If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government.
Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
*Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo.
If you owe the US government money right now they can take it out of your bank account.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government.
You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
> *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
If the government could stop cash transactions entire classes of crime would be significantly more impractical (while at the same time significantly invading the privacy of all citizens).
> But I was asking about a chance from the status quo.
> If you owe the US government money right now they can take it out of your bank account.
Yes, but they can't see your transactions unless they go ask your bank. Now, they could do that, but they're not set up to do this for all transactions. FedNow changes that for all transactions within FedNow. The government wouldn't start taxing transactions until FedNow is the only game in town or all other payment systems also give them that kind of visibility.
As well, with FedNow they get real-time transaction visibility, which is very different from getting non-real-time batched transaction data from banks.
> Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
>wouldn't start taxing transactions until FedNow is the only game in town or all other payment systems also give them that kind of visibility.
....Or they can just demand banks immediately start taxing transactions per merchant codes _right now_ without FedNow. And the banks would comply. They don't need real time visibility. The bank could take money off the top and/or send the tax form required to you at the end of year and IRS just like anything else. It would just be similar to Form 8949.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
The Federal Reserve isn't the government. Yes, if they want to charge a fee for this service, they could. The same is true of every existing money-moving mechanism.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government
FedNow is essentially free[0]. If FedNow imposes a higher fee in the future, you can always choose to use other services (ACH, wire payments, etc.). It's a competitive market.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
This power already exists. FedNow doesn't change it one way or the other.
It won't be any worse or better than existing federally administered systems. The government already oversees all the major existing bank-to-bank transfer systems mentioned in the press release. In the US banks charge different wire fees because they can as a competitive matter, but they all use FedWire to talk to each other. Just like they can impose arbitrary limits on ACH transfer size but they all use FedACH to handle the actual transfer. This one is just a faster, more secure version of the latter.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
They have no authority to do this unless you're subject to a tax witholding order. The government cannot collect taxes on arbitrary transactions as they occur - it can levy taxes, and then attempt to collect them (it hopes via voluntary payment by taxpayers).
You, like so many other commenters here, seem to fail to grasp that FedNow is a replacement for ACH, the existing inter-bank exchange system that already involves the Federal Reserve to precisely the same extent that ACH already does.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top
the implied alternative being they don't take it automatically and now it's your responsibility to figure it out and pay it? Or is the alternative that you would not pay it if it were not automatic, aka tax fraud?
Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
*Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.