is an ancient, creaking monstrosity. If we can't ever replace or fix old, busted infrastructure because of conspiratorial rambling, we are fucked as a civilization.
I’ve seen a lot of crazy conspiracy theories reveal themselves to be true in the past five years.
Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
It makes me question why we allow government to be in charge of our money, and the price of money (interest rate meddling by govt contractor federalreserve). I suppose we grow up with it and don't question it.
If a country’s government really wants to get rid of a lot of large cash transactions, they could phase out some paper money like India (no cryptocurrency required) but in the US it doesn’t seem very likely?
Most money in the US already consists of electronic records in banks. Making bank transfers work better is fairly orthogonal to whether ATM’s work and retailers accept cash.
I wouldn't worry too much about replacing the US Dollar entirely. We're pretty slow even to get rid of the penny. The US Dollar has a _lot_ of fans, I'm certainly one of them.
Cash can be spent without being monitored or blocked.
A recent example of how this might be relevant is with the protests in Canada that lead to the freezing of the protesters’ bank accounts by the government. While I don’t agree with the protesters, the idea of the government freezing their accounts is alarming. After seeing such control exercised, it’s hard to be excited about a cashless society.
For one, unlike cash, the issuing entity can program CBDC to expire on a specific date unless utilized. Another horror use case is that they could track and limit how many hamburgers or pizzas you eat daily, weekly, monthly or yearly!
When the government does something unpopular against its own people, they can easily quell protestors at scale and force the usage of CBDC adoption by closing ATM withdrawals [0] add savings limits [1] and can incentivise spending with an expiring date. [2]
Whilst many HNers were celebrating UPI as the payment rails from India, it is almost the same thing as FedNow and is planning to put their own CBDC on UPI called E-RUPI [3] taking all the same valid concerns that I have mentioned.
It's bad enough that banks have virtually unlimited insight into my spending habits that we need to give the Feds the same access. I should have the right to buy a big mac without some government server getting pinged.
For those curious, it is really using IBM MQ[1] under the hood and uses a bespoke flavor of the ISO 20022 specification.
The FedNow Service itself is the tip of the iceberg in terms of what actually happens from an end-to-end perspective.
We've been working to become a Certified Service Provider so feel free to ask me anything. I'm happy to share anything that is not under NDA.
[1] https://www.ibm.com/products/mq
What does a development environment look like, both architecturally and simply visually?
Like: Do developers spin up entire fake economies with two banks and the fed on their latop, or is it all incremental changes to individual microservices in a big permanent test setup? Do other banks / service providers / the fed run test instances of their systems with fake money for other companies to do interop with, like a "global test financial network", or do you generally test with "real" money?
What do you see on your screen in day to day developer live? Are there like dummy online banking web interfaces? Or is it all text logs?
Is it just normal software development like anywhere else, or is there anything that really sets it apart in terms of developer workflow?
Once the service provider is connected to the Fed (a somewhat complex process), it's normal software development. The client uses either MQI or JMS to send and receive messages; the messages are essentially ISO20022 XML. The development environment could be anything (any OS, any IDE). You interface those messages with your system of accounts. The Fed also provides a simple web UI and a testing network where you can test with other participants and run regression tests.
From a software development perspective, it's really quite normal.
5 replies →
In front of your eyes: TSO-ISPF for everything. IDz for the 5 seconds per month that code is actually written
Test env: Separate permanent envs. From playground where nothing matters, env with some fake data in similar databases and variants of all systems, to mirror of prod with anonymised data, then prod
There are dummy online banking web interfaces
What sets it apart is that the operating system is painful to use and never stops being painful to use. And your employer is paranoid and keeps you in a digital prison for security so very few permissions so there is no creativity or off-road improvisational innovation just assemblyline style development
8 replies →
> I'm happy to share anything that is not under NDA.
Meta-questions that you quite possibly can't answer: broadly speaking, what parts of this system are under NDA? Why would any part of this system be under NDA? Did any government agencies impose the NDA, or was it private companies? Is the NDA intended to protect those running the system, or is it intended to protect those using the system (IOW, is it security by obscurity)?
In my line of US government coding (no relationship with this project), NDA is orthogonal to security. NDA is used to protect confidential vendor information. For example: that they have a contract with the government at all (in the case of a stealth startup), specific technical capabilities they don’t want broadcast to their competitors, the size of the contract vs. committed resources, etc
Basically everything that is not publicly documented on the Federal Reserve's website. Unfortunately, it is really common in the financial services space to overuse a NDA. Things like specific fraud safeguards, hardware information, network diagrams, etc. are all under NDA.
Is the eventual end-game that I can send money from my account at Bank A, to a friend's account at Bank B to split a check at dinner without using a third party like Venmo?
Yes, that is absolutely a use case. Similar to Venmo, there is also a Request for Payment (RFP) mechanism. I'm on the Request for Payment (RFP) Work Group that is composed of a number of financial institutions, service providers, and billers.
Netflix is part of the RFP Work Group. So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. Instead of Netflix paying ~$0.50 in credit card processing fees per U.S. subscription they'll probably be able to find a bank willing to charge them < $0.25. It also gives consumers more control as they have to authorize each charge.
71 replies →
I had to read this twice - is it really not like in the UK? Is this the first US implementation of "Faster Payments"? Sure people in the UK sometimes use PayPal, Revolut, but most of the time its always just a friend gives (and you save on your banking app) their bank account number and sort code, and you instantly send it across. edit: with no fee
32 replies →
It sounds very much like some of the Interac services that we have here in Canada (and have had for ages). We can do what is called "email money transfer" where as long as I know your email address I can go into my bank app, transfer money to you and it will automatically show up in your bank account.
15 replies →
Not OP, but I thought FedNow will do this on day one for participating banks. Someone correct me if I’m wrong. FedNow will also settle faster than Venmo currently does (unless you pay for Venmo’s instant settlement) because it’s instantaneous. To be fair to Venmo, their bottleneck was precisely the lack of FedNow. I assume Venmo will make instant settlement free. But they will need to add more features now that people might substitute with FedNow. Anyway, this is a big deal for Americans and was a long time coming.
Is this not possible currently in the US? That’s quite surprising!
3 replies →
From the perspective of most people from other developed countries, it’s honestly incredible that the US hasn’t already had this for years like we all have…
Can't you already send money from bank A to bank B without Venmo? Isn't that the whole point of bank transfers?
3 replies →
wow americans can't do that already????
That's how it works in the EU.
Tell us as much as you can about the tech stack. What is going to be able to handle truly massive volumes of transactions? Database, hardware, communications channels, programming lang, everything.
Not trying to side-step the question, but The FedNow Service Technical Overview and Planning Guide[1] goes into depth on what is not under NDA.
[1] https://explore.fednow.org/resources/technical-overview-guid...
23 replies →
What is innovative and/or well engineered there? Could any bank or financial institution connect seamlessly with the system? How does it handle security keys, transparency, and transaction log duration?
As I see it, the innovative part is that the service is push-only. With ACH and most other systems in the US, payees can pull from accounts, while FedNow has no support for forceful debits. That's a significant shift in the way we think about payments (for the better, IMHO). This has been done before by other service providers, but not by someone with this kind of influence and clout in the US.
4 replies →
Do you call those things "innovative"?
1 reply →
If I am a merchant and want to get started by hooking up to the FedNow service, is that possible to do so with a direct connection?
If I am a service provider, and want to use the FedNow service to power one of my offerings, how can I get started with that?
Super curious, were you involved in the implementation of ISO20022 from software perspective or were you more on the hardware end? Asking because naturally entire banking in US is kinda waiting to see hows its implementation going to turn out ( for non-fednow payments ).
Software side
Is there anything special about the IBM MQ implementation which makes it worth naming them? It looks like you can connect to it using AMQP so I wonder why they wouldn't just say something generic like "MQ" or "AMQP protocol".
I assume IBM Message Queue Interface (MQI) is the only supported protocol in this installation. Don't know of any other compatible brokers to support MQI.
Edit: "The FedNow Service will initially leverage IBM® MQ MQi Client for the payment message flows." according to https://www.frbservices.org/financial-services/fednow/blog/a...
It’s a little especially strange as IBM hasn’t exactly made a great reputation for themselves over the last several years. Name dropping IBM makes me think that the reserve is generally not confident and is ready to blame IBM for what they expect to happen.
5 replies →
Last time, a decade ago, I played with RabbitMQ and similar open source queue system they didn't handle congestion and rate limitation well (crashed). From my little experience with classical IBM systems like MQ they knew about that stuff.
8 replies →
I mean it pre-dates probably every open source MQ implementation, for starters.
The Fed has been using IBM MQ for connectivity for over 20 years for their outward facing services such as Fedwire and National Net Settlement.
> I'm happy to share anything that is not under NDA.
How will this eventually benefit consumers beyond what Zelle currently provides?
Is there a record of 'what' was bought or transacted for?
No this is an Interbank transfer system not a merchant service
1 reply →
For people who want to get a rough idea of what ISO 20022 is and how it looks like, I wrote a brief article about it from an end-user point of view: https://evrim.zone/blog/knowledge/iso_20022_pain_001
I think that it's a pretty handy format to be familiar with, and is quite simple to work with too.
If the Fed or participating banks decide to open up the system like European banks have done so, it can be handy to get familiar with it for us financial hackers out there!
Hi, is this implementation similar to mexican instant payment system (SPEI)?
Ironical that same system in Russia, was built (around 5 years ago) using _exactly_ same set of technologies (and many others of course). Central Banks fucking loves IBM
Man I was talking about how badly IBM fumbled the last ten years of AI between getting Watson on TV and then getting sent back to the minors by every other player. And yet here they come with a bajillion dollar government contract to keep them afloat for another 100 years. Gotta tip the cap.
What is your opinion of the FedNow Service bespoke flavor / enhanced message schemas vs what is formally defined in ISO 20022? Do you foresee any impact those differences having on how future versions of ISO 20022 can evolve? Is there an aspect of ISO 20022 you wish was different in some way?
Will this replace ACH and/or Plaid for sending money amongst my own various accounts, as well, or is it intended more as a 'payment' than a tranfer?
