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Comment by i13e | Hacker News Reader

Am I understanding this correctly? It seems like this simple feature if added to US bank accounts would make Zelle, Venmo, cash app, maybe even PayPal, completely irrelevant

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It doesn't. Some countries in Europe have this already. The UK has FASTER which is instant transfers between UK bank accounts (I seem to remember these transactions are settled instantly interbank at the BoE, so good tech if I have remembered right).

For non-P2P stuff like PayPal is very good because bank transfers are non-reversible. You can do G&S on PayPal and reverse that if you need to.

For P2P, stuff like Revolut, PayPal, whatever is still easier because you don't need to remember your bank account number. There is also no interoperability between banking apps either (the only interaction is through FASTER and your number). So you end up needing someone in the middle, like PayPal, which (in the end) is just doing bank transfers...not ideal but it is, at least, cheap.

Reason would suggest the latter will eventually change, but that day is not today.

Also, cross-currency transfers are significantly easier with apps. I agree that it is all a bit unnecessary but...banks are banks. In the UK, there has been a lot of competition and services are still (imo) dire.

> (seem to remember these transactions are settled instantly interbank at the BoE, so good tech if I have remembered right)

No, participants have nostro/vostro accounts with each other, and payments are immediately settled using those. Participants shuffle money between those, including via accounts at the Bank of England if necessary, to maintain sufficient liquidity; they do that throughout the day, with a big cleanup at the end of the day, but it's not part of the transaction.

Which means that banks need to keep track of their balances with other participants, and not send customers' payments if that would take them overdrawn. Obviously this would be highly undesirable, so they work hard to keep those accounts topped up.

Thank you. I remembered I read something like that. Do you know if it is possible to clear with the central bank instantly? Over short enough timeframes I presume it becomes like trying to hit a moving target.

That i'm afraid i don't know!

In Poland we have BLIK for a few years already.

All major banks participate in it, and it's both P2P (send to target phone number, which will behind the scenes resolve to a bank account) and web payments (use a one-time code from your bank app and then confirm in the app, without sharing any permanent data like card numbers).

Also, it's instantaneous and free.

And in fact almost nobody in Poland uses Revolut nor PayPal for P2P, everybody uses BLIK. People do use Revolut for their great exchange rates though.

Phone numbers and one-time codes, sensible. I am in the UK and the term "fintech hub" is used too loosely (part of the problem is that banks have got so large and lazy here, there is competition, most of it terribly ineffective).

In Australia, our New Payments Platform (which has been rolled out to almost all banks at this point) allows you to set up an email address or mobile phone number as your "PayID", which negates the major advantage you mention for P2P transfers. (People are still getting used to using PayIDs at the moment, so I still get many friends sending me their bank account numbers like they always have, but usage is definitely picking up.)

It blows my mind how badly Zelle has failed. It already is integrated to US bank accounts. It started as a cooperative venture over a decade ago by several US banks with the explicit goal of being integrated with your bank so you don't need a separate account!

And yet it comes across as a mere clone of Venmo.

https://en.wikipedia.org/wiki/Zelle_(payment_service)

Yeah, honestly I didn't know it wasn't bank specific until I opened an account at a local credit union and it showed up as an option for transferring funds.

Has it failed? Zelle’s volume is more than twice that of Venmo and Zelle is growing faster.

I don't think Zelle has failed. I use it to pay my rent and to people who do odd jobs around my place.

The problem with Zelle seems to be that no one knows about it. Yet, I'm using it more and more all the time.

For example, the person who cuts my hair only takes cash. I asked if we could try Zelle (I rarely carry cash). She agreed, and we haven't looked back.

Zelle does roughly $490B/year in transaction volume (1/4 of total annual US card volume, ~$2T). If that's failure, I want to fail too! Venmo is closer to $230B in volume.

My bank offers me like 50 garbage services every time I log in. Zelle falls into that bucket. I've never used it and barely know what it is, I just assume it's a scam like everything else banks offer.

It looks like a garbage service but it’s kind of great. It what I use to send money. It’s instant and free.

It's a little too instant. If you send money to the wrong place it's gone and IIRC it doesn't really help you confirm you're sending to the person you meant to.

Yeah, I found the UX for Zelle very confusing. I think it's why I prefer to do a bank transfer and wait for 2 days.

> with the explicit goal of being integrated with your bank so you don't need a separate account!

The goal of Zelle was to prevent the likes of Square Cash, Venmo, etc from dis-intermediating the banks from their customers.

Funny I tried to setup Zelle with TD Bank the other day and they told me not to use it to send money to myself.

How do Americans send money from one bank to another for accounts they operate?

Most bank accounts I've ever had in the US let you set up bank-to-bank transfers via the web site. It only requires a routing number and an account number.

TD too but that takes 24-48 hours and you have to go through a weird validation process. Two deposits are made to the receiving bank under and you're asked to confirm.

