1) The recipient needs to download the app and sign up. How does the Payor know whether the recipient has Zelle app or not

2) Even with the app, there are only about 50-100 banks that allow Zelle transfers. If someone's bank does not offer Zelle they are directed to enter their Debit Card number using "Push to Card" to receive the funds. While the funds land up in the bank account instantly either way, some Debit Cards have limitations and will not be enabled to receive funds

3) Zelle is essentially a "messaging layer" i.e. the actual settlement happens overnight using ACH rails. As a result the sending as well as the receiving bank are taking some risk in terms of allow the recipient to withdraw money when the underlying settlement hasn't happened. If the settlement fails the receiver's bank will need to claw bank the money from the receiver As a result there are some really low limits on daily transfers i.e. between 1-2K/day for most banks

4) Above all Zelle (like most other payment rails ) is a push system i.e. one can push money using Zelle. One may not pull money using Zelle

Currently FedNow is simply a push payment system i.e. bank account holder may be able to use FedNow to push money out from their bank account to someone else's bank account.

The limitation here is the bank account holder must know the account number of the recipient. This is a huge limiter in adoption since most people don't want to share their bank account numbers and maintaining a directory of people's bank account numbers is cumbersome to say the least

Yes, the Fed is working on a directory but they have not yet announced the launch date for such a directory, not have they mentioned the index i.e. will it be phone number ? email ? something else ?

Bottom line: FedNow launch: Step in the right direction but still a long way to go

Getting a new bank charter since the financial crisis of 2008-2009 has been virtually impossible. The number of banks in the US in the past decade or so has come down from ~6K to ~4K. New licenses for banks (State or Federal ) since 2008 have been negligible. So, let's buy a "small" bank. So far so good

Next part is core banking software as well as Money movement software. This is where is gets interesting.

Smaller banks use Fiserv/FIS/Jack Henry (and a long tail of other core banking providers) and larger ones have a mix of systems with legacy cores e.g. DXC, Misys and bunch of others. While it's tempting to build an entire banking stack from ground up it may not pass regulatory and compliance muster for a while. Plus even some the legacy cores have now built a rich RESTful API. Would be interesting to know how much of the core was built in house over the past 3 years

Next part is Money Movement. This is where ACH, Push to Card, Fedwire and RTP come in

ACH isn't that bad. Most banks use ACH "aggregators" which in turn connect to one of the two ACH Operators. Once a bank has a business relationship with the Fed it's not tough to connect to these aggregators and simply sftp files to/from them

Push to Card is available through VISA Direct and MC Send. Given their financial resources and fintech background it wouldn't be difficult to get a connection going there

RTP would be an interesting one but a relatively easy one since the Clearing House is already used to working with multiple banks and have "plug-ins"

So, now it all boils down to the business procedures and KYC/KYB on Fintechs that want to use Column's services. This can be done very efficiently online

The T&Cs are heavily skewed in favor of column. Some of them may be unenforceable. But those can be negotiated

There are 2 parts to any payment, the sender side and the receiver side. Bill.com has historically pulled all the funds from the sender's bank account and held them in a custodial bank account controlled by Bill.com to pay out the recipients

They have earned float on this amount and given they are a public company you can see from the historical statements what percentage of their earnings are from carrying such float. (It depends on the interest rate and given the rates have been low recently it was about 10%-20% historically, may increase or decrease)

They have decided to do the same on the receiver side now i.e. instead of disbursing funds to the recipient they will simply hold them until the recipient manually collects them. This is somewhat unprecedented in the payments world - I don't know of any other Business payments processor doing it. It's basically a paypal type wallet being foisted on the recipient without an opt-in

In so far as "Are they allowed to do so" ? Bill.com is registered as a Money Transmitter (not a bank ) so in partnership with their bank they can do this. From the principles of ...let's say "generally acceptable payment processing rules" this is bad, particularly since it's an opt-in

There are multiple other alternative payment processors available, including the company I work for

Recipient can Deposit them online by verifying their bank account instantly, no signup. no login, no app to download. Basically we are doing to paper Checks what Stripe and Square have done to the Credit Card space. We’re in midst of our Series A, seeing exponential growth, have a small but great team and super investors (Tim Draper, Naval Ravikant/Kevin Laws of Angelist, our customers and many more ) i.e. this would be a good time to join.

Looking for both a back-end as well as a front-end engineer. Need to have a strong background in being able to write scalable software, preferably multi-paradigm, disciplined. I’m the Founder of the company - this is a “founding team” level opportunity - you’ll be working with me and other core people in the team. Work hard - play hard.

Our tech stack is Python, Angular, Postgres.

We move fast - if you’ve done a hackathon - we’ll probably want to do one with you and it’ll be clear if we are a mutual fit

Email admin@checkbook.io or pj [at] checkbook.io

VISA/MC are aware of this. They expect "Interchange compression" i.e. reduction in revenue from Credit Card fees as users switch to other systems. However it isn't a show stopper because in parallel they have discovered (and are using ) new ways to increase interchange revenue e.g. Virtual Cards, Prepaid Cards etc.

Bottom line: Fednow may be too little too late

Basically they had funding before the demo day.

Also they stayed in "beta" all the way until Sept/Oct 2011 when they formally launched on Techcrunch. That gave them enough time to hone the basic API, work out a TPPP (Third party payment processor ) deal with Wells Fargo and actually try it out before launching.

US has more than 10,000 banks and credit unions. That combined with the fact that US the most "market driven" of the industrialized countries it has take a backseat approach of letting the "market" solve it

There have been attempts by the "market" e.g. wallets and lately "push to card" by VISA/MC and RTP by the The Clearing House but it has realized that the Federal Government needs to come up with a standard settlement network with specifications and a protocol that "market" i.e. private companies can build upon.

Given the timeline i.e. 2023-2024, it may be a little late since apps and companies building on top of P2C (Push to Card) and RTP (Real-time Payments ) are likely to corner substantial portion of faster 24x365 payments before FedNow is ready.

And don't forget even if it's ready on time it'll take another 2-4 years for all the Financial Institutions to connect to it

Looking for both a back-end as well as a front-end engineer. Need to have a strong background in being able to write scalable software, preferably multi-paradigm, disciplined. - I’m the Founder of the company - this is a “co-founder” level opportunity - you’ll be working with me and other core people in the team. Work hard - play hard.

Our tech stack is Python, Angular, Postgres.

We move fast - if you’ve done a hackathon - we’ll probably want to do one with you and it’ll be clear if we are a mutual fit

Email admin@checkbook.io or pj [at] checkbook.io