Plaid still uses ACH just like it has always been used for years.
It is just an easier way to connect and link accounts and data alongside it.
1 reply →
Does this end the T + 2day ridiculousness? It should be T + 1millisecond at worst. What does it take to update 2 "balance" values in databases?
> What does it take to update 2 "balance" values in databases?
Quite a bit more than you seem to think.
https://engineering.gusto.com/how-ach-works-a-developer-pers...
1 reply →
TLDR: Nearly all payments will irrefutably settle within a handful of seconds
Strictly speaking the primary means in which money moves in the United States from a volume perspective is ACH today. That system is a T+1 day from a default perspective, but it has offered the option to same-day settle during a handful of batches throughout a business day. However, ACH is not irrefutable and so it is common to have holds associated with this movement of money.
FedNow is truly 24/7/365 and push only.
All payment flows are subject to an end-to-end payment timeout clock of 20 seconds, starting from the creation timestamp to the point at which the recipient FI (almost always really a Service Provider on their behalf) sends a formal response that they intend to accept or reject the message.
An accepted payment must then be posted to the receiving account "as soon as practicable, but no longer than a few seconds” unless there are compliance/fraud concerns.
In practice, it should rarely take 23 seconds and will likely take 1-5 seconds from an end-to-end perspective depending on the processing speed of the originator, receiver and FedNow Service itself.
10 replies →
T + 1 millisecond seems impossible. Light can only travel a couple of hundred miles in a millisecond.
9 replies →
The PDF linked in the thread [1] specifies T+20s or no settlement.
[1]: https://explore.fednow.org/resources/technical-overview-guid...
T + 2day is ridiculous. T + 1ms is also ridiculous (speed of light and all.)
8 replies →
The problem is, which "database"? If you know the data is always going to be in the range of ~1TB, use Postgres or some other ACID database. But I don't know of any petabyte scale ACID compliant database.
Also I'm not sure if ACID is sufficient or not for banking systems.
7 replies →
What are the mechanics of IBM MQ’s exactly once delivery? What does the sequence diagram look like for a transfer?
Can this be extended to be global at some point? It seems SEPA instant payments in the EU also use ISO 20022
For transfers between bank:a and bank:b do both banks have to integrate with Fednow?
Thanks!
Was it difficult avoiding using an ESB? I've heard stories about how requirements to use those were listed as an example of an interoperable system in law and then ended up being mandated across DoD for everything.
commenting here solely for the fact you have a great username. go Georgetown!
Is there going to be a universal SDK / API we can use with this? This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win.
Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
> This would cut alot of middle companies out of the payments industry
Not really. All it will do is let the same companies change the way they handle average citizens' payments.
It's the same as Open Banking in Europe. It is supposed allow small businesses to leverage this to enable innovation and all that stuff, but when you want to use these APIs you find there are limitations on who can actually use it. For example, you can only put your service to production by being on a "directory" of approved providers, and to be on that directory you need something 25k or 50k in an account. So, not really that useful for a small startup wanting to make a product out of it.
Banking systems are the backbone of world power dominance, big players won't let small people share it.
> So, not really that useful for a small startup wanting to make a product out of it.
I mean, 50k puts it out of “a couple people starting something in their garage”, but it doesn’t really lock out much beyond that. That’s pretty close to the franchise fee for opening a McDonald’s.
Yes, it could be more equitable, but if that’s the only barrier to access, it’s… pretty open for even quite small businesses.
1 reply →
50k is nothing. That’s not even the salary for one person in a year.
If you can’t scrounge together $50k to start a banking business, you probably should not be starting a banking business.
Bruh, I could get $50k right now if I go through a line of credit for small businesses as a regular person.
It's not particularly difficult for a small start-up to come up with $25,000 in the US.
That's modest angel investor money in a small city.
7 replies →
50k is small peanuts, even for a friends and family round. I’d expect any startup dealing with banking transactions on my or my businesses’s behalf to have at least that much in a bond or escrowed away for counterparty risk.
A lot of people complain that 50k isn't much of a hurdle. Yes, I also agree that I as an individual can actually get that loan tomorrow if I want, but the point is "open" banking is meant to open up opportunities and should have as little hurdles as possible and the 50k is just one example.
Look into going into the business and you will realise other hurdles like having some insurance that will cost you tens of thousands, and more costs. When you compare that to, say, creating an app and putting it up on an app store, we can agree that there is a huge difference.
Of course I understand that banking means playing with people's money and therefore measures need to be put in place. But instead of requiring financial assets maybe the 'measure' should all be around technology and your service will need to have gone through extensive testing to ensure it won't be exploited. Otherwise 50k is peanuts like someone said when it comes to covering any financial loss incurred if your service is messed up. So that 50k is just to filter out a huge majority of individuals wanting to create something for themselves.
Currently this works between banks only. Banks have reserves at the Fed, and those reserves are what gets adjusted when a FedNow transaction happens. The banks then adjust their own records on their customers' behalf.
The fed lists a number of service providers on their page. I assume they will now roll out some interfaces. Glad to see the US banking system start to catch up with the rest of the world ca mid 90s.
2 replies →
I think most if not all the participating banks are "receive only" so there's no one pushing any money yet.
So it's like a Bitcoin exchange, but with dollars!
17 replies →
It won't take long before all banks are using it. Once the banks are using it, employers will begin making payments using it. Once employees are receiving digital currency payments from employers, cash will end soon after.
15 replies →
> Is there going to be a universal SDK / API we can use with this?
There is probably a neobank opportunity in providing this. FedNow is, reasonably, administered by banks. (The Fed doesn't want to provide end-user customer service nor incur liability for fraud.)
Right. I suppose that makes sense. I’m thinking about ease of startup costs for institutions that want to use it financially. The Fed would need to support that anyway. Perhaps by not limiting a qualifying institution to just banks but also opening up access to financial service firms would be enough. They could just have some sort of fair priced qualifying program that a company has to maintain to access it or something
The Fed is not allowed to compete with member banks. That's part of the reason why something like FedNow took so long to emerge.
Isn't this column's whole shtick?
> Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
If FedNow can fit in with ApplePay, then it can displace credit cards in the first place! The corollary I’m drawing, is from India where “UPI” payments (something similar to FedNow) was launched about 7 years ago and today is the more dominant payment mode than credit cards.
Shameless plug, but Moov offers a single API for payments. The clearing house's RTP system will be supported shortly, and FedNow is coming soon after. Check out out here: https://moov.io/
Pricing page is all but worthless... no indication what so ever about what even basic tier pricing is, or could be.
3 replies →
Column is building API's for our direct integration with FedNow: https://column.com/fednow/
The network of banks supporting FedNow is still small, so we may not see meaningful payment volume for a while compared to ACH, Wires, Checks, etc.
That you for staying true to your word!
https://news.ycombinator.com/item?id=31114620
No. This is an interface for banks to settle between themselves.
A bank does not want to interact with you in the same channel as it interacts with another bank.
What there will be are services provided by banks which utilize this for instant transfers.
The middle companies between transfers you want. Most of the actual work is fraud prevention and dispute resolution... unless you want the only means of settling a dispute is through the courts.
> Wish we could do the same for the credit card companies.
FedNow can replace credit cards for cases where chargeback or actual credit isn't necessary. So for many ordinary cashless payments.
Arguably even for many cases (small to medium amounts of money) where the possibility of chargeback seems useful FedNow could be better in expectation, because the fees are lower. The credit card companies are making money after all. Using them for chargeback is like buying insurance for things you can replace out of pocket: On average, you make a loss.
that seems like the right answer...
however, the payment itself is almost besides the point. the tricky part is the scheme / governance surrounding payments. who is liable for what, preventing fraud, etc. these large payment actors + the middlemen are more about fostering trust networks than moving the actual dollars and cents.
fraud in P2P payment networks (e.g. Zelle) is already a huge issue because a lack of a governing actor like a card network.[0] a different question is would the government ever provide this mediating role / lay out guidelines? would we want it to?
https://www.nytimes.com/2022/03/06/business/payments-fraud-z...
Even when offered a more competitive option, consumers love credit cards - the merchant gets soaked, while they get cash back. Given how the networks are, you'd have to have an unprecedented collusion of merchants to break the credit networks open.
> consumers love credit cards - the merchant gets soaked, while they get cash back
It's never the merchant that gets hosed. It's the people not using credit cards.
Because, of course, the merchant just takes his banking expenses and forwards them right back to all customers by increasing prices across the board.
And it's not only the people not using credit cards that get hosed. Even the people with credit cards lose out - because the cash back is practically always smaller than the fee the merchant payed and forwarded to the customer.
As always, the real winner is only the bank. There's a reason for the market cap of MasterCard and Visa...
Credit cards also have really good consumer protection laws around them. I have 30 days to report any fraudulent transactions and on my card and the bank MUST give me my money back.
Every single study shows that people spend more when using credit cards than when using cash.
I think you know the answer to your question, more than likely this won’t see the light of day outside of federal usage.
Far too much lobbying for any REAL competition to shake up the industry.
This will be exclusive to the federal government and state governments I imagine.
> Wish we could do the same for the credit card companies.
For e-commerce, isn’t that SRC?
https://www.emvco.com/emv-technologies/secure-remote-commerc...
> cut alot of middle companies out of the payments industry
Those middle companies have lobbyist representation and the govt has no intention of cutting any companies out of the payments industry.
This is usually never the way it happens. The government does not make market ending decisions on a whim. It would have already met with the biggest stakeholders and fedNow is likely the result of many considerations and compromises. Visa will likely not be threatened any time soon.
Yeah. Unlike UPI in India, FedNow is not mandatory for anyone. But companies could still offer "discounts" to customers when they use FedNow, as they save on credit card fees.
3 replies →
> This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win. > Wish we could do the same for the credit card companies.
I have no idea about fednow but you can directly transfer an unlimited amount of USDC to someone in about a second for $0.0025 right now on Solana.
$0.000025, ahem.
This is a bit off topic for the post, but relevant for some of the comments here.
For those who are commenting about payment systems in India and comparing this to UPI (Unified Payments Interface), this is not like UPI in a few ways.
