The U.S. invented real-time gross settlement electronic payments with Fedwire in 1915 [1]. FedNow is the newest real-time end-to-end payment system [2]. It launched in 2023.
[1] https://www.federalreservehistory.org/essays/fedwire
[2] https://www.frbservices.org/financial-services/fednow-servic...
> FedNow exists but is supported by handful of banks which charge fees to use the feature.
What good is inventing a feature if almost nobody can use it?
https://www.rba.gov.au/payments-and-infrastructure/new-payme...
Subscriptions are often done via "direct debit" ( since 1970 ), which is safer than letting anyone take money if they have your details, so that's been a solved problem here for a while too.
The downside is the first-movers problem, where the UK having been ahead a couple of decades ago will now likely be behind for a while, because there isn't so much incentive.
Hopefully not as long as the USA has been behind though!
How so? I just tap my mobile on the terminal just like tapping my debit or credit card. In Norway that works with both Google pay and Vipps.
The advantage with Vipps is that I can also pay other private individuals knowing only their mobile number and the payment is instant.
The only way I would use such a system for purchases would be if the merchant refused debit/credit cards, and even then only if there wasn't an alternative merchant I could use.
The big difference is that the EU has mandated (effectively) fee-free availability to all end users, while the US is only making it available as an infrastructure layer. Most banks don't bother offering any product on top of it, or own-account-transfers for a fee at best as mentioned by GP.
Part of it is "the curse of good enough": the US has had good credit-card style infrastructure for over a century and digital infrastructure since the POTS days. Part of it is that we lost our appetite for anti-trust in the 80s. Part of it is that the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit. The good-enough is the enemy of the good.
Germany is another first mover with decades old banking systems and standards. German banks also dragged their feet supporting SEPA Instant or they added additional fees so that barely anybody wanted to use it.
Then the EU stepped in with regulation: If you support classic SEPA transactions, you also have to support SEPA Instant for the same price (which is almost always free for retail banking accounts). And suddenly banks did.
I think the “recent” change allowing merchants to pass along the credit card fees is a step in the right direction.
I think a lot of people would still choose fraud protection for the extra costs, though.
Not to take away from your example, but I was under the impression that transaction fees charged when using a credit card in the US were significantly more than in say, the EU?
Of course the business passes its costs right back to the consumer, but it's not visible to them, while the benefits are.
The government is the only one capable of changing the rules to be included in the list of allowed parties to make it better.
> All U.S. financial institutions (Receiving Depository Financial Institutions or RDFIs) must participate and accept Same Day ACH credit transactions.
> However, sending (originating) Same Day ACH payments is optional for banks and credit unions.
I've signed up for or seen the contracts for several payment processors across several companies. Rack rate for ACH debit starts at $0.25/trx and goes down to sub-penny at scale. Returns can be high though ($2 per, going down as well).
Edited to add: that's not a defense, I *loathe* ACH. It's a negative-reporting system which is such a pain to deal with.
What I can say is the Fed has draconian rules for pricing its services. The services cannot be subsidized but must be priced to recover costs, including a return on capital similar to what a private payment system (ie from the Clearinghouse) would expect.
I read it as the sending institution pays 5.2 cents to the receiving institution per item, on top of the 0.35c/item + 0.1c/item same-day surcharge for a maximum of 5.65 cents/item before volume discounts.
For other examples, look at adoption of login.gov vs id.me, and tax filing software solutions.
Because why would Musk possibly be interested in saving money and making the government run more efficiently?
What an egotistical ass hat.
In the USA, no single regulator have that power. Basically only congress can do something like this. The us Congress ain't famous for being fast, you know.
The countries that have innovated the most in regards to automated payments are the ones trying to escape US influence: look at PIX in Brazil, BRICS pay, etc...
In America, the payment system is an oligarchy, they protect their own (the bankers), what need is there for innovation when they are making a killing out of the current inefficiency?
The one place where the US haven't been slow is in stablecoins, making them dollar donominated, to ensure the monopoly the US dollar has on international trade stays strong. That way, when the US has a crisis, they take down the rest of the world too, to the joy of non-US countries.
I’ve never been in a position where I needed a cash transfer to an account the very same day, I have tens of thousands of dollars of credit available so there’s very little need for immediate transfers, at least for me personally. I do virtually all of my spending on credit cards so I have up to 60 days to pay the loan back without interest.
We've had a billion discussions on Hacker News about payment rails and it's invariably always a European incredulous that Americans can't/won't do a digital payment instantly and for pennies. These Europeans are typically operating with a mental model where they have cash in a bank account and every transaction gets funded from cash on hand.
Americans - for better or for worse - want longer cycles to pay for their charges and many want rewards for their spend. I don't think it's uncharitable to describe those who pull out debit over credit during a transaction as lower income and higher credit risk than those who prefer credit. (Europeans will decry that this is Americans living beyond their means. Maybe! Maybe.)
