FedNow, Federal Reserve's instant payments system, goes live
FedNow, Federal Reserve's instant payments system, goes live
FedNow, the Fed’s instant payments system, goes live, Toast removes the 99-cent fee after facing backlash, and Goldman Sachs continues to narrow its consumer ambitions
Hi!
Yesterday, the Federal Reserve launched its instant payments system, FedNow. Instant payments are great for consumers and businesses, yet pose certain challenges for banks. It will be interesting to see, what will happen next.
More on that and other things Fintech:
FedNow, the Federal Reserve’s instant payments system, goes live,
Toast removes the 99-cent fee after facing backlash, and
Goldman Sachs continues to narrow its consumer ambitions
Thank you for reading and have a great weekend!
Jevgenijs
p.s. have feedback? DM me on Twitter
Federal Reserve Launches Instant Payments System, FedNow Service
The Federal Reserve launched its new system for instant payments, FedNow Service, yesterday. This service allows banks and credit unions of all sizes to transfer money instantly for their customers, 24/7, throughout the year. The goal is to make everyday payments faster and more convenient, enabling individuals to receive paychecks immediately and businesses to access funds instantly when invoices are paid. When fully implemented, this system is expected to offer significant benefits for consumers and businesses, including instant access to funds and efficient cash flow management.
Last month, the Federal Reserve announced that 57 organizations, including 41 financial institutions and 15 service providers (and the U.S. Department of the Treasury), completed testing and certification for the upcoming launch of the FedNow Service in late July. The Federal Reserve is working with more financial institutions to join the service in the future, with the goal of creating a robust network encompassing all 10,000 U.S. financial institutions. The service will operate alongside other Federal Reserve payment services like Fedwire and FedACH.
✔️ Federal Reserve announces that its new system for instant payments is now live
✔️ Fed Launches Payments System That Will Deliver Paychecks in a Flash
✔️ Fed Launches Long-Delayed Payments Network for Instant Bank Transfers
Toast Removes 99-cent Fee After Facing Backlash
Toast (NYSE: TOST), a provider of restaurant point-of-sale solutions, announced that it will remove its 99-cent processing fee just days after its nationwide implementation. The fee, which was added on online orders over $10 and was intended to fund software improvements, faced widespread backlash from restaurant operators and customers alike. Many criticized Toast for charging customers without offering restaurants the option to waive or offset the fee. Although the fee will be gone by the end of the week, it has already started disappearing from some restaurants' online checkout pages.
The negative response prompted the CEO, Chris Comparato, to acknowledge the mistake and announce the fee's removal. “We made the wrong decision and following a careful review, the fee will be removed from our Toast digital ordering channels,” said Comparato in the press release. Despite dropping the fee, Toast does not expect it to impact its financial guidance for the second quarter of 2023. Nevertheless, the company's stock price saw a decline of over 15% on Wednesday. The CEO also hinted that price adjustments could be considered in the future to fund new product capabilities and innovation.
✔️ Update on Toast Digital Ordering for our Customer Community
✔️ Toast to remove 99-cent fee after widespread backlash
Goldman Sachs Continues to Narrow Consumer Ambitions
Goldman Sachs' (NYSE: GS) profit for the second quarter dropped by 58%, on a decline in investment bank activity, writedowns on its consumer businesses, and markdowns on real estate investments. Goldman incurred $1.4 billion in writedowns associated with its consumer business as the company was “narrowing its consumer ambitions.” The writedowns included a $504 million impairment of goodwill on the home improvement lender GreenSky and credit losses related to its consumer loans and credit card business. The company also sold "substantially all of the remaining" Marcus loans.
Earlier this year, the Wall Street Journal reported that Goldman Sachs is seeking to end its partnership with Apple and is in talks with American Express to take over the Apple credit card and other ventures with the tech giant. The company is also discussing transferring its card partnership with General Motors to American Express or another issuer. Exiting the Apple and GM partnerships would effectively end Goldman's consumer-lending business and its ambitions to become a full-service bank. Goldman has already stopped issuing personal loans and is trying to sell GreenSky which it acquired for $2.2 billion in 2021.
✔️ Goldman profit falls to 3-year low on consumer losses
✔️ Goldman Profit Tumbles on Real Estate Hits, Dealmaking Slump
Shopify (NYSE: SHOP) trades at a 28x Enterprise Value / Gross Profit (LTM) multiple, compared to 10x for Fiserv (NYSE: FI), and 7x for PayPal (NASDAQ: PYPL) and Square (NYSE: SQ). Is it because investors expect its gross profit to triple following the sale of the logistics business to Flexport? I mean, Shopify never disclosed how much money they invest in its Shopify Fulfilment Network.
Director of Embedded Fintech, Commercialization
@ Toast
🇺🇸 Remote, United States
@ Toast
🇺🇸 Boston, MA, United States
@ Shopify
🇺🇸 Remote, Americas
Transaction Banking - Payments Product Manager
@ Goldman Sachs🇬🇧 London, United Kingdom
Transaction Banking - BaaS Product Manager
@ Goldman Sachs🇮🇳 Bengaluru, India
Cover image source: Wikipedia
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