Firstly, this is more closer to a faster version of RTGS (Real Time Gross Settlement) in India, which is operated by the RBI (Reserve Bank of India). Speaking from experience, RTGS in India can take several minutes or even 20 minutes or longer, belying the “real time” in its name (this is true even now). The FedNow system is supposed to be real time (we’ll soon know how well it performs in comparison).
Secondly, UPI is a payments system by a consortium called NPCI that’s owned by private, public and foreign banks in India. It is not owned by RBI. FedNow is owned by the Federal Reserve, and not by a bunch of banks.
With both RTGS (and the slower batched transfer system called NEFT) in India and FedNow in the US, the interbank settlement is done via the central bank (RBI or Federal Reserve).
FedNow is probably more similar to TIPS, which has been running in the euro area banks since 2018, building on SEPA instant credit transfer. https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...
Anyone with an euro bank account is probably using TIPS in some fashion. In most cases, you can send a bank transfer anywhere in the euro area within 10 seconds for zero fees. Some banks may charge an extra fee on the sending side, and the receiving side might be a bit slower (in which case the payment might take a few hours to show up or act like a normal bank transfer). It's also used by merchants like Amazon or payment systems like PayPal to reduce fees on their payments.
Another difference is the use of phone numbers and simple email like identifiers in UPI. That doesn’t seem to be part of FedNow itself. What makes UPI very usable is that entering the phone number or a simple UPI id brings up some metadata about the person to confirm that the transfer target is accurate. In FedNow such a layer has to be added by Zelle or similar layer above, it appears.
Well, given that FedNow has nothing to do with UPI, per the parent's comment, and it's about inter-bank settlement, it makes sense for an application layer like Zelle to provide that.
FedNow intends to support aliases such as phone number and email identifiers in the near future.
To clarify, the Federal Reserve is owned by the 12 Federal Reserve Regional Banks which are in turn “owned” (as in stock that pays a dividend but can’t be traded) by the commercial banks in that region.
it's not a clarification.
the ownership and stocks are entirely legacy symbolic gargoyles on a standard central bank. independent government agency. it's a loosely coupled top-down public institution, the monetary policy is set by a public committee,
1 reply →
Any idea how much the dividend pays to these private individuals?
I don't think you are drawing the right parallels here. RTGS is only meant for transactions where sums to be transferred are very large. It only accounts for 0.24% of all transactions. While UPI and IMPS guarantee instant payments and account for 57.27% of all transactions.
> FedNow is owned by the Federal Reserve, and not by a bunch of banks.
Sorry I have to ask. What do you think the Federal Reserve is?
The announcement is very unclear. What I as layperson will get from it?
Is it an app FedPayPal/Fedmo that I will be able to use for sending funds? Is it something that will be used by other apps to have cheaper funds transfer? Because if it is latter then I'm afraid that entrenched players will just keep doing what they're doing, keeping the profits but offloading processing to that system if it will be cheaper.
The fees by Paypal/Square/Stripe even Visa and Mastercard are enormous. Personally, I strongly believe that if one will dig deep enough he will find cartel there that sets prices. And when that will happen, LIBOR scandal is going to be a kindergarten play.
This is not a consumer-facing, social payment platform (e.g. Venmo), it is another payment rail (e.g. ACH, wires).
Laypeople are not the target audience for this, payment rail users are (i.e. entities who regularly utilize ACH/wire transfers or build services on top of them).
> Laypeople are not the target audience for this
Why not? There is no reason you couldn't buy a coke with it, with a fraction of the usual credit card fee. It just needs to be implemented.
4 replies →
So something like Stripe would benefit from this?
2 replies →
As I understand it, eventually this should lead to ubiquitous, cheap/free, instant payments, similar to UPI in India. That can be very convenient and useful.
Now, obviously there are various competing services for this kind of use case already: Venmo, Cashapp, Zelle, etc. So maybe it won't be better enough to feel like an improvement, but that's the aim.
This is third on their list of FAQs:
> Will there be a FedNow app for me to use?
> No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features on their mobile apps, banking websites, or other interfaces such as those used for business payments. Bank and credit union customers will probably not even see the name "FedNow" on their bank's instant payments platform as the FedNow Service is the high-speed highway that helps payments move from one financial institution to another. Banks and credit unions build new products for their customers that connect to the highway.
https://www.federalreserve.gov/paymentsystems/fednow_faq.htm
You go your bank and set up a bank transfer, check the box to save details to your contacts if desired, and then hit the submit button.
FedNow Payment Flow diagram...
https://www.frbservices.org/binaries/content/assets/crsocms/...
Amazing news. Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
In Switzerland we build an awesome eBill system ontop of the equivalent thing to FedNow. Its all run by Six Group which is the biggest Stock Exchange but it is jointly owned by the big banks and government. So they all agreed to add this eBilling system. Its so much superior to having paper come in the mail all the time.
So much is possible once you have instantly confirming transactions supported by all banks. Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
> Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
I wish I, and anyone else, could get a bank account directly with the federal reserve bank.
> According to a 2021 report by the Federal Deposit Insurance Corporation (FDIC), an estimated 7.1 million adults in the United States do not have a bank account. This number represents about 2.4% of the adult population.
You could even place limits to "child-proof" such accounts. I'd be ok with not allowing the account balance to get below zero or exceed the FDIC insured limit. My only condition is nobody should be banned from it or kicked out for any reason. You could say this account earns no interest (as long as there are no account maintenance fees or transaction fees).
> Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
Given Stripe's role in the system, it doesn't make sense for them to support it until there's sufficient support from the banks as well. Until banks support it, it doesn't matter if Stripe (or any payment platform) does, because the users won't see any benefit.
> Driving the news: "We're tracking it closely," President of Product and Business Will Gaybrick says, noting the company is not actively working on anything related to FedNow. "I really do think real-time payments are going to be a big deal."
> "As I understand FedNow, there isn't yet a mandate, so banks don't have to implement it," he added. "For things to completely change the landscape of payments, you need universal coverage."
> If, for instance, only 30% of banks support FedNow, then it's unlikely to become a priority for merchants to adopt the system.
https://www.axios.com/pro/fintech-deals/2023/06/14/fednow-st...
> The Financial Technology Association, which represents fintechs including Block, Marqeta, Stripe and Wise, among others, is urging the Fed to make direct access to the new faster payments system, called FedNow, more widely available so fintechs can tap the new service without going through banks.
> Generally, only licensed banks have access to the Fed’s master accounts, giving them clearance to use FedNow’s faster payments system when it’s available, but nonbank fintechs argue it’s shortsighted to exclude them from the same direct access to the new public system. While there is also The Clearing House’s rival RTP Network, the new FedNow system may provide more cost-effective services.
https://www.bankingdive.com/news/fintech-federal-reserve-pay...
How could stripe adopt this? Accounts are limited to depository institutions, aka banks. Stripe is a money transmitter, and their customers are businesses.
FedNow can undercut most of their credit card processing business. Not sure why they would even get on board.
Stripe doesn't take the credit card processing fees. The card processing fees go to the card processor, who is not Stripe.
I've been receiving and sending all my bills and invoices by e-mail for the last decade, without any need for some awesome or amazing system. I'm sure millions do the same.
How does one attach money to an email?
3 replies →
> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
> Is this akin to government-backed Venmo, or something?
Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
> On the other hand, it's going to let the government see every transaction you make
Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
24 replies →
I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
1 reply →
The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement.
That's on top of reporting requirements banks already have for your transactions.
1 reply →
Govt can already see any bank transaction made as it chooses already.
Question is, why does this fact get brought up everytime as if it’s novel?
paypal , visa and the like have proven to be worse than most governments
Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
5 replies →
> > Is this akin to government-backed Venmo, or something?
> Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
No, exactly wrong. It's a gov Blockchain
Ok but.. ACH
So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement.
* Any IBAN from a SEPA country, at least.
"Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
A large portion of SEPA bank accounts can now use TARGET Instant Payment Settlement (TIPS) on TARGET2/T2. https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...
My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).
> > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
> Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
No, under the hood it's a government Blockchain
Does it use cryptography to digitally sign its messages?
> Whoa. Is this as awesome as it sounds?
No. A possible CBDC rails in the US is nothing to get excited about. Unless you want savings limits and expiry dates on your money.
> Is this akin to government-backed Venmo, or something?
Yes, but even worse.
>Unless you want savings limits and expiry dates on your money.
I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well.
This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation.
Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
10 replies →
> Unless you want savings limits and expiry dates on your money.
Why is this something that's not already possible under the current settlement regime and is uniquely possible and likely to happen with a CBDC?
I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.
> I don't understand why ~FedNow and CBDC~ BIG BROTHER are such a big issue in the US.
Fixed this for you.
I don't really want a gigantic federal agency having insight into every financial transaction I make. Hard, fucking, pass.
Are you under the impression that ACH, the thing FedNow is replacing, is free from government influence?
This is what's bizarre to me about the FedNow hysteria. It's not a government system replacing a private market system. It's a government system replacing an older, worse government system. It's like having a panic attack because the Federal Reserve is updating their PCs to from Windows XP to Windows 10.
7 replies →
Ignoring the fact that FedNow doesn't change much in this regard...
I'm torn on this. Visa, MasterCard, Venmo (aka PayPal), etc. all know about large subsets of my transactions, and they go and sell my personal data to other companies in sleazy ways to cover their costs.
Is that better or worse than the government knowing all this stuff? Sure, the government can also legally use force against me and deprive me of my freedom and possessions, and might pervert my transaction history into justifying doing bad things to me. But that's a risk, not a certainty. Private companies selling my data and using it in nefarious ways is a certainty.
6 replies →
Just wondering, but how is this different from our current system where judges can approve search warrants and companies have to comply?
Are you think they won’t need search warrants?
7 replies →
Seems to me people is failing to understand what CBDCs will bring, especially even more “bad money” and economic slavery caused by “incentives” to spend.
But the list goes on..
Please explain to me what FedNow changes compared to the current ACH system in regards to government recording of transactions? Please explain to me how FedNow prevents cash transactions from occurring, or otherwise justify your statement “every financial transaction I make”?
