MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
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The payments impasse
By EmmaZahn on Tue, 01/07/2014 - 2:38pm |
a techie’s viewpoint into a question which many non-Americans have when they start living in this country: how on earth can can moving money from one person to another be so difficult, expensive, and time-consuming?
The simple answer ... is that we’re suffering from a particularly toxic combination: an outdated payments system combined with a seemingly powerless central bank, which is happy to let the big banks dictate the pace of change (or lack thereof). And as American Banker’s Kevin Wack explained in a great piece last November, the big banks are very good at vetoing even incremental improvements in the US payments infrastructure.
[...]
The Fed is a bit like a hippy parent: it doesn’t want to force anything on its charges, it wants them to change on their own. And so it asked for responses to its paper, which can be found at a dedicated website. If the Fed had any doubt about the banks dragging their feet, then the responses will certainly have put those doubts to rest.
The responses from The Clearing House, Nacha, and the American Bankers Association all basically say exactly the same thing (which is not surprising, given their highly-overlapping memberships). Do we really need instant funds transfer? Can’t we just have instant messaging saying that the funds transfer will happen, instead? How are we going to make money doing this? Do you have any idea how expensive it’s going to be? Don’t you know that we already have a massive regulatory burden? This is no time to ask us to do even more. (Although, by the same token, it wouldn’t be fair to allow non-bank competitors like Ripple to compete against those of us who have many more regulators.) Besides, just thinking about the cybersecurity aspect of the whole thing makes our heads hurt!
URL:
http://blogs.reuters.com/felix-salmon/2014/01/06/the-payments-impasse/
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Comments
Anyone who has had to exchange payments internationally or has had to deal with clearance of large checks will agree that this is a good topic to rant about. It will also be clear to such persons that the excuse examples given by banks in Salmon's article are so much b.s., that what they really want is to continue to be able to play with other people's money for a couple days....
Edit to add: before the screaming starts about this being an exclusively rich people's problem, I would like to point out where there are many situations where a large payment by Peter to John is mostly going to end up paying Paul. But Paul and his employees have to wait until the bank is done playing with the money. Because there's no way that John would ever have enough in his account to cover that kind of payment while the bank plays with it.
by artappraiser on Tue, 01/07/2014 - 4:49pm