Thread by @astrange

1) The lack of a universally adopted real time payments system in the US is one of our largest regressive taxes.
@sm90 and I discuss in the latest episode of @a16z 16minutes pod:
a16z.com/2019/08/11/16m…

2) Most employees live paycheck to paycheck and come dangerously close to 0 balance. With impossible to predict delays (in paychecks, $ from checks being available or cashed) - every mistake results in a $30 overdraft fee...adding to $34B in overdraft fees last year.

3) It's the people who need their cash the most who suffer the most from these payment delays. Why pay 1-5% of your check to cash it immediately when banks do it for free? Because you can't afford to wait the 2-7 days for the bank to clear it.

4) Interestingly - we HAVE a real time payments network in the US. It's run by the Clearing House - an association run by many of the large banks. The problem has been adoption by the rest of the 10K banks in the US.

5) Why has adoption been slow? For one - the Fed has been talking since 2015 about building a network. So there's been some "wait and see". There is also a reticence/mistrust to allow large banks to own such critical infrastructure and pricing control.

6)What’s the recent news? The Fed is entering the market and plans to launch an RTP network “FedNow” - technologyreview.com/f/614085/the-f…

7) Impact of FedNow? or Fed "5 years from now" as the expected delivery date is 2023/24. I hope we don't need to wait 5+ more years for nationwide adoption. There is the opportunity in the short term to incent/regulate more banks to join the existing network while building new.

8) The Fed plans to act as both a regulator and an operator -- as it does with ACH (we have 2 networks). Hopefully the announcement of FedNow will further shine a light on this regressive tax and prompt faster progress (Countries like the UK have had RTP for 10+ years!)