> I don't really want a gigantic federal agency having insight into every financial transaction I make. Hard, fucking, pass.
If that's the case, I have bad news for you about the banking system of literally every developed country.
8 replies →
You know they already do right? If you pay or get paid by direct deposit or check those all run through the fed.
Because there are many Americans who are small gov and against excessive taxation. A CBDC is "too far" for a lot of people who believe that.
Imagine being paid in a ‘programmable’ currency that your employer (or government) decides cannot be spent on alcohol, meat, or fossil fuels.
Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
21 replies →
You are already starting to pigeonhole people with your stereotype. I'm as liberal as they come and I find the thought of a CBDC to be an unimaginable Orwellian nightmare. A boot stamping on the face of civil liberties and privacy forever.
1 reply →
The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing. Same for importing drugs from other countries. And on and on.
The ISP duopoly/monopoly is worse from a consumer perspective and functionally equivalent from a civil rights perspective. To think otherwise is naive.
In fact, the private sector solution is perhaps even worse from a civil rights perspective.
Consider a prosecutor in Jurisdiction A hell-bent on violating the civil rights of a citizen in Jurisdiction B, and suppose Jurisdiction B is sympathetic to this citizen. This isn't even hypothetical in the USA. Abortion, immigration, civil disobedience, etc. In the corporate duopoly setup, Jurisdiction A can compel the ISP to comply -- either by physically entering the property of the ISP and taking data by force, or by threatening market access. In the muni ISP case, Jurisdiction B says "shove it".
And that's before noting that corporations such as modern ISPs are -- like governments -- also large bureaucracies endowed with incredible power that are de facto impossible to opt out of. Except at least in representative government you have some sort of voice, however small, which isn't dependent on amassing vast sums of cash.
> a town decides to string fiber on their utility poles and sell transit
I dream of the day my municipality does this. The idea of buying service from whoever I want rather than be forced to use Comcast... -swoon-
> The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing.
Why is it horrible?
FedNow isn't a big issue.
CBDC really isn't a big issue either, because it almost certainly won't happen. Americans are very unlikely to want a system like that.
Americans didn't want a central bank, but look at where we are.
https://www.cambridge.org/core/journals/perspectives-on-poli...
1 reply →
Many of the arguments revolve around concerns that the government will gain too much control, power, and personal information. It the government directly controls financial transactions they know every transaction we make, and more importantly can deny transactions they don't like.
Arguably the US government effectively has these powers today, but beingtthat they don't directly own our banks there is a level of red tape they have to go through. As long as they are technically separate there is also the opportunity for us to change the laws and strip them of that access, once combined we give up that possibility.
The US was originally design with a very strong distrust of our own federal government. For the last 80 years we've completely flipped the script and given more and more power to a massive federal government, but the undertone of distrust is still around for quite a few Americans.
Two points of context:
* the Biden administration is planning to monitor smaller denomination transactions (in an inflationary environment!)
* IRS resources historically and presently target low-income, low-wealth households/individuals for audits
https://www.cnbc.com/select/irs-600-reporting-rule-delayed/
https://www.cbsnews.com/news/irs-audit-eitc-five-times-as-li...
IRS auditing targeting has been at the explicit behest of Republican controlled Congresses. That is, they were told to stop/reduce targetting high net worth individuals, or face even further cuts to their budget.
What benefit would targeting low wealth individuals have to the IRS? I worked on a state tax system briefly at Accenture and they offered the product for a percentage of reclaimed taxes. They started with high debts with good credit scores. Since they had skin in the game (which it could be argued the IRS doesn’t), they wanted to maximize the unpaid taxes they collected.
6 replies →
> IRS resources historically and presently target low-income, low-wealth households/individuals for audits
If we could actually increase their funding substantially, this would be less true, but it's difficult and expensive to go after wealthy individuals.
Supposedly, it's because of more centralized surveillance and control.
https://medium.com/beyondmoney/the-good-bad-and-ugly-of-cbdc...
https://medium.com/illumination/how-the-central-banks-digita...
The press release lists a few big banks like Chase, Wells Fargo, BNY Mellon, US Bank and Fiserv, along with a dog's breakfast of random service providers and credit unions.
Since free realtime payments presumably would still require both the sender and the receiver to use a participating financial institution, instead of all participants just transacting directly through the Fed, how is this supposed to work if most of the industry isn't participating?
There are already other options for instant payments in the US. The Zelle network and The Clearings House's RTP have been running for several years, and provide pretty good account reachability today. FedNow is the result of smaller banks and credit unions wanting an alternative to Zelle and RTP which are both owned by consortiums of the big banks. The expectation in the industry is that there will eventually be interoperability between these systems, and it will not make much difference to consumers which one their bank uses. Similar to how paper check and ACH clearing works in the US today.
Zelle isn't a good comparison because it's not made for things like paying employees or other businesses. It was made specifically for payments between individuals and in fact, the big banks that run Zelle could very well change the terms to specifically forbid using it for things like payroll (actually, they might already forbid it but I'm not sure).
FedNow is good for basically everything: Payments between individuals, employeers/employees, B2B, etc. More importantly, the fees are so low it might as well be considered free ($0.045/transfer) which is HUGE.
> The expectation in the industry is that there will eventually be interoperability between these systems
Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
1 reply →
the entire reason FedNow exists is because (simplifying somewhat) the large banks launched their own real-time payments system (RTP through the Clearing House) and small banks in the US lobbied the govt HARD to get a government option out of the reasonable concern they would get squeezed by the majors.
nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.
In the UK if a financial institution didn't support FPS it would fallback to the existing system with 3-5 days clearance.
Eventually they all got on-board and now money is sent in seconds between accounts.
It didn't replace credit cards or direct debit but it's the reason why nothing like Zelle exists in the UK.
There's also some added benefits like being able to withdraw money from Paypal pretty much instantly.
It takes time for adoption. These were the early adopters, who wanted to participate in the design and also be prepared from a business standpoint to ready at launch. If it proves it’s worth, broader adoption will follow. Like anything else.
Seems, it started with Google advising the Fed.
https://en.wikipedia.org/wiki/Unified_Payments_Interface
In December 2019, noting the success of UPI, Google suggested the US Federal Reserve Board to follow UPI as example in developing FedNow,[22] a real-time payment system for United States.[23]
UPI is a modern marvel tbh. Can't praise it enough.
I agree. I hardly carry cash nowadays.
It will be interesting to see how this affects "toxic," deplatformed, and to some degree debanked (at least from PayPal and CC processors) entities, like the KiwiFarms. While this page is somewhat vague about the private/public status of the Fed: https://www.federalreserve.gov/faqs/about_14986.htm
it seems pretty well established that federally chartered corporations, like the USPS and Amtrak (e.g., https://en.wikipedia.org/wiki/Lebron_v._National_Railroad_Pa...), are bound by the first amendment, so theoretically the Fed should be as well.
That means the usual "it's a private corporation!" defense of corporate censorship is probably off the table.
I think KiwiFarms is a cesspool and I think Null in particular is an extremely crappy human, but despite that I disagreed with the credit card processors pulling them, because they really did have a near-monopoly for online payments, meaning that this could be considered stifling of free speech.
However, I think I'll have less of an issue for it if there's the government-backed means in which to send them money; at that point I think the "it's a private company!" defense would actually apply to the credit card companies.
This is a dramatic whitewashing of KiwiFarms. KiwiFarms was not deplatformed for wrongthink or because people disagreed with their ideas. They were deplatformed for coordinating harassment campaigns that resulted in at least three confirmed suicides. That is not protected speech.
28 replies →
[flagged]
6 replies →
Hopefully it resolves it. I don't want to live in a society where Mastercard or Visa defines if your business is "moral" enough to operate.
Then you have Obama with https://en.wikipedia.org/wiki/Operation_Choke_Point trying to circumvent the Congress and the Judiciary.
Isn't it the case that you still have to have a relationship with a bank to have an account to transfer into or out of via FedNow in the first place? In that case I don't think this would change the picture at all. It's not the intention to help the unbanked pariahs, that's for sure.
There are still almost 5k banks in the US. Unlike Zelle, if this opens to all of them, all you need is one bank.
18 replies →
Yes, one doesn't have an account with a participating bank in order to receive and send payments via FedNow. It is same with Zelle; with Zelle, one sends money to an email or a phone number of an intended recipient. Both senders and receivers of Zelle need to registered with Zelle from their banking apps. USBank and Chase are notorious to close accounts who use Zelle heavily, because they see such activities as nefarious. Maybe, other banks use Zelle transaction history as another point to in order to debank people.
I don't want my banks to know who I send money to via Zelle; but they do. If banks are happy with customers writing checks to 'problematic' people, why they think that frequent Zelle activity as source of risk, as long as customers are not depositing or withdrawing cash/money orders.
The Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term. There is no term limitation for this office.
The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.
>>Federal Reserve is a private company with a chair that is chosen by the President of the US with advice and consent from the Senate, and serves a four-year term
Sorry but no... You can not be a "Private Company" and have your leadership appointed by the President like any other Government Agency
The Fed is a Government Agency,
>>The reason the US government has a national debt is because that debt is owed to the Federal Reserve,
Incorrect
Some of the Debt is owned by a Federal Reserve, more recently as no one want to buy US Debt any more but....
>>which is a private bank that loans the US government money
Again FALSE....
The Federal Reserve can not Loan the US Government anything
The US Dept of Treasury issues Bonds which are sold on the Open Market, 3rd parties then Buy these Bonds, then the Fed Buys them
The Fed can not legally buy Bonds directly from the US Government. How do you think Black Rock got to be do big...
10 replies →
>The reason the US government has a national debt is because that debt is owed to the Federal Reserve, which is a private bank that loans the US government money and that sets the US monetary policy.
I'm pretty sure every holder of US Treasuries (including me) is owed money by the US government.
2 replies →
... https://www.thebalancemoney.com/who-owns-the-u-s-national-de...
public / private is a false dilemma
trusts, foundations, and a host of other entities are ‘orphaned’ entities and is essentially a third category which is more accurate for the Federal Reserve as well
The Board of Governors is a public entity with an appointment, and the rest of the entity has a rotation of members and pretty full autonomy on how it runs on the inside at the employee level
4 replies →
Did the Fed own significant treasuries prior to QE?
