Netflix is part of the RFP Work Group. So presumably they are interested in offering consumers the ability to pay for Netflix using FedNow instead of a credit card. Instead of Netflix paying ~$0.50 in credit card processing fees per U.S. subscription they'll probably be able to find a bank willing to charge them < $0.25. It also gives consumers more control as they have to authorize each charge.
I do wonder how stuff like this will shake out. I will use a credit card, always, with any vendor that doesn't pass along credit card fees to the customer in some way. (Why would I choose otherwise? The credit card gives me rewards, and better fraud protection.)
But more and more, I see companies charging "convenience fees" for credit card usage or offering "discounts" for cash/debit. Hell, T-Mobile just started requiring you not use a credit card to get their $5/mo autopay discount.
So this is all cool (and perhaps would make it easier for people who don't have a credit card to pay for Netflix), but I don't see why I'd use anything but a credit card to pay for my Netflix subscription, unless they offer discounts for using FedNow. Which... they probably won't?
Currently FedNow is simply a push payment system i.e. bank account holder may be able to use FedNow to push money out from their bank account to someone else's bank account.
The limitation here is the bank account holder must know the account number of the recipient. This is a huge limiter in adoption since most people don't want to share their bank account numbers and maintaining a directory of people's bank account numbers is cumbersome to say the least
Yes, the Fed is working on a directory but they have not yet announced the launch date for such a directory, not have they mentioned the index i.e. will it be phone number ? email ? something else ?
Bottom line: FedNow launch: Step in the right direction but still a long way to go
Yes. Visited a T-Mobile store to set that up. Brought in a voided check. Said "Set up an ACH transfer, please." "What's an ACH transfer?" Took about half an hour, two rejects from the T-Mobile payment system with both me and the clerk checking the numbers, and a conversation with Bank of America customer support ("We didn't reject that, we won't see it until the daily batch.") Too many people are going to be paying T-Mobile a $60/year "convenience fee".
(Worse, BofA is apparently still charging for outgoing ACH transfers. And they're not on FedNow.)
I think every vendor passes along the fees, either in aggregate through pricing, or to the individual as a charge. At least in the latter case it is more transparant and fair to non cc users.
Most bills are paid using this exact system. Credit cards are very rarely used except in-person. Since you have to accept (or tell your bank to always accept certain vendors) debits using this system, there’s never any surprises. You usually have nearly a week to accept a debit.
I guess that includes some very small values, but the upper bound seems ridiculously high.
I'm just randomly curious: do you know which Federal Reserve Bank FedNow was developed at?
Other than with credit cards, there are no costs for customer kickbacks and chargebacks.
I can't imagine netflix giving up the stickiness of automatic recurring billing to say <2% of the transaction cost.
At least in the EU, a recurring billing over bank transfer is totally a thing...
I had no idea it was the opposite in the UK.
Edit: with the exception of writing physical checks, of course. I use those when the receiver doesn’t accept Venmo or Apple Pay.
For payments to friends we use bank apps. Usually the receiver generates a QR code for the payment on their phone, which you scan from your bank app, sign with a pincode, and the payment is executed immediately. If you are not near you can also use their account number to transfer money instantly.
No, there's already Zelle, which is fairly popular now, though not as ubiquitous as instant bank transfers in other countries: https://en.wikipedia.org/wiki/Zelle_(payment_service)
The larger banks have their own systems that only work within the bank; some smaller banks offer systems that work with any bank that offers the same system.
ACH exists, and I've used it to move money between accounts I own, but there is some friction to set up. I don't know anyone who uses it for C2C payments.
That seems rather excessive. Why on earth are Polish bank accounts so long?
The interface is very weird. Many people can't figure out how to use it. I ended up having to set up new email addresses and assign them to different bank accounts in order to distinguish my accounts.
Zelle is run by Early Warning Services [1], a joint venture between Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo.
It's most definitely not "government-based".
1) The recipient needs to download the app and sign up. How does the Payor know whether the recipient has Zelle app or not
2) Even with the app, there are only about 50-100 banks that allow Zelle transfers. If someone's bank does not offer Zelle they are directed to enter their Debit Card number using "Push to Card" to receive the funds. While the funds land up in the bank account instantly either way, some Debit Cards have limitations and will not be enabled to receive funds
3) Zelle is essentially a "messaging layer" i.e. the actual settlement happens overnight using ACH rails. As a result the sending as well as the receiving bank are taking some risk in terms of allow the recipient to withdraw money when the underlying settlement hasn't happened. If the settlement fails the receiver's bank will need to claw bank the money from the receiver As a result there are some really low limits on daily transfers i.e. between 1-2K/day for most banks
4) Above all Zelle (like most other payment rails ) is a push system i.e. one can push money using Zelle. One may not pull money using Zelle
* Zelle is basically better bank transfers and is already supported by many (most?) US banks: https://en.wikipedia.org/wiki/Zelle_(payment_service)
* Random 'third party' money transfer services like Venmo, Cashapp, Paypal, etc.
But similar to messaging in the US, the main issue is fragmentation. There's isn't quite a national consensus like some other countries have.
And Zelle is a bank to bank transfer network, not a third party service.
1) Write a physical check (2-10 days from deposit, usually 2) 2) Use ACH (a virtual check) (2-10 days, usually 2) 3) Fedwire which costs $10-$15 to both the sender and receiver (15 minutes).
