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Comment by galkk | Hacker News Reader

The announcement is very unclear. What I as layperson will get from it?

Is it an app FedPayPal/Fedmo that I will be able to use for sending funds? Is it something that will be used by other apps to have cheaper funds transfer? Because if it is latter then I'm afraid that entrenched players will just keep doing what they're doing, keeping the profits but offloading processing to that system if it will be cheaper.

The fees by Paypal/Square/Stripe even Visa and Mastercard are enormous. Personally, I strongly believe that if one will dig deep enough he will find cartel there that sets prices. And when that will happen, LIBOR scandal is going to be a kindergarten play.

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This is not a consumer-facing, social payment platform (e.g. Venmo), it is another payment rail (e.g. ACH, wires).

Laypeople are not the target audience for this, payment rail users are (i.e. entities who regularly utilize ACH/wire transfers or build services on top of them).

> Laypeople are not the target audience for this

Why not? There is no reason you couldn't buy a coke with it, with a fraction of the usual credit card fee. It just needs to be implemented.

Same reason that laypeople are not the target audience of AWS. It’s a building block you use to build a product, not a product.

Not necessarily. In Germany we have "GiroPay", which literarily redirects you to a prefilled form in your online banking website. You have to choose your bank, enter your PIN, and click "okay". It's basically the same complexity as PayPal. (It's not hugely popular currently because it's fairly new and credit based services like PayPal have a headstart.)

But GiroPay is a product built on whatever payment rail is in use in Germany. In the same vein you need "FedPay" to make this as easy for the consumers. FedNow by itself won't really cut it.

Sure, but the overhead is pretty minimal.

So something like Stripe would benefit from this?

Basically you know how you can ACH payments from your account to someone else’s and back but it only happens the next morning as long as the next morning is a business day? Now it would happen instantly on any day.

ACH has had same day payments since 2016. If your bank takes until "next morning" then that's your bank's problem, not ACH's.

https://www.nacha.org/resource-landing/same-day-ach-resource...

That said, FedNow is still an improvement over ACH. ACH is fundamentally batch-based processing, they just run the batch multiple times per day now. And all the batch times are East Coast biased, so people on the West Coast get worse service.

As I understand it, eventually this should lead to ubiquitous, cheap/free, instant payments, similar to UPI in India. That can be very convenient and useful.

Now, obviously there are various competing services for this kind of use case already: Venmo, Cashapp, Zelle, etc. So maybe it won't be better enough to feel like an improvement, but that's the aim.

This is third on their list of FAQs:

> Will there be a FedNow app for me to use?

> No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features on their mobile apps, banking websites, or other interfaces such as those used for business payments. Bank and credit union customers will probably not even see the name "FedNow" on their bank's instant payments platform as the FedNow Service is the high-speed highway that helps payments move from one financial institution to another. Banks and credit unions build new products for their customers that connect to the highway.

https://www.federalreserve.gov/paymentsystems/fednow_faq.htm

You go your bank and set up a bank transfer, check the box to save details to your contacts if desired, and then hit the submit button.

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