None of what you just said is true, it’s libertarian propaganda.
A less controversal site, at least on hn, may be wikileaks https://www.forbes.com/sites/andygreenberg/2010/12/07/visa-m...
What is the Kiwi Farms?
A discussion forum similar to, say, Something Awful (or indeed HN), with a focus on mocking online misbehaviour and a reputation for unpopular political views.
13 replies →
Be happy that you do not know.
A toxic website where online trolls discuss other personalities, mostly online, in a toxic way.
It is crazy how much credit card companies get paid just for making sure that money goes from A to B.
Yes, they also offer fraud protection and chargeback, but in 90% of purchases, I don't need those. I have other means of establishing trust and recourse, and I just want to send money, instantly.
Paying $200 on the internet should cost $0.01, not $10.00.
I think there is tremendous opportunity in unbundling payment and fraud protection.
My intuition is that the existence of fraud protection probably lowers the incidence of people attempting fraud.
I'm someone who (still!) believes in the Bitcoin project but I'm hesitant to use it for online payments because if someone rips me off there's no one I can go to for help.
Question: Can this be used by a consumer to more conveniently and securely, and without 3rd party fees, sell things online or in-person?
Example 1: Sell a graphics to someone on /r/hardwareswap. Currently using PayPal.
Example 2: Sell car in-person. Currently go to bank and have buyer hand over cash to deposit in bank.
I hope so, when it trickles down to the commercial bank user level.
That's how it works in pretty much the entire rest of the world. PayPal is mostly incomprehensible to Europeans, it solves a problem that they never had.
This isn't strictly true, at least in NL. Most domestic online businesses use iDeal for instant payments, but if you aren't shopping at an online retailer that explicitly supports it, you need to use a real credit card or Paypal as a pass-thru. Some businesses will support you sending a payment via IBAN, but then you're waiting days potentially for someone to reconcile the ledger manually and deliver your digital product.
Since I don't particularly enjoy having debt, Paypal is a nice middle ground as long as the fees aren't outrageous.
Not yet for consumer banking. Expect this to get rolled out first for transfers between banks and financial institutions, then regular businesses.
The end users of FedNow are financial institutions, so not directly.
The hope is that banks open it up for their consumers to use. Log into your bank app -> send money to friend's bank and it will all happen over FedNow under the hood.
How can a consumer actually try this to send money? This says Wells Fargo is live now but after logging into Wells Fargo I don't see any obvious new feature.
Think of it more as an alternative method to fulfill the kinds of things that ACH and Wire Transfers are used for. You'll probably never see 'this is a fednow function' on any consumer facing documentation, but billpay, payroll etc will use it.
I'm assuming that banks and payment services will add it to their services. Everything that goes over ACH will gradually switch to FedNow. There will be no noticeable difference to users except that transfer will be instantaneous instead of taking days.
1 reply →
It is live on star one credit Unions mobile app. On their interface, it still requires you to specify the target’s routing and ac number like an ACH transaction. So not the most usable now.
There's no new feature. It's an old feature (transferring money) but faster.
Check out https://explore.fednow.org/ for more information and an interesting use of Google Maps :)
> “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true.
Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
This seems like a very opinionated take.
The CBDC is still planned. But way far in the future (couple years, at least). And why wouldn't it solve settlement itself?
FedNow is shipping today. If it is not the future solution, that is fine. It gives us better performance now.
I actually don't have a strong opinion about the digital dollar. I learned about it as a concrete idea in this very article. My opinion is: sounds reasonable, probably pretty complicated to pull off. I am opinionated when it comes to bad, weasely non-answers to questions though, if that's what you mean.
2 replies →
> "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project,"
If if that were true at this instant, they could change it at whim.
What is really needed is a constitutional protection of privacy.
Consider "We have every intent of creating a digital dollar and are actively planning and working on that project BUT FedNow has NOTHING to do with that project".
They're definitely both.
Founder of a developer bank, Column N.A. here. If people are interested in starting to build on FedNow hit us up. column.com/fednow and my email is william at column dot com .
Do you support cannabis business? Or rather, those of us who provide services too cannabis businesses? Some folk (eg: Stripe, Twilio) frown on even using their platforms for things next-to (but not touching) cannabis.
So, is the cost of moving money at the retail level zero to almost negative at this point? I mean, literally, we as a society have invested tax dollars to reduce money movement to something that's damn near minimum entropy.
We've had something similar (OSKO/PayID) in Australia for a couple of years now. In our case it wasn't the government, but the private banks getting together to launch it themselves.
Unfortunately its a big target for scammers. Once the cash is instantly transferred, there is little to no chance of getting it back. There are no chargebacks like with credit cards and the instant nature of it means payments can't be reversed like the old bank transfers.
So its good for sending money to friends, family and trusted people, but not so great for buying anything online as your protections are basically zero.
... except for buying things from countless trusted online companies? Reminds me of
https://astralcodexten.substack.com/p/the-buying-things-from...
You have to remember that the instant payment also stops the scam of "it will be in your account in a couple of days". You can see right there and then that the payment went through.
One scam blocked, another enabled. Of course scammers will update their strategy to take advantage either way.
zelle is the same thing in the US been around for years ran by banks with lots of scamming going around.
I hope it's a success - but I am doubtful in the US payment landscape, as absurd incentives persisted so long: - C2B payments (everything from cable to insurance) is dominated by credit card payments, as consumers chase rebates/miles/cash back [paid for by the people who don't pay their card in full every months] - C2C payments, because it was virtually impossible for an average person to pay another bank account to bank account, a whole shadow banking system like Venmo, PayPal, Zelle, CashApp was created. - B2B could always pay via ACH, doing it in real time for vendor payments has no advantage - B2C payments, maybe - when you insurance company settle a claim same day (just kidding...).
So I hope that the US gets to a place where it is secure and convenient to pay others bank accounts with the balance in your bank account - but I doubt it.
Sharing a comment I posted from an earlier submission: https://news.ycombinator.com/item?id=36801977
------------------------------------------------------------
The Federal Reserve announces that its new system for instant payments, the FedNow® Service, is now live. FedNow® FAQ:
>> https://www.federalreserve.gov/paymentsystems/fednow_faq.htm
------------------------------------------------------------
FedNow® Service Provider Showcase (Incl: Service Providers with APIs)
Browse service providers that can help you connect, innovate, and deliver instant payment products using the FedNow Service.
>> https://explore.fednow.org/explore-the-city?id=10&building=s...
------------------------------------------------------------
Participating financial institutions that are currently live on the service:
>> https://www.frbservices.org/financial-services/fednow/organi...
------------------------------------------------------------
Launch Video: https://www.youtube.com/watch?v=wHLnV9wu-5A
Other Official FedNow® Videos: https://www.youtube.com/@FRBServices/videos
Here in NZ you can do this with your bank. Just enter the person’s acct number and the amount to send in online banking.
The working assumption (on the part of the US Federal Reserve) is that eventually all/most US banks will use FedNow and offer it to their customers (probably via mobile/online front-ends developed and sold by B2B third parties).
We'll see if that actually happens.
So when can businesses start utilizing this to replace ACH? I run a b2b company and right now ACH is our most popular payment option, but the settlement time is a pain.
Right away. My organization verified that an account at one of our banks could send thousands of dollars to an account at another bank, in seconds, and then send it back. It's pretty cool. :-)
Did you have to pay extra fees for the service?
Welcome to 2002 I guess? I’m surprised you couldn’t already do this.
What happens when you get paid? It comes several days later?
Yes, that’s the current state of affairs. My bank receives the money in my account from my employer’s bank but it takes a couple days to clear. Right now many banks will make this money available to you right away rather than waiting for it to clear.
I assume you are being snippy, but to actually answer the question: Kinda - if you are paid on Fridays then payroll is submitted on Tuesday or Wednesday.
No I’m genuinely asking. You get paid at the end of the month, but it actually arrives in your bank 4 or 5 days later?
3 replies →
I know that these are famous last words on Hacker News, so I post them very hesitantly...but presumably this is bad news for Plaid, right?
I don’t think there’s much overlap. Banks aren’t using plaid to settle up…
Wouldn't it also be real bad news for Zelle? And in theory Venmo/Cashapp/etc
Zelle is already owned by a consortium of banks. Even if FedNow were to make Zelle obsolete, it wouldn't do anything to harm the banks, so they ultimately wouldn't care.
Meanwhile, Venmo is owned by PayPal, who deserves to become obsolete, so we should all be cheering this on.
Not for Zelle/Venmo/etc.. Zelle is for P2P (person to person) and FedNow is for A2A (account to account). There are no take backs on FedNow so it's not intended to be used for P2P. No take backs means no recourse for fraud etc.. FedNow should supplant ACH waaaaaaaaaaaaaaay down the line.
3 replies →
What I have heard is that the banks that own Zelle will try to convert it into a directory service mapping identifiers like email addresses and mobile numbers to bank account information. The actual payment clearing will move off of Zelle, and all payment clearing and settlement will happen on FedNow or The Clearing House’s RTP system. That makes some sense to me.
Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
Regarding payment systems specifically, people generally don't realize what they're missing.
Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so. They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you. It was very convenient. On the downside, the ATMs were turned off (!) during national holidays, so you had to get cash beforehand.
Surprised you're writing checks every week: I haven't written a check in years. ACH transfers, sure, but not physical checks.
I do still receive them occasionally, almost always as printed checks from companies.
14 replies →
Checks never took off in Japan because their 1947 Labor Standards Act (Art. 24) actually made it illegal to pay wages by check [1]. So it's not that checks were made obsolete, it's that they were smothered in their crib. Until the advent of electronic payment, it's said that tens of millions still got paid in cash rather than bank transfer in the early 90s [2].
I think it's easy to forget that societies that adopt a technology early might be doing so because the slightly outdated alternative from elsewhere was never brought over. Japan has no shortage of those, like a lot of dining is still cash only. Who knows, perhaps in 10 years those restaurants will skip credit cards and contactless and go straight to face-based automatic payment.
