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Comment by tudorconstantin | Hacker News Reader

Of course banks can do it better with the traditional technologies. They operate in a centralized, trusted and regulated environment. Their consensus algorithm is "settling disputes in courts".

And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer.

The blockchain technologies will disrupt the banks themselves, because they are the intermediaries in this industry. I can receive the equivalent of $1 mil in BTC from oversea in less than 10 minutes and the sender pays fractions of a dollar in fees.

The banks will be in a tough position the more people accept payments for their services and products in BTC. We're not there yet, of course, but who knows where we'll be in 5-10-20 years.

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> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer

U.S. dollar Fedwires are “immediate, final, and irrevocable“ [1] regardless of from where they are initiated. If your EU bank takes 5 business days to swap between the world’s two most liquid currencies, you have a uniquely shitty bank.

[1] https://www.federalreserve.gov/paymentsystems/fedfunds_about...

> In 2008, approximately 7,300 participants made Fedwire funds transfers. The Fedwire Funds Service is generally used to make large-value, time-critical payments.

seems like maybe the crux of this discussion is that, all of the sudden the features of banking have been automated. that’s definitely not the same as “the features of banks, regulation, etc...” have been automated.

But certainly, we can see that the Fedwire is not a consumer product, where BTC clearly is

> In 2008, approximately 7,300 participants made Fedwire funds transfers

To be a Fedwire participant you have to be a Federal Reserve member, i.e. a bank. Consumers arrange Fedwires through their banks. When I send a wire, I'm not a Fedwire participant--my bank is. If you have a U.S. dollar bank account, you have access to the international Fedwire system.

Fedwire is only usable by banks that have a working relationship with the Federal Reserve, which will only be large international banks with a US presence. With most international transfers you're stuck with SWIFT, which is complete garbage. Hopefully replaced by Ripple entirely ASAP.

> it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer

Only if you use a wire transfer. Payment by credit card is instant and costs about 1% for the merchant and maybe another 1% in change fees if there is a currency conversion needed.

>Payment by credit card is instant

Hardly. Chargebacks on credit cards can occur up to 3 months after payment. Good for customers who need that dispute feature but bad for others because those costs are socialized onto merchants and other consumers.

Chargebacks are a feature for settling disputes, not a bug. Payment is still instant unless there is a dispute.

>Payment is still instant unless there is a dispute

If that was the case a merchant could withdraw cash immediately after someone paid them with a credit card. Which patently isn't the case. So no, Payment cards are not instant.

The payment happens and confirms instantly. Withdrawal of funds from the payment processor is not the payment, because payments are not limited by 'time to cash liquidity'.

Right and is there a problem with making our world more liquid?

Nobody said there was.

>The payment happens and confirms instantly.

Let's say that merchant accepts payment via Visa on Day 1. On Day 2, Visa goes out of business. The merchant will never receive the payment. So no the payment is not instantaneous. The merchant receives an IOU from Visa that settles in a few days. IOUs != settled payments.

Yes, in your carefully crafted hypothetical where a billion dollar company goes out of business tomorrow, it means that company can't make payments tomorrow. What about nuclear winter? Dissolution of the U.S.? Alien invasions? We need account for these hypotheticals too when discussing the validity of payments.

The delay event(bankruptcy, Visa’s servers go down for an hour) is meaningless. The point of debate is “Is the payment settled?”. To which the answer is a simple “no”.

This is one of the problems with cryptocurrencies though. Consumers are unlikely to accept a system where they can't contest charges, either through a trusted large institution (e.g. Visa) nor through the courts. I haven't heard an explanation yet of how to solve that without layering on central authorities, which undermines the decentralization that's supposed to be crypto's #1 advantage.

This article has a good explanation of that concern, among others: https://hackernoon.com/ten-years-in-nobody-has-come-up-with-...

>And still, it takes up to 5 days to receive a payment from USA in the EU and the sender pays 40$ for the wire transfer.

Transferwise

Whats to stop a new bank springing up and allowing transfers a lot faster and cheaper using traditional methods?

What's stopping them is a simple question: who are you transferring the money to?

A lot of banks allow customers to do instant transfers between customers of that bank, but for this to be a killer feature, you have to have enough customers that this is significant. In NYC, Chase is almost there--they have enough of a share of NYC that it's worth asking if the person you're transferring to has Chase so you can use their instant transfer system.

But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly--it doesn't give you a competitive advantage, while processing slowly allows you to collect interest on the money while it's in transit.

> But the vast majority of transactions are still between customers of different banks, and there's not much reason for a bank to process a competitor's payment quickly

But they're doing exactly this now with Zelle.

Interesting, I hadn't heard of them and I don't know enough about their business model to comment.

Zelle sounds great, and I really want it to work, but my experiences with it so far have been really frustrating.

3 separate experiences:

1. My friend was sending me $750, and had to structure it as 4 separate payments each 24 hours apart due to some sending limit that either Zelle or his bank imposes.

2. I sent my brother money, and for whatever reason he had trouble accepting the transfer, so I had to resend it a week later when it failed.

3. Someone sent money to me, and it was my first time using Zelle, so I had to login to my bank after clicking a link in a text. But after logging in, nothing happened... It didn't tell me where the funds went, and they weren't in my account. 3 days later they magically showed up. I think the transaction was pending??

Do you really have to ask? Is it a separate system or something?

In Australia, you must pay using the normal way (which is pretty much always free), and if it’s the same bank it’s processed instantly and if it’s not it’s processed generally overnight.

Pretty much everybody’s moving to a new real-time payments platform in the next few months too, so it should just always be instant for domestic transfers.

well, to transfer money between banks requires the use of the ACH system (or a wire transfer), but looking at how ACH works https://www.nacha.org/ach-network it essentially requires that your money get processed by what is essentially the federal reserve's mainframe computers. Given that these machines only process transactions during government business hours, such a delay is reasonable.

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