US banks have something mostly like this: Zelle [1]; the company behind it, Early Warning Systems, is owned by JPMorgan Chase, Bank of America, Capital One, Wells Fargo, PNC, basically every bank has a stake in it, and every bank supports it. And it works better than Cash App/Venmo; enter phone number or email address, get an instant direct bank-to-bank transfer, no fees, all from the normal bank app you'd already be using.
What we're really talking about with FedNow is not user-facing: Zelle runs on Mastercard Send/Visa Direct, but traditional bank transfers run on ACH, which is very antiquated. FedNow is supposed to replace all of this (though, who's to say if Zelle would actually use it; its possible Visa/Mastercard have stakes in it as well, and they'd lobby against it; but, even in those cases, Visa/Mastercard likely make heavy use of ACH somewhere, and they'd be using FedNow. Its all ACH all the way down)
Zelle's issue is really that most people don't know they have it. For example, Chase has had, for a very long time, QuickPay, which could be used to instantly send money to other Chase customers. Naturally, no one relied on it very often, because if I'm out for drinks with my friends, I'm not going to lead with "Hey, do you have Chase?". QuickPay now uses Zelle, so the bank doesn't matter, but people have their apps.
Its actually the exact same "problem" as WhatsApp is elsewhere in the world. Upgrades to the fundamental, platform-agnostic technologies (SMS->RCS, ACH->Zelle->FedNow) lose stickiness when people have "their app" they'd rather use. In my view, Zelle is one of the greatest tragedies in the US financial system; the banks did everything right with it, its an incredible product, but even very smart people I know refuse to use it, because its not Cash App or whatever.
What skeeves me out about zelle is there is no fraud protection unlike most other payment methods in the USA. So I'm going to continue to use venmo, credit cards, etc:
When people started trying to pressure me to use Venmo, my research at the time led me to the conclusion that it offers no guarantee of fraud protection either.
Just like PayPal before it, it's not a bank and doesn't have to follow any of the rules.
How it's legal to operate in such a fashion is beyond my ability to understand, but that's my understanding of the situation.
Seriously - check out your limits. I can ACH into the 100's of thousands but I can zelle basically nothing - I don't think you could run even a small payroll on zelle or make even a medium sized purchase with it.
The fraud story is horrendous.
The traceability and audit-ability of things is horrendous - seriously -> you CANNOT see where the funds are and no one will tell you / can tell you.
With a cancelled check image I get the back and I can trace down what account it went into if need be.
With a wire I get my reference number and can trace status that way.
With NACHA I can do Payment Trace Requests...
Zelle - forget it, the money is GONE and no way to trace who got it.
Zelle is horrendous and cannot die soon enough. How are people even considering this as a settlement service?
For context - Fedwire does something like trillions of dollars per day in activity. NACHA at least $100B per day+.
According to the Zelle website they have 924 partner financial institutions. If you total the number of FDIC insured institutions and the number of credit unions in the US the total is very near 10,000, so Zelle is very far from universal.
Today was the day I discovered Zelle was same day deposits as I had just assumed like everything else before it, that there would be 2-3 day settlement. US Banks are comically bad at branding and user experience and the lack of cooperation between them all historically has left a pretty bad taste in the mouth, leading to my own ignorance displayed here.
What we're really talking about with FedNow is not user-facing: Zelle runs on Mastercard Send/Visa Direct, but traditional bank transfers run on ACH, which is very antiquated. FedNow is supposed to replace all of this (though, who's to say if Zelle would actually use it; its possible Visa/Mastercard have stakes in it as well, and they'd lobby against it; but, even in those cases, Visa/Mastercard likely make heavy use of ACH somewhere, and they'd be using FedNow. Its all ACH all the way down)
Zelle's issue is really that most people don't know they have it. For example, Chase has had, for a very long time, QuickPay, which could be used to instantly send money to other Chase customers. Naturally, no one relied on it very often, because if I'm out for drinks with my friends, I'm not going to lead with "Hey, do you have Chase?". QuickPay now uses Zelle, so the bank doesn't matter, but people have their apps.
Its actually the exact same "problem" as WhatsApp is elsewhere in the world. Upgrades to the fundamental, platform-agnostic technologies (SMS->RCS, ACH->Zelle->FedNow) lose stickiness when people have "their app" they'd rather use. In my view, Zelle is one of the greatest tragedies in the US financial system; the banks did everything right with it, its an incredible product, but even very smart people I know refuse to use it, because its not Cash App or whatever.
[1] https://www.zellepay.com/