[1] PDF warning https://www.ilo.org/dyn/travail/docs/2018/Labor%20Standards%... [2] 1991 article https://www.sun-sentinel.com/1991/10/24/japanese-prefer-cold...
I'm only nominally a grown-up, but I've lived in the US my entire life and I don't think I write a check more than once a year. Most stuff I buy is done with credit cards (which I generally pay with their respective mobile apps with bank transfers), my mortgage is automatically withdrawn from my checking account, and I use CashApp or Paypal to send money to people directly.
I think the last time I actually wrote a physical check was when I refinanced my house in 2021.
I don't think cheques are obsolete in Japan, so much as never having been popular and established in the first place. A lot of things are just done in cash (even e.g. buying houses!) and that's not seen as unacceptably risky the way it is in many countries; COD is an established practice that again just doesn't exist (and wouldn't remotely be considered safe) elsewhere. Furikomi is slow and expensive and cheques would actually be an upgrade in many ways.
> When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so.
And yet in Japan they're still obsessed with using backwards fax machines and paper.
> They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you.
That's intresting to know.
Where I'm at, we had (still have?) a "passbook", a small booklet where you could get all your transactions printed onto.
But AFAIK we couldn't do it ourselves through the teller machine though. Once in a few months or so you go to the respective bank and ask the staff there to update the passbook. They use a machine, however.
Of course, there days it's unnecessary as you can electronically download a list of your transactions for a given period from the bank's website/app.
1 reply →
> In the US, I write checks every week or so.
What the hell? I need 'checks' of some kind (regular check or cashier's check) maybe once a year for something like a deposit on a rental home.
For actual rent payments and the like I use Zelle, since most major banks support it. What do you need actual paper checks for?
> Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
This is like comparing candles and lightbulbs. Sure you can light up your home using both methods just fine, but you end up realizing how inconvenient candles were once you've made the jump to the newer technology.
Yes, but in many cases the people using candles fight like hell to insist that electric bulbs aren't better, can't be better, and even if they were better, there's no way to have electricity in the US.
1 reply →
Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).
Interbank payment systems are actually provided by central banks or the government (or affiliated organizations of either) in quite a few cases.
Europe has TIPS (an ECB-operated implementation of the SEPA Instant Credit Transfer scheme), India has UPI (which is pretty close to the central bank, as far as I understand) etc.
In the case of FedNow and TIPS, there are private alternatives as well, such as RTP in the US or EBA Clearing's SEPA Instant implementation in Europe. This is similar to ACH – there's both a public (FedACH) and a private (The Clearing House) implementation/network available.
> in most countries, those services are provided by banks, not the government
That's something I always point out when telling others how awesome the Brazilian Pix system
https://en.wikipedia.org/wiki/Pix_(payment_system)
is. It's not a private initiative by a bunch of individual banks, but rather a zero-fee payment system managed by the country's central bank: https://www.bcb.gov.br/en/financialstability/pixfaqen .
7 replies →
This, ladies and gentlemen, illustrates the point I was trying to make.
OK.
But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.
5 replies →
Sounds like a European view.
>Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
As an American, this definitely isn't true for me. I've found so many large organizations fail to make auto-pay work, transferring money is mind-bogglingly slow, and going from magnet to chip-and-pin instead of straight to tap-and-go was a regression. Some companies are able to bill you after you no longer wish them to bill you, while other organizations make it difficult to find out how much you even owe them in the first place when you want to pay them. Not sure how much the last couple can be solved with incremental tech.
I think that was their point - the rest of the world solved this long ago, it is just the USA that lagged
1 reply →
It's true that America is very far behind now but they're also the ones who started creditcards all the way back in the 1950s.
Anyway I have a theory: big countries are too far up their own ass to notice or care what the rest of the world is up to.
Compare a small, international oriented country like the Netherlands or Denmark to sleepy provincial Germany.
Singapore might be another interesting example. They are very much living the future.
Which is basically why all the De-Fi, Web 3.0, Cyrpto nonsense are very much US centric.
When I want to know what the future of money transfers could look like, I'd ask people from, say the Swahili-speaking regions of Africa, not Silicon Valley.
Not my good friend from Tuvalu
> Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
I thought FedNow was explicitly inspired by the success of India's UPI?
Fantastic, although not a peep from my bank.
Articles seem to imply that it can work in complement to zelle, so that may extend it’s reach quite a bit, no?
>not a peep from my bank
Why would a for-profit banking institution actively advertise for something that will affect its bottom line (e.g. transfer fees)..?
Because customers demand it and any bank which has it can attract customers from banks which don't.
A system like that exists in Europe already, banks operate for profit there too.
My bank doesn’t charge transfer fees. Not sure what that means, credit card fees? That’s charged by the network.
Obviates old-fashioned wires I suppose but those are rare and fee sometimes waived. Probably save money by reducing employee headcount.
I haven't learned all the details of the service yet, but I hope this helps eliminate the ridiculous check-based / Zelle fraud that seems to be growing (or at least, seems to be highlighted in news and discussion as growing).
The very fact that we have money that can appear to be yours initially, but then removed from your account if a check is reversed or disputed is costing people in time and $, and benefitting fraudsters. (advance fee fraud, Zelle "mistakes", and similar). 3 day clearing times that give people an opportunity to be scammed.
Although, irreversible + instant payments may open some new types of problems for people, I could totally see that. But people will need to learn how to deal with this more rational system. Other countries are decades ahead of us in that you are the one who has to initiate payments from your account, and only you can do that, and payments are instant and settled.
In India, there’s something similar to FedNow called UPI — “Unified Payments Interface” that really disrupted the market completely about 7 years ago — it is interoperable, works instantly and has no charges. It was phenomenal how that grew and got adopted, keen to see how FedNow changes the American payments systems.
Do you think that eventually UPI will be a vector for more efficient taxation?
IIRC India has relatively high tax rates, but has struggled with collection in the past -- maybe I'm being overly paranoid, but UPI seems like the perfect mix of usefulness and convenience to get everyone hooked, then once it's widely adopted enough (let's say 80/90%+ of payments) a sales tax could be enforced.
I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.
>I don't know the specifics of how much identification UPI requires, but you could levy all sorts of taxes that way if you knew who was who.
UPI connects with your bank account -- that's the only way it works. So the identification that UPI has, will be same as that of what the bank account requires. Typically, higher the amount, more the IDs required to keep the account active.
> IIRC India has relatively high tax rates, but has struggled with collection in the past ....
The way tax evasion primarily happened in india was through cash payments. When you rotate money in cash, it's really hard to trace it back. Now with UPI becoming mainstream, the thing that is now accessible to govt is your day-to-day transaction history.
> once it's widely adopted enough (let's say 80/90%+ of payments)
UPI already is >80% of all consumer digital transactions (as per this article - https://bfsi.economictimes.indiatimes.com/news/fintech/upi-d... )
https://archive.ph/FsEaf
If the IRS was used against political opponents, this will be too.
I think this is a case where setting a standard and requiring payment processors to adhere would have been a much better idea. More centralizing of power is not what we need right now.
Can you point me to any examples of the IRS being “used against political opponents”? Please specify who the opponents of the IRS are in your examples.
I'm not the person you asked and as an Australian it's difficult for me to find a concrete irrefutable example of the USofA IRS being weilded as a political weapon on short notice.
I can, however, provide two examples of an incredibly unlikely event that happened to two political enemies of the then seated POTUS:
https://www.nytimes.com/2022/07/06/us/politics/comey-mccabe-...
As outlined the Comey | McCabe audits appear to have all the likelihood of jeering at the president and then being struck by lightning.
This does appear to be something specific to a particular POTUS and not a general practice.
I was thinking specifically of the Tea Party targeting during the Obama years.
https://en.wikipedia.org/wiki/IRS_targeting_controversy
1 reply →
Who built this? Dev was obviously contracted out.
What makes you think that?
Building such a system is not a core competency of the Federal Reserve
1 reply →
internally built.
How does this system impact the normal person? Like who is the customer for this? Can I uninstall Venmo and Paypal? Or is this something banks would use under the hood and consumers would never interact with?
e: ah I see the diagram now. more helpful.
Powell has mentioned[0] that the Fed is unable to affect fiscal policy, which is the fastest and best solution to certain economic crises. Does this bring the Fed closer to being able to simply give people money?
[0] https://rollcall.com/2020/06/16/feds-powell-urges-congress-t...
The Fed isn't allowed to give people money, so it doesn't matter what they're able to do.
The main problem stopping the government from giving you money is that it doesn't know where you'd want them to send the money to.
FedNow doesn't change anything other than transaction speed & cost. If your concern is the Fed giving people money directly, they've had the technical capability for a very long time.
Well done America. This has been available for literally decades in Australia. I was doing bank transfers over the phone from a landline in the 90s before mobile phones were common and the internet was all dialup. I don't think I've been paid by cheque (check) since the 80's.
When I started dating my wife, she called me an old man for even owning a cheque book. That was in 2006.
Americans don't carry around checkbooks. They carry around credit or bank cards.
With magnetic stripes. Your banks are adorable.
Is this equivalent to Interact eTransfer in Canada?
Is there a way to restrict my bank to only allow incoming deposits to use this for my account? I'm scared of VULNs in a new system being abused to withdraw money quickly. Yes, I know the bank is on the hook for making me whole, but recovering from a financial issue like that is more annoying and time consuming than just avoiding it and being a late adopter.
FedNow is a push-only system. It cannot be used to pull a debit, only to push a credit.
Here we go. CBDCs are next, and also national Digital IDs. https://m.youtube.com/watch?v=uwRSzNTp2ko
Real ID + needing it to browse anything on the Internet: https://community.qbix.com/t/the-coming-war-on-end-to-end-en...
From what I see people on HN writing, by and large they downplay the risks of these as well as AI. Or alternately seem to suggest that CBDCs and national IDs are not coming, and that it’s a conspiracy theory. However, the “enshittification of Big Tech platforms” is already a fact, so they simply complain about it, but anytime solutions involving open source, decentralization, and utility tokens are introduced, they are violently voted down. So — since no solutions are welcomed, I guess many denizens of HN support hurtling toward extreme centralized control. After all, we’ll be able to complain about it once it’s in place, and that’s enough!
