[teraflop]

I wish there was a bit more detail about this part:

> The initial release of the FedNow Service will include features to help banks manage fraud risk and mitigate fraud losses. [...] In addition, there will be tools that help a financial institution investigate erroneous or suspected fraudulent transactions.

Let's say Alice's "Bank A" processes a FedNow transfer of $1,000 to Bob at Bank B. What happens if Alice calls her bank and says the payment was unauthorized?

If Bank A investigates, and finds evidence that Bob hacked Alice's account, do they then have to call up Bank B and persuade them to return the money? Does the Fed get involved as an arbiter? Or is Alice just out of luck?

(To be fair, I'm not sure exactly how this happens behind the scenes with credit/debit cards, either.)

[Animats]

I'm wondering about that. This is a debit transaction that clears within seconds. The recipient has good funds immediately and can take them out of the destination bank, just like a wire transfer. Or, for that matter, cryptocurrency.

ACH is daily. It really is a batch system, with a daily batch at 4:30 PM Eastern Time, and settles around 6 PM. There's a whole "undo" system built into ACH. FedNow does not have "undo".

Credit card transactions have good consumer protections in US law. The whole concept of credit card transactions is that you buy something and pay for it. Both the "something bought" and "pay for" parts are logged. And you have to be a "merchant" to accept credit cards. So you can order stuff and get a refund if it doesn't show up.

FedNow, like Zelle, seems to be only have a "pay for" part. It just sends money. Using this service with any unknown payee for anything you haven't already received (such as dinner) is probably a bad idea.

The Fed's discussion of FedNow fraud is not comforting.[1]

[1] https://www.frbservices.org/financial-services/fednow/instan...

[seewhydee]

There are tons of everyday use-cases where it's preferable to sacrifice fraud protection to achieve instantaneous money transfer. Credit card companies have normalized using credit cards (with their attendant fees) for all sorts of small-denomination transactions, like public transportation, where the fraud protection machinery of the credit card system is of negligible benefit; it's a rip-off.

[Animats]

That makes sense for those stored value "gift" cards that are on racks at drugstores. But FedNow allows transfers of up to $100,000 at launch. That's big for instant irrevocable transfers.