You conveniently missed GP's follow-up sentence:

> FedNow exists but is supported by handful of banks which charge fees to use the feature.

What good is inventing a feature if almost nobody can use it?

For nearly 20 years the UK has had "faster payments", free instant transfers, now up to £1m, and while you can't send to a phone number, the routing numbers needed can't be used to withdraw so are generally safe to give to people.

Has it actually helped anything? B2C is still all credit card or (due to some weird regulation) cash because of the credit card fees being passed on.

Even before that Australia had bank transfers, the US had Paypal and now Zelle.

Mostly the curse of the first mover, with a dash of corruption for spice.

Part of it is "the curse of good enough": the US has had good credit-card style infrastructure for over a century and digital infrastructure since the POTS days. Part of it is that we lost our appetite for anti-trust in the 80s. Part of it is that the price structure of this infrastructure has wormed its way into everything in a way that is difficult to undo without causing high-visibility inconvenience for low-visibility benefit. The good-enough is the enemy of the good.

Payment processors and banks lobby for control over this. As usual, a service/product is bad because no one is allowed to create a better alternative, this is an almost universal rule. Specific to this case: the government is included in the list of parties not allowed to make it better.

Mostly deficiencies of the political system: regulators see themselves, call themselves and act like "watchdogs", whereas in other countries financial regulators act like shepherds and lead the market. Hence in this country relatively minor players with interests not exactly aligned with the general public can hijack the process. That's what we are witnessing.

Banks earn money on card payments and pay (via explicit fees or implicit fraud liability without compensation) for interbank transfers, so without any external forcing function (market or regulatory), it seems pretty clear to me why they prefer one over the other.

Not real time, but ACH is being forcibly sped up by regulators. [0]

> All U.S. financial institutions (Receiving Depository Financial Institutions or RDFIs) must participate and accept Same Day ACH credit transactions.

> However, sending (originating) Same Day ACH payments is optional for banks and credit unions.

[0]: https://www.nebankmn.com/assets/files/aijt34yD

Our federal representatives are mostly incompetent and technologically illiterate. When a large project does materialize, the funding is wasted on contractors who actively scam the government.

I think it’s the general desire for a “smaller” Federal government that instead relies on private sector solutions.

For other examples, look at adoption of login.gov vs id.me, and tax filing software solutions.

In most part of the world, the government just force the bank to join the payment system and restrict how they charge the customer.

In the USA, no single regulator have that power. Basically only congress can do something like this. The us Congress ain't famous for being fast, you know.

The Fed prints a fraction of a fraction of the actual money in circulation. Private banks in practice control the money supply. As such, they want to maintain their monopoly.

The countries that have innovated the most in regards to automated payments are the ones trying to escape US influence: look at PIX in Brazil, BRICS pay, etc...

In America, the payment system is an oligarchy, they protect their own (the bankers), what need is there for innovation when they are making a killing out of the current inefficiency?

The one place where the US haven't been slow is in stablecoins, making them dollar donominated, to ensure the monopoly the US dollar has on international trade stays strong. That way, when the US has a crisis, they take down the rest of the world too, to the joy of non-US countries.

It does. Outdated information RTP is what its called

Lobbying?

Venmo, CashApp, Apple Pay, and Zelle are free for person to person transactions and you get the cash in your account the following day.

I’ve never been in a position where I needed a cash transfer to an account the very same day, I have tens of thousands of dollars of credit available so there’s very little need for immediate transfers, at least for me personally. I do virtually all of my spending on credit cards so I have up to 60 days to pay the loan back without interest.

Others have pointed out that we do have this and there are some reasons it's not the same scale as credit card infrastructure, but I'll just observe there's a cultural difference

We've had a billion discussions on Hacker News about payment rails and it's invariably always a European incredulous that Americans can't/won't do a digital payment instantly and for pennies. These Europeans are typically operating with a mental model where they have cash in a bank account and every transaction gets funded from cash on hand.