Edit: literally 5 seconds after I posted it, I received downvotes. Not fast enough for a human to read the message let alone explore the links. I wonder if it’s even automated by keyword now.
I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
Similarly with digital payments, I'd much rather trust the government with that than some rando cryptobro of the week.
There is nothing extreme about this. The government already does both functions in the analog world. It's about time they caught up digitally.
Meanwhile some YouTuber screeching about some Bible quote... not a convincing start
Edit: didn't downvote you btw, just don't agree that this is a bad thing
> I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
And reintroduce all the chilling effects of knowing everything you say is on a permanent record linked to your name. I know the government wouldn't be running the sites, but they'd have activity metadata, and data breaches could be correlated to work out who the "opaque" ID refers to (perhaps it would be possible to mitigate that by having the IdP identify users to the site as a hash combining the site and the user. Not sure). There are a few types of companies that may have a genuine reason for requiring government auth, but generally we should not make it easy for Facebook or Google to require it
A community with fewer bots and trolls should be accomplished with moderation, and not just allowing a firehose of signups
1 reply →
My concern with digital payments is the elimination of cash. Having the ability to transfer value without it being monitored or blocked is an exceptionally useful property of paper money.
7 replies →
I don't trust the govt quite as much as you, but could see this being a useful govt function if the issuing body didn't maintain any record of when, where, or why an ID was used--and only acted to verify the authenticity of an ID.
2 replies →
> It would open up the possibility of real-person communities with fewer bots and trolls.
I would be 100% unwilling to engage with public online communities if I had to reveal my real-world identity to do so.
3 replies →
> I would love to see government IDs be available as a form of auth on the internet
This kind of already exists: https://login.gov
I have to use this to login to the VA.
3 replies →
I agree I'm more concerned about Silicon valley tech bros than my own government.
I can vote for Parliament I can't vote for PayPal's board of directors.
18 replies →
It’s not even been 100 years and people already forgot.
2 replies →
> Meanwhile some YouTuber screeching about some Bible quote
Why do you lie when it takes 1 second to verify the facts? I wasn't interested, but clicked on the video and the man is talking in a calm and collected manner, not even close to "screeching". Or is it always "screeching" when somebody says something you disagree with?
> CBDCs are next
Nobody has seriously discussed a CBDC for months in the U.S. FedNow is the American financial system catching up to the 1990s. It has nothing to do with crypto beyond the cursory.
Powell seriously discussed CBDC in his recent testimony to congress. He mentioned it was far off.
1 reply →
FedNow is the system that will give the USD some or all of the troublesome properties of a CBDC.
I can't begin to parse your comment.
1 reply →
It was obvious from the first line that your post was going to be axe-grindey conspiracy fodder. It's not us, it's you and your and tightly closed epistemological loops.
In this case CBDCs (the interest bearing kind) actually have the potential of disintermediating banks. Or atleast reducing credit/liquidity risk. Grandma's savings/deposits arent going to evaporate the next time a bank collapses. Cause her CBDCs are going to be sitting in her wallet.
> Grandma's savings/deposits arent going to evaporate the next time a bank collapses.
That's already the case.
if they are interest bearing, there will always be some risk involved by definition....
I've already read this comment before, just written a different way. I promise you I'm not a robot, I just disagree.
US attitude towards national IDs is amusing, lol
[Lightly] amusing is thinking there is a singular attitude in the US towards national IDs. And we already have several forms of national ID anyway.
3 replies →
It's also wildly inconsistent. The same political factions (vs individuals) that complain about Real ID also complain endlessly about fake ID. They complain about illegal voting, but also support the drive to withdraw their states from ERIC, which has done a good job in detecting illegal voting. Basically they're sometimes against solutions because their complaints infrastructure generates a reliable stream of political and financial capital from the credulous.
It's kind of strange that in other threads HNers will lament the end of the nerd internet and how everything is corporatized and 1984 wasn't a manual, and then here they downvote you.
National IDs in the US are never coming because the evangelical base of the GOP literally oppose it for being the "mark of the beast".
>Here we go. CBDCs are next, and also national Digital IDs
No, this is a long term replacement for ACH, a function that the Federal Reserve was already carrying out.
I see it as an almost total impracticality to transition from our current system to a centralized national identity document.
There is no central database of:
* Citizenship
* Births
* Drivers Licenses
* Marriages
* Deaths (SSA death reporting is voluntary and customary by funeral homes -not required)
* Education history
* Criminal Records
* Firearm Ownership
* Property Ownership
* Vehicle Ownership
The only thing the feds or even the state government has a certain idea of is, how much you made in a given reporting period - not that reporting periods always overlap in any meaningful way. There is no requirement (as far as I can tell) to even request a social security number - most parents do, because they want to claim their children on their taxes.
Now, many of those records do exist - they exist at the county, state or local level in some manner or fashion - and of course, its not standardized either, sometimes its at the county, sometimes the state, sometimes at the county or state for the same record type based on year. (e.g. Marriages from 1902-1962 are in county records, and 1962 to current in state, or the other way around.)
Trying to link all of this data in a meaningful way, would be a monumental task that would likely require a vast amount of manual data matching - and it would still be wrong 40% of the time.
2 replies →
We already use social security numbers for everything (insurance, credit, etc.). It's pretty much a national ID, just a shitty one.
7 replies →
nothing about singling out people for various reasons and depriving them of basic services? read history much?
7 replies →
Here are the current participants (honestly I thought the list would be a lot longer): https://www.frbservices.org/financial-services/fednow/organi...
Do they have a simpler use id like india's upi?(userHandle@bankHandle)
In the demos I watched, There is account number and routing number
Yes, that part is unfortunate. It requires full routing number and account number. Maybe the phone number to account number mapping might be seen as a privacy risk in USA.
Address book and search can help with that. Worked in NZ anyway.
well yes but the addressing scheme we use here is so much simpler. I hope they incorporate it at some point
2 replies →
Another nail in the crypto's coffin.
Can I transfer money now to entities that are not Visa/Mastercard-linked? e.g. weed stores?
Cannabis businesses are still kept at arm's length from banking due to federal law:
https://www.aba.com/advocacy/our-issues/cannabis
It looks like a recent proposal to fix this (the SAFE act) is politically stalled:
https://www.politico.com/news/2023/07/14/weed-banking-safe-b...
> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
Come on... Being capable of sending money to someone easily should not be based on the bank.
Your money is located somewhere and your recipient has their money located somewhere. The places where your money sits needs to interoperate with whatever "thing" you're using to send money. Presuming that your money sits in a bank/credit union, you arrive at the quoted statement. If your money is paper in a sack somewhere, you can mail it, but it might not make it all the way.
This sounds like India's UPI[1]
[1] https://www.npci.org.in/what-we-do/upi/product-overview
https://en.m.wikipedia.org/wiki/Instant_payment
Here's a list of countries with similar payment systems
I am genuinely curious, how is this news? I can do real time bank transfers since... I dunno...
I never touched a check in my life and I get my employers payment mostly even before the end of the month?
Most of the comments below are about the tech. Is no one concerned about the privacy concerns that the government now has easy access to all payments made through this?
For those in the know, will this break the stranglehold Visa and Mastercard have over the entire payments industry and help prevent people from being un-personed on a whim?
As a non-US person, just to confirm I'm understanding the implications of this, have near instant bank transactions not being a thing in the US until now?
Yes. Bank transfers aren't really a thing in the US. To send money to a friend you have to use a third party service like PayPal, Venmo or CashApp.
Mind boggling.
I wonder if the acceptance of the middle layer perpetuates the service economy?
Are there amount caps?
The network limit is $500,000 per transaction, although individual participants can set specific lower limit, which is defaulted to $100,000.
Furthermore any end user interface provided by the bank could have its own limit, since FedNow is just a backend service, frontends are up to each participating provider.
This and IRS Tax filling all happening today. From an outsider perspective the only two major thing left for US to fix is Medical Cost and Public Transport.
Title could include "instant payments system"
I cant help but feeling like this is a huge mistake.
The best service the Fed could supply for the average American citizen is a federal checking account paying interest at the listed Fed rate.
The average American citizen probably wants to get a bank loan, which isn't possible if none of the banks have any funds to loan.
Does this eliminate the late night flights of Mitsubishi MU2 turboprop cargo planes delivering canceled checks for the Federal Reserve?
I thought Check 21 (enacted back in 2003) was supposed to eliminate that, allowing digital check images to substitute for physical copies during the clearing process. My understanding was banks (or even sometimes merchants) just scan in the paper checks on receipt these days and process everything electronically.
https://en.wikipedia.org/wiki/Check_21_Act
That could very well be... I remember many a late night run to the airport to help resolve some crisis back in the 80s/90s, to keep them canceled checks flying.
V / MC / AXP / DFS should be scared.
So easy to undercut the vast network of middlemen involved with using credit cards and debit cards.
Just in time before they layoff 5% of the staff.
Fed is laying ppl off?
I'm glad the US is finally catching up the rest of the world...India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown. Banks already have to settle transactions between banks through reserve transfers via the Fed...this will just help automate that process so we can send money from bank account to bank account. Like a Zelle or Venmo, but government backed!
[0] https://en.wikipedia.org/wiki/Unified_Payments_Interface
> India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown.
Yet, India is already working on E-RUPI [0] which is a CBDC on top of UPI by the Reserve Bank of India, also shown in the same Wikipedia link you just used. Eventually, FedNow will just be the rails for a US dollar CBDC.
The next time a protest happens in India after their government does something extremely unpopular, you'll see why CBDCs are a nightmare not to be ignored. This is why governments around the world are working with many central banks with pilot schemes to test them out and eventually roll their own.
> Like a Zelle or Venmo, but government backed!
Look where that went for Zelle. [1] A vehicle for rampant fraud on the system.
[0] https://indianexpress.com/article/explained/what-is-e-rupi-d...
[1] https://www.nytimes.com/2022/03/06/business/payments-fraud-z...
