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Comment by TechBro8615 | Hacker News Reader

Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).

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Interbank payment systems are actually provided by central banks or the government (or affiliated organizations of either) in quite a few cases.

Europe has TIPS (an ECB-operated implementation of the SEPA Instant Credit Transfer scheme), India has UPI (which is pretty close to the central bank, as far as I understand) etc.

In the case of FedNow and TIPS, there are private alternatives as well, such as RTP in the US or EBA Clearing's SEPA Instant implementation in Europe. This is similar to ACH – there's both a public (FedACH) and a private (The Clearing House) implementation/network available.

> in most countries, those services are provided by banks, not the government

That's something I always point out when telling others how awesome the Brazilian Pix system

https://en.wikipedia.org/wiki/Pix_(payment_system)

is. It's not a private initiative by a bunch of individual banks, but rather a zero-fee payment system managed by the country's central bank: https://www.bcb.gov.br/en/financialstability/pixfaqen .

And it seriously rocks. It has been such a tremendous change to everyday life.

What happens when it becomes so good that it's the only option? There's no need for it to be profitable, so it can inevitably undercut private sector competitors. Do you want to live in a country where the central bank controls and monitors your ability to transact with other people?

Just last year, the Canadian government weaponized "debanking" in an effort to quell peaceful protests against vaccination mandates. They restricted the bank accounts of people who peacefully disagreed with government policy stances. And that was just with the status quo of deputizing private banks to enforce the sanctions against the individual citizens - imagine how much more systemized and effective it would be as a coercion measure if the bank accounts were directly managed and controlled by the government.

> What happens when it becomes so good that it's the only option?

Nothing is stopping banks from creating something better.

But not something cheaper.

If the government has to step in and fix your industry, you have failed.

I'm fine with an alternative that's also free. No need to pay me when I use the service.

Should I be feeling sorry for the poor banks that were too greedy to come up with this new payment solution? I'll try.

We're not a banana republic and actually have laws governing what the central back can do, and they can't block transfers without a warrant. Any private banking solution would be subject to same kind of laws.

Banks use Bank Secrecy Act as a cover to debank people. When you complain, banks retort that you agreed to their terms and conditions. Add machine learning and/AI to this mix: debank people because their algorithms flagged them as risky. Just as c-level executives use code language to talk to their yes-men to execute unethical and/or illegal activities. Now replace yes-men and code-language, with maching learning/AI; viola, perfect way to debank without any evidence of unethical doings.

This, ladies and gentlemen, illustrates the point I was trying to make.

OK.

But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.

There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.

> There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.

I guess there's technically a difference between "sending every transaction to the federal government in real-time" (FedNow) and "sending every transaction to the federal government, in batches three times per day" (the status quo).

But from a privacy standpoint, the two are functionally identical.

Can you clarify something? I thought FedNow was for settling up when I, as an ABC Credit Union customer, initiate a transfer of $5000 to you, a Chase customer. Now ABC needs to subtract it from my account, and if successful, tell the Fed to take money out of ABC's Fed account and put it into Chase's, and to tell Chase to expect $5000 (Transaction ID: XXXX?) and here's who it's for.

Does FedNow, or whatever batch job it is replacing, involve ABC telling FedNow "This is for a transfer from Jane Doe (SSN 123-45-6789) to Joe Bloggs (SSN 098-76-5432)"? As I imagined it, FedNow would only need to know what bank is sending and what is receiving.

You should do some research on the Automated Clearing House (ACH) system. It's how most bank transfers are done. Most ACH transactions will likely move over to FedNow as it's implemented. I believe both systems do account to account transfer, fed now is just faster and settled instantly, while ACH takes a couple days to settle.

> Most ACH transactions will likely move over to FedNow as it's implemented... fed now is just faster and settled instantly, while ACH takes a couple days to settle.

FedNow is more of an extension to ACH than a replacement for it.

Same-day ACH also exists, although it's relatively new. FedNow is faster than same-day ACH though.

Sounds like a European view.

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