The Durbin Amendment is responsible for modern fintech as we know it

kunle.app

2 points·kunle··3 comments

Great post, really love the content around fintechs and the financial incentives involved.

You mentioned in the post that debit cards are the most used payment instrument, with credit cards and cash behind debit cards, but I didn't see any mention of the FedNow's instant payment network that is getting ready to go live (and where each transfer will only cost the financial institution a penny for up to $100k in value transfer, compared to relatively high interchange fees for debit and credit transactions). Would love to hear the author's thoughts on how that will impact the fintech landscape, and if this end game eventually destroys the value prop of popular fintechs (which one might argue aren't businesses, but great UX on top of chartered bank infra, funded by likely to be compressed interchange rev).

I think FedNow impact on debit will be missed. Cost and speed are only 2 parts of the problem to solve. The debit card instrument is still a materially better interface/experience than the account + routing number instrument; people have a debit card on them most of the time, you can swipe it in places etc. Without changing the UX of fednow, hard to imagine it competes.

I think fednow probably cannibalizes a bunch of ACH (because its same UX but faster) and a bunch of wires (bc its the same speed but cheaper) but less debit.

Appreciate the reply! I think this is dependent on uptake of payment methods with QR codes and similar. If FedNow enables a similar UX as in China with WeChat Pay, uptake potential is greater for in person payment. I can already P2P and P2B others with Venmo and Zelle using a QR code, and Walmart Pay uses a QR code for it's UX (examples off the top of my head).

TLDR “Are phones or cards the future of mobile payments?” TBD.

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