> Eventually, FedNow will just be the rails for a US dollar CBDC
This is unfounded. FedNow is a faster classical payment rail. CBDCs involve the central bank taking on a customer-facing role. The Fed has no desire, nor frankly basis in law, to do that. The only reason the two are linked is crypto (a) prompted the first serious discussion about American payments modernization and (b) promoters are using it as a thread by which to hang onto a dream of mainstream crypto.
1 reply →
India’s system is more usable, though, apparently. This seems like an improvement but it doesn’t do the same thing?
> Because UPI is designed to be intermediated by computers rather than by humans, transactional information gets captured by the payments company while the transaction is in progress, and that can tell the clerk (or cron job) that the payment succeeded without them needing access to the bank account.
> This is a fun engineering challenge in many countries, which are often overlaying bank transfers as a payment method on top of bank transfers as a settlement method.
[…]
> Bank transfers are an extremely small percentage of customer-to-business payments in the U.S. In addition to the speed issue, which might get improved by FedNow when it launches (wags have referred to it as FedLater), bank payments have no consistent way to receive metadata, and despite being no-cost they compete with well-developed credit card ecosystems which credibly offer better-than-free pricing through rewards schemes (to the customer, who generally gets to choose which payment method they use to transact).
https://www.bitsaboutmoney.com/archive/bank-transfers-as-a-p...
Reward schemes are funded by interchange fees funded by higher product prices. They are a tax on the entire economy. Merchants can push the CC fees to customers who opt to pay with CCs vs cheap or free instant payment systems. T-Mobile has dropped autopay discounts if you use a credit card vs deposit/bank accounts for payment, for example. Walmart wrote public comments on this topic supporting the FedNow implementation.
Reward systems won’t last as merchants push towards FedNow as a payment alternative and charge you to use a credit card. Nor should they last.
https://news.ycombinator.com/item?id=36012866
> Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.
6 replies →
India has got pretty good payments system. UPI is miles ahead. Any reason why FedNow can't learn from India and adopt UPI?
Why would banks adopt FedNow when it will ultimately eat into their revenue from card interchange?
The selling point of "use your paycheck immediately" could appeal to customers.
Genuine question - is this the US's version of UPI (United Payments Interface) in India?
When can citizens cut out the upcharging bank middlemen so that we can get out of debt faster?
Upcharging banks aren't the only option, you can use a non-profit credit union.
How much will it cost to do FedNow transfers? Does it depend on the amount or is it fixed fee?
Is this something that one (a business) can now (or soon-ish) use to send or receive payments?
It sounds like something they will use to send food stamp payments so you can be Fed Now.
Will banks be able to charge fees to their customers for using FedNow like wire transfers?
They could theoretically, but it is unlikely due to each transaction costing a few cents and the monthly FedNow fee being $25 (it is a utility run on a cost recovery basis). No banks charge for Zelle payments to my knowledge, for example.
This eventually replaces checks, money orders, Zelle, Venmo, ACH, and probably credit card payment volume over time (as seen with UPI in India and PIX in Brazil). Every deposit account can send to other deposit accounts instantly.
Given how generous credit card rewards are in the US, combined with the interest rates that get charged to people who buy things they can't afford, I don't see it replacing credit cards.
2 replies →
is the fee on a per bank or per account basis?
5 replies →
I am very worried when the government knows/governs money transfers; look at china.
Feds already get money transfer data without warrants. Recently Chase closed my checking account because I use Zelle so often. Chase knows all Zelle records because they partially own Zelle. I would rather have Feds own the data, rather than banks. When banks own data, they make decisions to close people’s bank accounts without any proof of abuse.
This is basically just replacing ACH with a faster system.
Like Apple photo scanning was basically just for CSAM detection, right?
2 replies →
Right on Feds! This I assume takes away one use-case from crypto-currencies. No?
From the FAQ,
> No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features
See y'all in another 25 years, when banks get around to implementing this.
This is really concerning. I wonder why they couldn't have looked into what (if anything) prevents the private sector from offering this service, and fixed those obstacles instead?
It seems to me like a government run shoe factory, or a government run mail service.
This is an incredibly stupid comment.
Will services like ACH will be unnecessary eventually then?
Does this paves the way for Central Bank Digital Currency?
Good! It shouldn’t take days to get a deposit or to pay.
So, how do we use it?
So is this gonna kill apps like CashApp and Venmo ?
If this kills Zelle, that would be amazing.
I'd Just As Soon Kiss a Wookiee!
would this now place the Fed in between transactions where it wasn't before?
I think FedNow can serve as the inter-bank settlement rails for CBDC, or the wholesale side of CBDC
Zelle: Fuck
Ribble?!
So e-transfers are dead?
why? don't we already have Zelle and Venmo that does just that?
Zelle is closed to the few banks that partner with the private banks that run it. Venmo is a private company that siphons your data for sale.
FedNow is a long-term replacement of ACH, which the Fed Reserve banks already run. This system is open to all US financial entities. The platform also uses a ISO standard https://www.frbservices.org/financial-services/fednow/prepar...
Zelle has been a nightmare to use. Apparently they rolled out a major update that caused many financial institutions to drop support. Because of that, my phone number is now unusable/blocklisted in their system because it's in a limbo state that neither Zelle nor my bank can fix
2 replies →
The Federal reserve banks are only one operator of ACH, with there also being a second private operator. The fed denies that Fednow will replace ACH.
Not sure if that denial makes much sense, although it certainly could take a long time to replace ACH even if it eventually does, simply due to how many systems interact over ACH, and that many of them will not be high priority to change.
I'm also a little surprised that FedNow went with real-time gross settlement, simply because that means posting every transaction to a Federal reserve account (which would be a large increase in transaction volume for those accounts, relative to say daily or even hourly net settlement). Reading Operating Circular No. 8 tells me that is exactly what they are doing, which is honestly a little impressive.
It surprises me because in Canada the Interac e-transfer system has been flawless in my anecdotal cases. Albeit one known issue is reversals allowing fraud, but I assume any non-cryptographic solution will have the same issue.
edit oops wrong article - Venmo is only “instant” requiring behind the scenes smoke and mirrors and also requires carrying balances
im assuming this means there will be no settlement time when i put money from my savings account in to my brokerage?
how long until it has a section for tipping ?
[dead]
[flagged]
Thanks for posting this excellent example of why you shouldn’t use ChatGPT to summarize documents. Page 4 of the PDF has an understandable diagram and list of steps, and this doesn’t match it.
Of course it does not, since I asked it to make it absolutely simplest diagram to give a 10k ft view of where FedNow sits.
For the actual diagram and documentation, the readers are encouraged to view the linked source.
[flagged]
This is not something revolutionary, multiple countries already have instant payment: https://en.wikipedia.org/wiki/Instant_payment. This is just a technical improvement on existing systems. Regarding your questions the FED is simply providing a facility (https://en.wikipedia.org/wiki/Clearing_house_(finance)) that willing participants (the list of early adopters is in the article) can use.
[flagged]
My concern is that this is a trial run for an official CBDC that will eventually replace cash.
FedNow is a replacement for ACH which is an ancient, creaking monstrosity. If we can't ever replace or fix old, busted infrastructure because of conspiratorial rambling, we are fucked as a civilization.
I’ve seen a lot of crazy conspiracy theories reveal themselves to be true in the past five years.
Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
16 replies →
What has government ever done for us?
https://youtu.be/Qc7HmhrgTuQ
CBDC is a new acronym for me... For others like me: CBDC == Central Bank Digital Currency
https://www.federalreserve.gov/central-bank-digital-currency...
>replace cash
That is the most important concern. Not even crypto can beat cash for convenience and anonymity.
But having a way to transfer money outside of large corporations and instead through a government regulated service is a good thing.
The ban on bearer bonds should be repealed. People worry about cash because it is the only legal option left.
It makes me question why we allow government to be in charge of our money, and the price of money (interest rate meddling by govt contractor federalreserve). I suppose we grow up with it and don't question it.
16 replies →
If a country’s government really wants to get rid of a lot of large cash transactions, they could phase out some paper money like India (no cryptocurrency required) but in the US it doesn’t seem very likely?
Most money in the US already consists of electronic records in banks. Making bank transfers work better is fairly orthogonal to whether ATM’s work and retailers accept cash.
I wouldn't worry too much about replacing the US Dollar entirely. We're pretty slow even to get rid of the penny. The US Dollar has a _lot_ of fans, I'm certainly one of them.
I read remarks where Yellen said explicitly that if FedNow works, they won't need a CBDC. I'll try to dig that up.
What is it about CBDCs you find concerning compared to cash?
Cash can be spent without being monitored or blocked.
A recent example of how this might be relevant is with the protests in Canada that lead to the freezing of the protesters’ bank accounts by the government. While I don’t agree with the protesters, the idea of the government freezing their accounts is alarming. After seeing such control exercised, it’s hard to be excited about a cashless society.
1 reply →
For one, unlike cash, the issuing entity can program CBDC to expire on a specific date unless utilized. Another horror use case is that they could track and limit how many hamburgers or pizzas you eat daily, weekly, monthly or yearly!
24 replies →
When the government does something unpopular against its own people, they can easily quell protestors at scale and force the usage of CBDC adoption by closing ATM withdrawals [0] add savings limits [1] and can incentivise spending with an expiring date. [2]
Whilst many HNers were celebrating UPI as the payment rails from India, it is almost the same thing as FedNow and is planning to put their own CBDC on UPI called E-RUPI [3] taking all the same valid concerns that I have mentioned.
Do you really want this?
[0] https://www.pymnts.com/cbdc/2022/nigeria-cuts-atm-cash-withd...
[1] https://reclaimthenet.org/digital-euro-spending-saving-limit...
[2] https://bfsi.economictimes.indiatimes.com/news/policy/digita...
[3] https://indianexpress.com/article/explained/what-is-e-rupi-d...
It's bad enough that banks have virtually unlimited insight into my spending habits that we need to give the Feds the same access. I should have the right to buy a big mac without some government server getting pinged.
14 replies →
this is what it is.
heard of upi in india? it’s one of the best payment system in the world.
Something something privacy