Unfortunately, a lot of American banking infrastructure is hard-coded on ancient systems, so it’s entirely possible that initiating a single transaction really has reached it’s price-bottom. That’s also why it takes 2 days to send money to people, in an era of instant communication.
Many companies (like Stripe and Venmo) mask these deficiencies. But when you have to do something like a wire transfer, you find that it’s all an “abstraction” over some really ugly systems.
I suspect that’s why there’s no institutional movement to build something better. It requires a ton of hard-coded systems to change, in lockstep…just so banks can charge you less? It would be like trying to change the entire US electric grid from 110V to 220V to reduce the cost of transmission.
FedNow was SUPPOSED to be the answer, but I haven’t heard a word about it since it was supposedly launched over the summer. Rumor is that no bank wants to touch the system even though it’s better…
Edit: After learning that FedNow IS getting taken up slowly, I guess the analogy is more like: FedNow is like a huge 220V line running through the center of the country, and all the banks/power stations have to run a line to it now. And maintain the existing lines at the same time.
For the pedants: Yes, overhead lines don’t run at either 110V or 220V, but I felt that made more sense than talking about changing from 60Hz to 50Hz
I've been trying to find a bank that does consumer-level FedNow outbound transfers. So far, no joy. Many banks have receive-only FedNow - they can receive money, but not send it. The US Treasury's Fiscal Service, the part of the government that sends payments, is going to be using FedNow. So banks want to be connected enough to receive money faster.
There are some online services for companies that make lots of outbound payments. JP Morgan Chase and BNY Mellon offer that. But outbound FedNow at the consumer level, not yet.
Part of the problem is addressing. The clever thing about PayPal is that your email address is your inbound payments address. The banking industry hasn't figured out the consumer-facing side of this yet. FedNow at the Fed level is about the same as ACH at the Fed level - just faster. You need receiving bank account info. There's a "request for payment" mechanism (i.e. a bill), but how does that reach consumers?
Singapore handles this well through their PayNow system, addressing can be handled by phone number, QR code, or entity ID. Obviously they didn’t have the same level of technical debt as the US did, but it’s possible to do this in a consumer friendly way.
FedNow is helping a lot, but adoption takes time. The middlemen's APIs have to adopt it, test it, then the tools that use the APIs have to do their own round of that, then the businesses that use the tools that use the APIs have to design, develop and deploy the new features, then the users of the businesses that use the tools that use the APIs have to adopt those new features, and then you have adoption.
> That’s also why it takes 2 days to send money to people, in an era of instant communication.
I always assumed anti-fraud had something to do with it. Give the victims time to notice and the institutions the ability to reverse transactions without loss
> I always assumed anti-fraud had something to do with it.
The banks must have had a good PR campaign going because I was under this impression for a long time too. Something didn’t click when I learned that mistyping a single digit in an ACH transfer means your money is gone forever…
You shouldn't make up completely wrong claims to use as an analogy. The US grid doesn't run at either 110V or 220V, it's much higher. The 50/60Hz thing doesn't make any sense as an analogy either, because there's no significant advantage to either, it's just arbitrary.
You really should just delete your comment if you can't come up with a decent analogy, or edit it to eliminate the analogy that makes no sense whatsoever and makes me completely ignore whatever point you were trying to make. Maybe it's OK for some non-technical audience where they have no idea how electricity works, but this is supposed to be a technical crowd, isn't it? Or is it? Sometimes I wonder.
> You really should just delete your comment if you can't come up with a decent analogy
I think you're being unreasonable. False/untrue analogies still work as a rhetorical device and we can appreciate the point being made.
Pedantry has its place (peer-review of scientific papers, for example), HN comments is not one of them. This is how a community develops a reputation for being hostile.
(Now I'm going to feel horrible about myself for even letting myself be tempted to respond to a comment like this in the first place)
Damn sorry I offended you with my stupidity. Like many people, I have a limit to the things I know. Any ideas on what might have been a decent way to phrase that analogy?
Your comment was fine. It added to the discussion, and even if the analogy wasn’t accurate, it made your point effectively to a lay audience. So I think that is a net positive. Ironically, the reply to your comment by the poster you are replying to added nothing and actually detracted from the discussion.
Many companies (like Stripe and Venmo) mask these deficiencies. But when you have to do something like a wire transfer, you find that it’s all an “abstraction” over some really ugly systems.
I suspect that’s why there’s no institutional movement to build something better. It requires a ton of hard-coded systems to change, in lockstep…just so banks can charge you less? It would be like trying to change the entire US electric grid from 110V to 220V to reduce the cost of transmission.
FedNow was SUPPOSED to be the answer, but I haven’t heard a word about it since it was supposedly launched over the summer. Rumor is that no bank wants to touch the system even though it’s better…
Edit: After learning that FedNow IS getting taken up slowly, I guess the analogy is more like: FedNow is like a huge 220V line running through the center of the country, and all the banks/power stations have to run a line to it now. And maintain the existing lines at the same time.
For the pedants: Yes, overhead lines don’t run at either 110V or 220V, but I felt that made more sense than talking about changing from 60Hz to 50Hz