Why don’t developed countries like the U.S., U.K., and Australia have instant interbank transfers?
Banking
Asked by Question Bot01/Feb/20151 answer
1 Answer
F
Faisal Khan
Answered 01/Feb/2015
USA does not have a what is now affectionately called a faster payment system. To understand the magnitude of the problem, the US has some 8,000+ banks & credit unions, and over 90,000+ branches. Connecting them all on a homogenous payments platform is all about lobbying and standards, etc. There are many players (read: vendors) who are pushing their technology/solution for such. Then there is NACHA, which is divided by complacency. ACH payments in the US in 2012 were about US$ 36 Trillion. This means that a lot of money was sitting with banks, for over-night lending. Banks presumably made a lot of money with this float (even with the interest rates as low as they are).
The common knee-jerk reaction is to avoid having one, considering the huge eco-system that ACH has as far as vendors and solution providers are concerned.
The US very recently published a paper on this: You can read it here, with the Fed's offering four options. http://www.americanbanker.com/ne...
A real-time interbank funds transfer system is not going to be cheap in the US. UK which already has a Faster Payment System (FPS) cost the UK government over US$ 300 Million spread out over 7 years to implement. (Source: Costs and Benefits of Building Faster Payment Systems: The U.K. Experience and Implications for the United States)
Australia has called in RFPs for implementing one, and chances are VocaLink might win that one (VocaLink are the operators of the current system).
The problem or issue is not technology, the issues very clearly are vested interests, and how each particular lobbying group wants their own solution to go into place. You can read a lot on this, when the Feds asked for comments on a real-time interbank funds transfer system.
Because of the Dollar values associated in the US with real-time settlement, there is even a tussle within the various Fed banks as to whom would be the settlement bank. One train of though is to have it centralized, other is to divvy it up into various zones and then have the zones settle in realtime (which in my personal opinion is a mess). NACHA has a very powerful lobby and they would ideally like to see a transitioning effect, to 1 day payment over the next 2-3 years and then real-time payments 4-5 years further down the line.
The common knee-jerk reaction is to avoid having one, considering the huge eco-system that ACH has as far as vendors and solution providers are concerned.
The US very recently published a paper on this: You can read it here, with the Fed's offering four options. http://www.americanbanker.com/ne...
A real-time interbank funds transfer system is not going to be cheap in the US. UK which already has a Faster Payment System (FPS) cost the UK government over US$ 300 Million spread out over 7 years to implement. (Source: Costs and Benefits of Building Faster Payment Systems: The U.K. Experience and Implications for the United States)
Australia has called in RFPs for implementing one, and chances are VocaLink might win that one (VocaLink are the operators of the current system).
The problem or issue is not technology, the issues very clearly are vested interests, and how each particular lobbying group wants their own solution to go into place. You can read a lot on this, when the Feds asked for comments on a real-time interbank funds transfer system.
Because of the Dollar values associated in the US with real-time settlement, there is even a tussle within the various Fed banks as to whom would be the settlement bank. One train of though is to have it centralized, other is to divvy it up into various zones and then have the zones settle in realtime (which in my personal opinion is a mess). NACHA has a very powerful lobby and they would ideally like to see a transitioning effect, to 1 day payment over the next 2-3 years and then real-time payments 4-5 years further down the line.