But when it comes to business, I've never understood this argument from Europeans. Invoicing works on net-30/60/90 terms. In B2B payments you could reduce payment cost by doing invoicing with instant low-cost payment in 30 days, but incur a different "cost" in cash flow management. Credit card payments are a risk-based financial product that does a magic trick of arbitrage for merchants between a service/good sold and payment received as a net-30 invoice to the cardholder, and you should expect to pay a fee for that. An economy where businesses need to pay each other immediately out of cash-on-hand is less dynamic and less efficient than one where all that cash flow can get smoothed out via payment intermediaries. (Money you have to keep on hand for bills is not being deployed doing other things in the economy - this is inefficient!)
For C2B payments, this is probably a helpful and lower-cost innovation over debit rails. But credit is a different product, financially and culturally, in the United States.
Pricing for customers varies by network participant. The network prices are cheap.
The real problem is that, even if costs were to come down to zero, there is nothing incentivizing banks to actually make RTP available to their customers. In the EU, customer-initiated "push" bank transfers are considered an essential part of a checking account; in the US, they're not.
A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
If you don't need it right that second, same-day ACH is widely used, and again the delay allows more efficient netting.
The Clearing House's CHIPS is a good in-between, it's not guaranteed instant, but uses an algorithm to match transactions as fast as possible with constrained float.
Purchases are an afterthought. A system like Brazil's Pix could be rolled out on top of FedNow.
Why? At least 2/3 of my cards do same-day ACH (the other is at the same bank, so I can't tell), so the transaction clears in hours. The point of a large credit limit (supposed to be at least 3x normal spend) is so that it doesn't matter anyway.
>FedNow could enable all of this.
Clearing House's RTP has been around since 2017 and it hasn't.
A non-hypothetical scenario is that I make a credit card payment via ACH. That money does not leave my account until EOD. Some other transaction causes my balance to fall below the amount required for that transfer. The transfer fails and I am dinged for a missed payment by the CC company (and if the bank sucks they charge a fee too).
Now you could argue this is an accounting issue "Why doesn't the bank reserve the funds until the transfer is complete?" Answer, I don't know ask Capital One. But RTP eliminates the question entirely.
This is a thing already in the UK. I can make a credit card payment from my account using the credit card number. It applies to the balance in real time (realistically in minutes). I don't have to worry that the payment could fail at any point.
Because transaction ordering isn't guaranteed. Say I know that I'm getting paid on the 1st, and I want to spend my paycheck immediately on rent. If the rent transfer gets processed at 11:00 and the payroll provider gets around to doing it at 11:15, I don't want my rent to be rejected.
Therefore, the bank allows transactions to happen and only checks at the end of day for overdraft. They then apply a time-independent ordering to transactions they can reject like paper checks.
In fact, this same scheme applies to banks, Fed only looks at their accounts at end of day, why you have overnight funding.
The major exception to this is debit cards, which Congress made them reject if the money isn't there at time of authorization.
My broker credits me for deposits immediately, switch brokers.
> I want to pay off a credit card and have that payment clear instantly.
Why? There is zero benefit to doing this, a credit card payment is applied to the account on the day you choose to pay it, whether it is removed from your checking account or not. I guess I could see if you are constantly over drafting your account, but you could just .. keep cash in the account so you don’t overdraft.
I leave enough money in my checking account to cover all auto paid bills for at least 30 days just in case I end up in the hospital or something.
Both are a very poor alternative to something like UPI or even EU-style bank transfers as a mass retail payment system. Cards are orders of magnitudes more expensive; Zelle has no standardized interface and is explicitly geared only towards P2P Payments, lest it cannibalizes the banks' golden goose, i.e. payment cards.
> same-day ACH is widely used, and again the delay allows more efficient netting.
Importantly, customer-initiated/"push" ACH is largely not a thing in the US, unlike in many other countries. This is what people unfamiliar with the US landscape often have a hard time understanding.
> A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.
That's the crux of it: The US seems to be culturally unwilling to accept the risks (fraud) and rewards (practically free P2P and B2C payments) that come with a customer-initiated/push payment system.
My point is that these properly designed national systems should also be considered in the USA as well, and not dismissed because something is kind of working right now with a long list of exceptions to a good and safe experience.
https://www.chargeback.io/blog/debit-card-chargebacks-guide
Liability is covered under the Electronic Fund Transfer Act
> You have zero liability if you report before any unauthorized charges are made. Reporting within two business days caps your liability at $50. However, if you wait over two business days but less than 60 calendar days after your statement is sent, your maximum liability jumps to $500. Beyond 60 days, you could be liable for all unauthorized charges.
Worldwide.
Most debit cards today have PIN, but that doesn't waive fraud or theft protections. If I purchase something online the purchase of course has my permission. If the goods are faulty or not delivered, then that is fraud and has chargeback protection. Even if you used your PIN, even if you used two factor authentication.
https://www.theclearinghouse.org/payment-systems/rtp
Zelle is pseudo real time. The settlement (mostly/often?) happens by ACH.
US bank has it, Mercury does as well