Comment by HoyaSaxa
3 years ago
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.
> So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card.
I do wonder how stuff like this will shake out. I will use a credit card, always, with any vendor that doesn't pass along credit card fees to the customer in some way. (Why would I choose otherwise? The credit card gives me rewards, and better fraud protection.)
But more and more, I see companies charging "convenience fees" for credit card usage or offering "discounts" for cash/debit. Hell, T-Mobile just started requiring you not use a credit card to get their $5/mo autopay discount.
So this is all cool (and perhaps would make it easier for people who don't have a credit card to pay for Netflix), but I don't see why I'd use anything but a credit card to pay for my Netflix subscription, unless they offer discounts for using FedNow. Which... they probably won't?
RFP i.e. Request for Payment is not part of this release. Furthermore there is no ETA from the Fed as to the release date for RFP.
Currently FedNow is simply a push payment system i.e. bank account holder may be able to use FedNow to push money out from their bank account to someone else's bank account.
The limitation here is the bank account holder must know the account number of the recipient. This is a huge limiter in adoption since most people don't want to share their bank account numbers and maintaining a directory of people's bank account numbers is cumbersome to say the least
Yes, the Fed is working on a directory but they have not yet announced the launch date for such a directory, not have they mentioned the index i.e. will it be phone number ? email ? something else ?
Bottom line: FedNow launch: Step in the right direction but still a long way to go
> most people don't want to share their bank account numbers
While far less common these days, people gave this information to arbitrary payees (via personal checks) for decades. The idea that it's not to be given to payers, despite it having been given to arbitrary payees, seems misguided. If someone tries to commit fraud with that number, they're probably going to get caught, making it sufficiently unlikely, no?
5 replies →
Australia's "PayID" system gets around this by allowing you to pay to a mobile phone number or email address (generally findable via your phone's contacts). The implementation is a little clunky, but an additional benefit is that it's a bit like DNS for your payments - you can associated those details with different bank account to redirect payments if you move.
I’m going to lose $30 a month in discounts with T-mobile if I don’t switch to debit card or checking account. T-mobile has a horrible history when it comes to security. I definitely don’t want to give them access to my checking account
Create an account just for T-mobile. With someone like Fidelity setting up a new account is a few clicks. Ally makes it pretty easy too. Then set it up to fund automatically from another account within a certain limit. Or if your monthly bill is stable, setup a schedule to fund it monthly.
What are the rights of the T-mobile customer in the USA, if they somehow do mess up an automatic bill payment?
I'm searching using the European/international term for this sort of payment ("direct debit usa") which gives me API documentation from many American payment providers, but nothing about the customer's rights. I assume it's the technical term there, and there's another term used with the public.
(In Britain and the EU this kind of bill-paying agreement has very strong rights for the payer, they can ask their bank to reverse any transaction for a long time without giving a reason. My online banking interfaces have easy buttons to do this, or to block future transfers.)
3 replies →
You can easily create an account just for T-Mobile and auto-deposit into it monthly.
3 replies →
"Hell, T-Mobile just started requiring you not use a credit card to get their $5/mo autopay discount."
Yes. Visited a T-Mobile store to set that up. Brought in a voided check. Said "Set up an ACH transfer, please." "What's an ACH transfer?" Took about half an hour, two rejects from the T-Mobile payment system with both me and the clerk checking the numbers, and a conversation with Bank of America customer support ("We didn't reject that, we won't see it until the daily batch.") Too many people are going to be paying T-Mobile a $60/year "convenience fee".
(Worse, BofA is apparently still charging for outgoing ACH transfers. And they're not on FedNow.)
Yea BoA is not the most consumer friendly bank. I specifically have checking accounts with 4 different banks to capitalize on the various services they all offer, and to avoid being caught by a bank run type situation (or even just a bank’s services being down for a technical reason).
3 replies →
"any vendor that doesn't pass along credit card fees to the customer in some way"
I think every vendor passes along the fees, either in aggregate through pricing, or to the individual as a charge. At least in the latter case it is more transparant and fair to non cc users.
I moved to Europe in 2018. The banking system is decades more advanced than the US. At least where I am, no restaurant will “split a check” and one person is expected to pay. We settle the bill between each other in a matter of seconds.
Most bills are paid using this exact system. Credit cards are very rarely used except in-person. Since you have to accept (or tell your bank to always accept certain vendors) debits using this system, there’s never any surprises. You usually have nearly a week to accept a debit.
Inability to "split a cheque" is still a very annoying limitation; completely normal behaviour to do this in NZ, still moderately weird in Australia (although it's got better).
The ability to resolve this electronically rather than with cash makes it less bad, but still easier and faster to resolve it in store.
1 reply →
>Credit cards are very rarely used except in-person
Credit cards give you reward points/money so that's not really a positive.
1 reply →
Credit card fees that aren’t passed through to you are a bit tragedy of the commons. Probably good for them to go away. It’s fine if you choose to pay them, and it’s still worth it to you, but otherwise you’re forcing everyone around you to subsidize your credit card rewards. That’s not fair.
Alternatively, everyone not taking advantage of the credit card protections isn't taking advantage of what's offered around them. Everyone should be subsidizing everyone else, because no one should be using a debit card to make direct consumer purchases in 2023. It's too fraught with risk comparatively, and even the scummiest of the sub-prime credit cards give you a grace period to not accrue interest.
25 replies →
Interesting, most credit cards with rewards I have seen in Aus have substantially higher interest rates which is where I assume they capture the cost of rewards back. Is that not the case in the US?
As for fairness, I agree they should go away. Companies with margin can swallow the fee, companies without could be unprofitable and make no sense if they don't pass on the fee. It's a practical reality of the dollars and cents, but it is a private apparatus we opt into so I guess we can't complain that much.
It’s no more tragedy of the commons than any other priced in offering a company does.
Don’t take advantage of “free delivery” because you buy in store? You’re paying for it anyways.
Don’t care about the ability to return for full refund because you changed your mind? You’re paying for it anyways.
Don’t care about the ability to link your washer to your Wi-Fi and use an app to see if your laundry is done? You’re paying for it anyways.
Have you looked at other systems across the world for inspiration / design choices, and if so, could you elaborate on how this system compares? For example, the use case mentioned is probably the prime use case for UPI in India, which has now been extended to become a full fledged payment network alongside CC networks etc.
> they'll probably be able to find a bank willing to charge them < $0.25
I guess that includes some very small values, but the upper bound seems ridiculously high.
I hope they extend that to actual invoicing standard, i.e. pass the invoice details in that RFP message, like something similar to https://www.finanssiala.fi/en/topics/finvoice-standard/
> I'm on the Request for Payment (RFP) Work Group that is composed of a number of financial institutions, service providers, and billers.
I'm just randomly curious: do you know which Federal Reserve Bank FedNow was developed at?
Why should they not be able to find a bank that charges <$0.05?
Other than with credit cards, there are no costs for customer kickbacks and chargebacks.
That sounds odd.
I can't imagine netflix giving up the stickiness of automatic recurring billing to say <2% of the transaction cost.
You realise you can do this over bank account?
At least in the EU, a recurring billing over bank transfer is totally a thing...
From the GP:
"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."
NB that last sentense. FedNow does NOT support recurring.
That sounds great!