You’re way off. The money earmarked for that project is $15 million, and it’s for a study on how the IRS would implement such a system.

The IRS has been underfunded and understaffed and demonized for a couple of decades. They've been strictly not allowed nor funded to develop online or automatic tax filing for awhile now, largely in part due to lobbying from intuit, H&R block, etc. I've worked in tax for a few years now, and that's basically the simplified overview of the situation.

First you cut the budget for decades, then you complain why the agency needs more money to do the job they should have been doing decades ago.

Are you equating Zelle to Faster Payments? No offense, but I really don't think you know enough about payments clearing if you are making such a statement.

Here is why: I still have people I can't send Zelle payments to because they bank with some random credit union. I can ACH anyone. ACH is managed through the "partisan" Federal Reserve.

Also, not sure if you're aware of the irony of your statement on no government involvement. Zelle originated at Bank of America, JP Morgan Chase, and Wells Fargo in 2011. Three of the largest recipients of bailout funds after the 2008 financial crisis. So, technically, Zelle wouldn't exist without government involvement.

The real american way is to add layers of inefficient private middlemen to barely solve problems that were done efficiently in giant majority of different countries, while paying 2x-10x for it. Healthcare, taxes, payments.

Got it in the edit, thanks!

While that may be the true in the cases of very small countries, on the other hand, Europe generally has even stricter regulations than the US and it also has better payment systems, so I'm not sure that the problem with the US taking so long to achieve this is necessarily due to having more regulations than other countries.

The US also has recently seems to have a hesitance toward introducing new regulations that actually seems to have made it harder to change things like these in cases where the private sector isn't able to take the initiative on its own.

UPI exists in India. And m-Pesa in Kenya. Neither are small countries or lightly regulated. At this point, US digital infrastructure is just objectively behind everyone else.

It absolutely is a technical challenge, and all of the above: risk, compliance, regulatory, technical. Small countries can achieve fast transactions because their risk is lower, their complexity is lower, their compliance burden is lower, and their technical burden is lower, because they are...smaller.

The migration to ISO 20022 is in full swing, finally. We will get there.

I think a robust transaction processing system, which can scale and handle as many transactions as you can imagine, complying with regulations while not having any single points of failure does count as a technical challenge. I don't think this sort of database is allowed to ever go down.

Or just having far fewer banks that need to be involved, instead of the roughly 5k we have in the US.

Changing from a clearinghouse net once a day settlement to real time gross settlement is a huge change especially if you are a small bank running ancient software.

The UK launched its Faster Payments network in 2008

Doubtful, considering "Chinese" technology is often American technology + state-sponsored espionage.

Plus, I think the Buy American Act had the IT waver removed, no?

There‘s nothing fake about a bank or payment service provider giving you access to unsettled funds if they can be reasonably sure that they will ultimately be made whole.

Banks are required to make the first $200 or so of a deposited check available immediately, and at that point it‘s not even clear if the check will clear, much less has the money already settled.

What‘s important to have in real time is a payment guarantee, but of course it helps the receiving institution with liquidity management if the settlement itself is also instantaneous.

Normal bank transfers can also be reversed, if something goes wrong, can't they? (Eg if there's fraud or whatever?)

I have three bank accounts and it's difficult using Zelle. I use a different email with two, and a phone number with the other one. But sometimes I forget which account belongs to which email. It's idiotic.

That's one problem with Zelle.

Another is that if you live overseas it is really hard to get it to work, even with a pre-existing US bank account.

And you can't make Zelle payments to someone who is not on Zelle. While in theory that's also true for ACH, bank wire transfers have been a thing basically since the invention of wires (telegraph).

Sorry, in my experience Zelle is a major step backwards with severe loss of functionality and greatly increased risk exposure.

zelle uses email or phone as identity. So you can create as many zelle accounts as bank accounts with email aliases.

My credit union is integrated with Zelle. I had to go through a special process to do straight ACH transfers, they kept wanting to direct me to Zelle but I need to regularly do transfers beyond the Zelle limit (business payments).

If this all works it will be an interesting culture shift.

Yes, because "transferring money" is a CORE BUSINESS FUNCTION of banks!

Major step backwards for them to outsource this. Your absolutely right that you should not need another app or service to enable your bank to do its job.

Eru has a decent HN reputation, so I'll engage.

First, the private sector is not handling this well.

Second, we are talking about core infrastructure of society. The question of what is best to solve this, business or government, is indeed complex.

Business tends to work well when the value created is short-term and can be easily measured and captured by the entity creating that value. For example, a grocery store.

Government tends to work well when the value created is long-term and diffuse, and doesn't have a single point of capture. For example, the road network which the grocery store relies on to get both its goods and its clients to the store.

A nation-wide payments system seems to me to fall clearly into the second category.

Note that eru is from Singapore, truly a great country where the government has many examples of striking a good balance along the above lines. It isn't perfect, but it is one of the best in the world.

Given the slow pace of the government, I would be okay with government run grocery stores. We would still be a good half a century away from them considering self checkout, so they would still staff human cashiers, which you don't find in private grocers, these days.

Isn't it a scary precedent that the government wants to compete with private enterprise, while publically funded?

In what way is it more "secure"?

How is India's system any less secure?

I think the thing is, because the system in the US was developed much earlier, it might have become more difficult to switch over to newer technology. Leapfrogging [1].

[1] https://en.m.wikipedia.org/wiki/Leapfrogging

Its really less secure. There is no seperation between identity and authentication so stealing a cc number would be enough to complete a transaction whereas a UPI Id won't help you much to steal money.

This is why you need to depend on nasty solutions like chargeback

Man, Pix doesn't get enough love honestly.

A payment system that is so cheap (free), fast and intuitive that people use it as a messaging system (via transaction description field).