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.