TD also wanted me to come into a branch with a bank statement from my other bank. Not ideal since they don't operate west of South Carolina and I'm in California.

The two deposit thing is pretty standard. A little odd, but it gets the job done and presumably does so using existing ACH interfaces (so they don't need to implement anything new or rely on the receiving bank to do the same)

Most services I use integrate Plaid. I believe Plaid is just a federated authentication glue that accesses your bank's systems and is granted access to account balances and ACH details (routing/bank account numbers).

It always struck me as an odd product, since I can just plug my ACH info in directly, but it does provide some level of convenience by allowing, say, a roboadviser app to show the embedded balances of my other accounts.

Plaid is a disaster waiting to happen—they store your banking username and password, and then use them to log in to your online banking on your behalf where they scrape the info they need.

I’m amazed banks put up with it.

It'll use app-specific passwords or OAuth with banks that support that, and both of those can be secured well enough.

The Plaid disaster hasn't waited- it's already started. They've already had to settle at least one class action lawsuit for deceptive practices

https://www.plaidsettlement.com/

Yeah Zelle doesn't really work well for that because I think you can only ever have one Zelle-enabled account because it's based on phone number or email.

Some banks offer external bank transfers through their online portal, and sometimes with a small transaction fee. I've been told by my bank with that transaction fee that you can avoid it by using the "bill pay" feature and just inputting your other bank account's routing and account information. I think that all works over ACH anyways.

I was hoping to use my catch all domain to resolve that e.g. td@mydomain.com, wellsfargo@mydomain.com which is what I do with Interac. Looks like it got me flagged.

I feel like the branding really shot it in the foot. If they'd named it something less "startup-y" sounding, and marketed it as secure, instant transfers backed by the banks themselves, they might be in a better position.

I still use it all the time since it's a superior to any other offering for instantaneous high-dollar transfers, but it always feels like a "Venmo got embedded in my banking app" type of interface vs. "my bank is offering a direct payment service to it's other networked banks".

Hard to define, but I do think the marketing/branding/rollout were more to blame than the merits of the service itself (IMHO, Zelle is great).

Chase used to call it "Chase QuickPay", which was a great name. And when they joined Zelle and started supporting other banks it became "Chase QuickPay With Zelle". I don't know why it needed 2 product names but at least one of them told you what it did. And now it's just Zelle...

Yeah, if it had piles of VC money shoving it down people's throats it might have been received better.

The banks don't make money on it...so boring to them and therefore neglected from a marketing perspective.

Since EWS (The company that runs zelle) is effectively co-owned by a bunch of the large banks in the US, which has caused many of the small and mid-sized banks don't want to take part. They worry transaction information and the size of their bank (based on traffic) when leak its way to the large banks giving them some kind of advantage.

The annoying thing with zelle is that every bank has different limitations. USAA for example has a 1k daily zelle limit. So it's completely useless for things like paying rent to a landlord unless you want to split a rent payment up over several days.

We can only hope that the US doesn't let a corporate interest put limits on this a la Intuit with free tax filing.

Otherwise, yes, it sure seems like this would pretty much obsolete a lot of payment platforms.

In the UK at least Zelle, Venmo, cash app are not a thing in my experience.

We have the wonderful Faster Payments System[0], that allows near instant payments to any account. Banks have nice phone apps, with push notifications and emoji.

Paypal is a thing usually just a way to avoid putting in card details directly.

0. https://en.wikipedia.org/wiki/Faster_Payments

Britain also has PayM, to send money using a phone number as an identifier, but at least in my bank's app the interface is hidden several menus deep.

Denmark's equivalent, MobilePay, is very widely used. I even use it for some online purchases, as the flow is so smooth:

- Select pay by MobilePay

- (They probably already have my phone number (e.g. for delivery notifications), if not I must enter it. It's 8 digits.)

- A notification appears on my phone, with the amount and recipient

- Fingerprint and swipe to confirm

- That's all.

The website doesn't keep any card data, but I still get a very quick checkout process.

To send money to friends or family (or small businesses) is also fast:

- Open app, unlock with fingerprint

- Type in amount, e.g. 100, press Next

- Choose a recent recipient, or scroll through my contacts, or type a phone number

- See confirmation -- the amount and the person's name as on their bank account, not their name in my address book

- Send.

Faster payments is good in a way but also.... weird. At least the way my bank implements it.

Want to pay someone new? Better have your smartphone with the app, and your bank card and your card reader. Be ready to provide your fingerprint and your card PIN number. And they'll send you a text message telling you a new payment recipient has been added. That's a fine level of security if you're paying thousands of pounds - but if you're paying £5 for lunch the process is just as strict.

And despite all that security, it's still limited to payments <£10,000 for some reason.

Any transfers that fall into the allowance of a tap payment shouldn't have to go through the same amount of security.

I miss the Faster Payments network immensely. The systems in Canada and the United States are a mess in comparison.

