FedNow will be the first of its kind central bank instant payment system in the US and could revolutionize how businesses and consumers pay and receive money. But not everyone is prepared for it.
I had no idea this was happening. Is this going to eliminate the need for Zelle and Venmo? Or is this more like I can send money from my bank to my credit union in an instant?
I hope it’s the first one
If it is similar to the Aus set up, yes.
Aus banks have instant (under 30 seconds) transfers directly from your banking/website app to any account held by any financial institution (bank, credit union etc) in Australia for about a decade.
Third party pay apps like Venmo never took off there because the banks’ solution was available to everyone, and it is easier, faster and free of charge.
Finally, it feels insane that this has taken so long.
The article lost me at fees. I saw a friend from Ireland last summer. They looked at us apps like cash app & zelle like that’s cool - but the app we use doesn’t charge instant fees and is not traceable.
On the other hand, this could be the death of physical currency in the us?
from what i understand, australia is one of the furthest along this road:
- instant, free bank to bank transfer for amounts under… i think its $2000 (and there’s a bunch of safeguards)
- you can register phone numbers, email addresses, ABNs (australian business number: every business has one), etc and just pay directly to that - again, this is directly in your banks app
- pretty much everywhere accepts credit card tap including phones, watches, etc (though some places add a % fee, that’s for all credit transactions not specifically tap)
- newer banks have a 100% online <5min process for opening accounts, even for new customers: ID check is done in your phone by uploading a photo of your drivers license (i actually opened a bank account with a new bank while i was in the US sitting in a restaurant, transferred money, added apple pay, and then tapped to pay all over dinner)
most people i know never carry cash, refuse to go anywhere that’s cash only unless it’s the only option, etc
granted i’m in a younger, technically-competent group, however my experience is that whilst physical currency isn’t dead, tbh i get annoyed at people holding me up fumbling around with it trying to pay: it’s just so rare, it’s almost a novelty at this point
Australian banks are now rolling out PayTo (www.payto.com.au), which is the consumer to business instant payment platform. It will eliminate the need for debit debits and return control back to individuals with respect to recurring payments (e.g. gym memberships, subscriptions, utility bills, etc).
Importantly it will provide a instant payment system for businesses that can bypass credit card fees (perfect for flight bookings, etc).
I doubt it. Cash will still be used.
I met a 25 year old a few months back who used cash. They didn’t trust banks and was mad their mom was forced to open a bank account to get paid at work. They were also stuck in an abusive household.
Apparently that’s one subset of people who use cash.
And to clarify they had no clue how banks worked at all.
So is this any different than e-transfer? I haven’t paid any fees or anything sending money via e-transfer to friends or businesses since it started in Canada. It’s not 10 seconds but it’s less than 3 minutes usually.
Imagine if e-transfer applied to bill payments through your bank, that’s kind of how this operates. Imagine if every bill payment, wire transfer, ACH, etc. moved instantly, that’s what’s being proposed here.
Meanwhile in Canada we still operate on a batch processing system where everything runs between midnight and 5 AM eastern, and our financial system upgrades to a more immediate system continue to get pushed back.
Australia has had this for years, and there are no fees (for users anyway)…
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