The US Federal Reserve is building an instant payment system (FedNow) that goes live in 2023 [1] [2]. Payment providers are moving upmarket and to features that stave off churn (my analysis here) due to expected revenue destruction caused by a free alternative being available (a US version of SEPA). This is alluded to in the second half of this blog post.
If payment revenue (interchange and the like) declines, and net interest is insufficient for providing large swaths of US deposit accounts, something is going to have to give (community and megabanks have a ton of pull in Congress, and neobanks are beholden to someone with a bank charter).
I’m not in payments (but in adjacent financial services), so I’m happy to be corrected if any of this is wrong.
The Durbin Amendment to Dodd-Frank capped debit interchange revenue. Bank of America responded by raising the minimum balance to qualify for no fee checking to $1500.
If payment revenue (interchange and the like) declines, and net interest is insufficient for providing large swaths of US deposit accounts, something is going to have to give (community and megabanks have a ton of pull in Congress, and neobanks are beholden to someone with a bank charter).
I’m not in payments (but in adjacent financial services), so I’m happy to be corrected if any of this is wrong.
[1] https://www.federalreserve.gov/paymentsystems/fednow_faq.htm
[2] https://www.frbservices.org/binaries/content/assets/crsocms/...