ACH could still be expedited even with the need to verifying identity. Technically it only need to demonstrate that the identity of receiver and the identity of the referred bank account are consistent, a national id won't be necessary. Fed is not technically a branch of the government.
>The Federal Reserve System is not "owned" by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.
> fed is absolutely an agency of the us government
It’s absolutely not a government agency but also absolutely not privately owned. It’s best thought of as a non-governmental entity that is strongly influenced—and sanctioned—by the government, but does not operate underneath it.
This is why e.g. the Fed and Treasury negotiated how losses fell from the Main Street lending program. And if you visit a Fed, one of the first things their employees like to point out is that they’re NOT federal employees.
> It’s absolutely not a government agency but also absolutely not privately owned.
The closest analogy is that it's a co-op:
> Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations. For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. Commercial banks that are members of the Federal Reserve System hold stock in their District's Reserve Bank. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. In fact, the Reserve Banks are required by law to transfer net earnings to the U.S. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund.
It’s got nothing to do with that. ACH is a batch processing system written in COBOL in the 1970s. Nothing is going to get rid of the batch nature of the system except a new system based on asynchronous messaging. That’s what FedNow is.
The issue with ACH isn't the batch nature, it's that banks on both sides of the transaction are allowed a fairly long amount of time (upwards of a business day) to decide whether to accept or decline the transaction.
If they decide immediately, it can go faster, but they don't have to, and many banks have no incentive to work on processing faster.
They could still use a batch processing system, and just process the batches once per hour, or half hour, or whatever. It would still be slower than some newly-designed instant payments system, but could potentially be more palatable within the current system.
ACH is used either to get paid by an employee or to move money between accounts, neither of those things are that easy to do with Venmo, in fact zelle was created to compete with Venmo and it addresses that competition so nicely that many of my friends have moved to it.
