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Comment by explodingwaffle | Hacker News Reader

Brit here- I usually send money to friends and family using bank transfers with internet banking- it’s instant, there’s no fee (AFAIK) and all you need are someone’s account number, and sort code, which everyone has.

Is this just not an option in the states? It’s insane to me that y’all use (need??) third party apps for something as simple as sending money around.

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Zelle is basically the US attempt at instant bank transfers. You can set it up and use it through your participating bank's app or through their online portal.

> Is this just not an option in the states?

They are working on it: https://www.frbservices.org/financial-services/fednow/about.... should be available this year. Once it's up Zelle, Cashapp, etc will not be needed anymore.

Wow this is the first I've seen of this, amazing it hasn't come across my radar. Seems like a major consolidation, tied closely to a government institution (or whatever the FRB technically is).

Can you explain what you mean by consolidation? It's essentially a standards-based collaborative approach not unlike other large payment networks like in the UK, Europe and India.

Apologies for the armchair commentary. "Consolidation" meaning commerce regulation and oversight more tightly consolidated than possible with technology (including paper notes) currently used.

> ...standards-based collaborative approach...

You have not said this explicitly, but for myself it is notable that this is not peer-to-peer, with both parties collaborating based on a standard. Instead it is clearinghouse. Unlike peer-to-peer standards, this would give the Fed Reserve at least a large dataset or at most a large control lever. From the linked article:

> Through financial institutions participating in the FedNow Service... > Consistent with the Federal Reserve’s historical role of providing payment services...

Of course it's not peer-peer. Therein lies a lot of potential for fraud.

Do you have an example of a p2p system that doesn't show all the fraud issues rampant in modern crypto?

I believe FedNow is the US implementation of FasterPayments which we have had here in the UK since 2008, and what the parent is referring to.

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

FedNow is no different from Zelle; it seems to me banks could still mess it up, and most of the complaints here (that you can't reverse a transaction you sent) would still apply to it, since that's kind of the point.

I would wait and see. It's not like they're ignoring fraud management:

https://www.pymnts.com/news/payment-methods/2022/fednow-pilo...

"FedNow Service features will help participating financial institutions conduct investigations and provide returned funds connected to fraud and errors. Beyond mitigating fraud through the design of the service, Stanescu noted that the Fed is exploring opportunities to collaborate with the industry on consumer education and outreach programs to help identify and prevent scams and promote strong enrollment and authentication processes. In the meantime, the value proposition inherent in irrevocability remains intact: receivers have protection and a guarantee that good funds have hit their account and can be used immediately."

I disagree - it seems a lot more like SEPA in Europe. The non-reversibility seems similar to SEPA fast transactions (ie, similar to fedwire) as well.

The fact that they're using ISO20222 is also a clue that they're probably picking up best-practice from European and Asian networks.

My biggest complaint with Zelle is my bank helps me by including Zelle in my bank account with easy setup. Some banks it's just included. I'd like a hard lock out on it.

> Is this just not an option in the states?

Correct.

We also still use paper checks fairly extensively, and chip/NFC cards are a recent advancement.

There are a few bank-to-bank mechanisms (ACH, wire transfers) but they're slow (often multiple business days) and often have fees associated with them ($20+ for wires).

The lack of good transfer mechanisms is what has led to a proliferation of alternatives (e.g. Venmo, Cash App). Zelle has emerged as a bank-approved mechanism for "instant" funds transfer.

Zelle, what they're complaining about here, is that. It's not a third party app.

In the USA, sending a wire transfer is usually $15-$20, and some banks charge $20 to receive a wire transfer.

> sending a wire transfer is usually $15-$20

Will note that there are banks that offer sending and receiving wires for free.

Wow, did not realize that banks also charge for receiving incoming wires, but most of the big guys charge around $15: https://www.nerdwallet.com/article/banking/wire-transfers-wh...

And an additional fee it's it's 'overnight' and another fee if it's international.

Then they do a three-way call between the parties and the banks to verify the transaction.

Really? I've had wires come in over the years and never participated in a conference call.

> had wires come in over the years and never participated in a conference call

Same. That said, if your transaction history is sketchy (e.g. large cash withdrawals following international wires) or the wire is coming from or going to a high-risk place, e.g. Russia or Turkey, your bank may opt to do this as an anti-fraud / anti-money laundering measure.

Sending an ACH is nearly free, banks just don't expose it because of the very poor experience when you get one of the numbers wrong. You can ACH people all day with Transferwise.

FedNow is scheduled to come this year and provide instant money transfer. We already have delayed money transfer services run by the government.

Zelle is just a private sector solution since the government hadn't built it out yet.

This is possible if both people use the same bank (Bank of America, Wells Fargo, Chase), but even with the relatively consolidated finance sector, the odds of this are not super high.

Yeah, the USA is way behind many other nations here. Exercise left for reader as to why.

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