Americans - for better or for worse - want longer cycles to pay for their charges and many want rewards for their spend. I don't think it's uncharitable to describe those who pull out debit over credit during a transaction as lower income and higher credit risk than those who prefer credit. (Europeans will decry that this is Americans living beyond their means. Maybe! Maybe.)

But when it comes to business, I've never understood this argument from Europeans. Invoicing works on net-30/60/90 terms. In B2B payments you could reduce payment cost by doing invoicing with instant low-cost payment in 30 days, but incur a different "cost" in cash flow management. Credit card payments are a risk-based financial product that does a magic trick of arbitrage for merchants between a service/good sold and payment received as a net-30 invoice to the cardholder, and you should expect to pay a fee for that. An economy where businesses need to pay each other immediately out of cash-on-hand is less dynamic and less efficient than one where all that cash flow can get smoothed out via payment intermediaries. (Money you have to keep on hand for bills is not being deployed doing other things in the economy - this is inefficient!)

For C2B payments, this is probably a helpful and lower-cost innovation over debit rails. But credit is a different product, financially and culturally, in the United States.

FedNow is still roughly an order of magnitude more expensive than the EU's TIPS (EUR 0.002 vs. USD 0.045, last time I checked) in terms of "sticker price", but yes, at least there's some movement, and as you say I'm not sure who actually pays that sticker price in the US.

The real problem is that, even if costs were to come down to zero, there is nothing incentivizing banks to actually make RTP available to their customers. In the EU, customer-initiated "push" bank transfers are considered an essential part of a checking account; in the US, they're not.

I want to send money between accounts I own in real time. I want to deposit money in brokerage accounts in real time. I want to stop connecting my accounts to services like Wise to make money transfers. I want to pay off a credit card and have that payment clear instantly. FedNow could enable all of this.

Purchases are an afterthought. A system like Brazil's Pix could be rolled out on top of FedNow.

> For purchases, the US has debit cards and Zelle.

Both are a very poor alternative to something like UPI or even EU-style bank transfers as a mass retail payment system. Cards are orders of magnitudes more expensive; Zelle has no standardized interface and is explicitly geared only towards P2P Payments, lest it cannibalizes the banks' golden goose, i.e. payment cards.

> same-day ACH is widely used, and again the delay allows more efficient netting.

Importantly, customer-initiated/"push" ACH is largely not a thing in the US, unlike in many other countries. This is what people unfamiliar with the US landscape often have a hard time understanding.

> A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods). FedNow, Zelle, wires, ACH do not and people have lost money by scams this way.

That's the crux of it: The US seems to be culturally unwilling to accept the risks (fraud) and rewards (practically free P2P and B2C payments) that come with a customer-initiated/push payment system.

Instant for USA banks doesn’t mean instant for USA banking customers, and deposits can be held per fed and banking policies for variety of reasons especially larger deposits. Also, it’s increasingly common to have financial routing intermediaries playing by different rules and non-insured financial accounts that result in no coverage when the money is spent/lost elsewhere and not returned to end customers. Take a look at Zelle case in New York and the nearly $100M customer funds missing with the Synapse bankruptcy.

My point is that these properly designed national systems should also be considered in the USA as well, and not dismissed because something is kind of working right now with a long list of exceptions to a good and safe experience.

Most other countries low value real time systems are also net settled (as opposed to RTGS systems which as the name suggests, use gross settlement).

Is this correct - A very important point is that debit cards offer consumer protections (chargebacks for unsatisfactory goods) - I was under the impression that only credit cards offer chargeback protection?

The Clearing House owns both ACH (automated clearing house)and RTP (real-time payments).

https://www.theclearinghouse.org/payment-systems/rtp

Zelle is pseudo real time. The settlement (mostly/often?) happens by ACH.

https://www.cjsoi.com/articles/fednow-vs-rtp-vs-ach

Why do you argue with fanatics? Even your sensible and informative post gets downvoted.

The networks exist, the product does not.