The level of 'user' security is defined by your bank, rather than the faster payments protocol.

Monzo for instance just requires that you are signed into the app and can face-ID on iOS.

it used to by the bank, now the minimum security is defined by the Payment Services Directive

which is quite specific

Forcing people to use a smartphone is still a fail.

The UK has a Zelle like service called Paym that works on top of Faster Payments and means you don't need to share your bank details.

This is specifically a behind-the-scenes product offered to banks that replaces the existing clearinghouse system. I can't imagine it being offered directly to consumers, but we might see it in the form of faster deposit/withdrawal times.

As I understand it, this is settlement infrastructure for banks. How the consumer experience is actually implemented is up to each bank.

Perhaps Zelle will switch to it for settlement without changing the user experience? Some limits might be removed, but then again I’d guess that the limits are at least partly there for security purposes (to prevent bank accounts from being drained too easily) and the risks don’t go away just because settlement is easier.

(In a similar way, ATM transactions have daily limits and it’s not because there’s any technical reason for daily limits to exist.)

To some extent crypto too. HN constantly shits on me for saying I use crypto for this purpose, but there are vendors in the US I legitimately use crypto for because it is the only low-fee way for me to send something that will clear in under 30 minutes.

Most pot dealers will take cash. ;-)

Seriously though, what kind of vendors are you finding crypto useful for that no other payment method can match or beat? I haven't found a single need for crypto in my life, aside from pure financial speculation. Maybe I just don't run in the right circles.

metal bullion. If you have free wire transfers, some of the time it might clear as fast for cheaper, but then again usually not and none of my banks offer free wires.

Most bullion dealers charge absurd markups for cards because people will steal credit cards or paypal account and drain it buying metals, which means the fraud premium for credit is sky high. Crypto is irreversible so you don't get stuck paying insurance premiums for fraud you're not engaging in.

Funny enough, the pot shops really embraced BTC in their infancy because anything to reduce cash was good (banks will not touch them due to the federal gov‘t), but they‘ve all since dropped it due to volatility being too expensive to deal with.

The existence of most of those apps has long seemed crazy from a UK perspective. Our bank transfers take seconds to hours, to pretty much anyone. Payments are one of the banking areas where the US has been stuck far in the past.

They were shims around Congress not providing the Fed the authority to establish instant payment infra until very recently (~3-4 years ago). With instant payment utility capabilities, you can eliminate the need for these shims and other antiquated financial infra previously supporting faster settlement (RTP, Zelle, credit/debit cards, etc).

Very pleasant to see the US catch up to the developed world in this regard [1].

[1] https://www.moderntreasury.com/journal/real-time-payments-ar...

The Fed has no interest in direct retail access (see narrow banking[1]). This is all about improving the plumbing for those services, not replacing them.

[1]: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...

Yes. None of those are a thing here in Canada in my experience. We have Interac E-Transfers which is allow you to send money to anyone just by knowing their email address or phone number.

Either the person gets an email/text with instruction to deposit the money, or they can register their email in a central database which allows for automatic deposit and nearly instant transfer.

Payments Canada is working on their real-time system, in theory this will be deployed this year.

https://www.payments.ca/real-time-rail-payment-system

Nearly instant depending on your bank. Waiting 45 minutes to an hour is not unheard of. They do a really poor job of assessing risk e.g. sending money to myself routinely still results in slow transfers.

There's also ridiculously low limits on daily/weekly/monthly transfers making it useless for say moving a house deposit between banks.

Zelle is owned and controlled by seven of the largest banks in the US. It was basically created the fill the gap and create a standard for consumer bank to bank transfers.

This doesn't replace Venmo for P2P since it requires $25/month fee if you want to receive credits. It can certainly replace paypal &c. for payments though

Wouldn't be surprised if banks or credit unions waved the fee as a benefit for their members

The fee is so minimal ($25/mo per bank / $0.05 per transaction) that any bank that even attempts to pass it through is really doing a disservice to their account holders. That said, I put nothing past Wells Fargo or Bank of America.

Given that the sender pays the bulk of the transaction fee, and smaller customers are more likely to send a lot than receive a lot, I suspect the $0.045 to be passed through. Of course, merchants might want to eat the fee by charging $0.045 less in order to encourage people to use this instead of credit cards (which are far costlier to merchants, and can incur chargebacks).

It's $25/mo per routing transit number, which means basically per bank or financial institution, since each bank has usually one or a handful of routing numbers, even if they have millions of accounts.

I'd like clarification but from the wording and this release, it seems that it's about $0.05 per transaction and the bank has to pay a $25/mo fee per routing number: https://www.pymnts.com/news/faster-payments/2022/fed-release...

Oh, I missed that it was per RTN, and just focused on the "that can receive debits" part; yeah, that's super cheap then, particularly since they don't take a percentage of the transaction value and it has a default maximum transaction limit of $100k.

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