Who Might FedNow Hurt in Tech or Consumers?

 Who Might FedNow Hurt in Tech or Consumers?

Did you just say, “Fed Who?”

Adobe Firefly generated image of magician floating gold coins in the air

If you did ask “Fed Who?”, don’t feel badly; so did I when I came across this announcement.

At first I thought, “Oh, that’s nice.” Heck, were I still working, I’d like getting paid instantly, which is what FedNow does: instant bank to bank (or credit union) transfers for businesses. And yes, even now I’d like my Social Security money and my retirement fund withdrawals to settle instantly. Yay!

But then I thought, sure, but if I’m on the sending side of this, wouldn’t I rather keep my money compounding interest for a few more days? I’m never in a rush to see money leave my bank, are you?

Well, maybe sometimes. If I were buying something I want right now and the seller wants my payment before handing it over, sure, I’d like this. I might be annoyed, but if that’s the only way I’m taking possession of my new 20 passenger jet for me and our friends to fly to my private island for my wife’s birthday party, fine, take my money now.

More realistically, if my favorite pizza joint won’t take credit or debit cards (and, in fact, they will not) and their ATM machine charges $3.00 to get cash (which it does), then again, I would reluctantly do this if offered.

But wait. The other articles I have read about this say that there will be no FedNow app and services like Venmo will not be able to use it. It’s bank to bank, so I’d be using my bank’s app to send the money. I do that with contractors now, but my bank sends a check, which is likely something they’d like to eliminate.

So Venmo can’t use it in their consumer app. PayPal? Apple? Apple does seem to want to be a bank, so I guess they might end up being part of this, but it’s confusing, isn’t it?

Credit Cards?

How does this factor in? I’d rather use Apple Pay where I can now — I get cash back. At supermarkets, I get 6% back (up to $6,000 spent per year) with my Amex card. But even if it’s the credit card who is absorbing those extra perks, the stores are paying processing fees for my card use, so wouldn’t they want to coerce me to use their FedNow app?

And how would they do that coercion? Do you remember when gas stations had a different price per gallon if you paid cash rather than used a card? Maybe some still do, or won’t take cards at all, like my fave pizza joint?

Let’s say that stores started doing that, adding fees for credit card use. Actually, my town utility bills do that right now. I’d be annoyed, but I’m solvent and have cash. I use credit cards to siphon a teeny discount with their cash back, but I don’t need to use credit.

Do we care about the poor?

Some people do have that need and they, the people who can least afford it, would be paying extra to get themselves further in debt. That’s not nice!

Let’s not do that.


There are other concerns. Some people fear that FedNow is a precursor to a national digital currency. That would be good for catching criminals and catching taxes, but it also carries privacy concerns. Crypto enthusiasts might not like that either, especially if digital currency made crypto payments illegal.

I dunno

I have neither very deep pockets nor very deep knowledge of our national financial workings. I am sure this will have some affect on my life, but I can’t guess if it’s for good or ill. As our government usually does what the folks with big money want, I would lean toward being wary, but really there’s no point: how could I protect myself anyway? Buy gold? Sure, maybe. But I can’t spend gold at the supermarket, can I?

Oh, well. It is what it is, and so shall it be.

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