While the rest of the world modernizes and enables free, realtime money movement, the US is held back by $187B in annual money-movement taxes, also known as Interchange.
Interchange is the punitive fee structure foisted on merchants so Americans can spend money they don’t have on things they don’t need.
And, we suppose if you wanted to quote Chuck Palahniuk, to impress people they don’t like.
Cuz #Consumerism.
The biggest beneficiaries of that $187B windfall are the duopolists Visa and Mastercard, whose organizations could be run with ~10 employees.
Not kidding.
That’s the power of the network effect.
The other winners?
The banks, who effectively colluded with the card schemes to build the two sides of the network.
Note: the early days of Visa were very entrepreneurial, and Dee Hock is the poster child for solving the Prisoner’s Dilemma. Since then, however, it’s been a one-sided money grab without competition.
The US likes to tout that it has “real time” money movement, but if you’re not transacting in a B2B environment, this is a complete fabrication.
And even in a B2B (business to business) environment, it’s not great.
To show you just what a shitshow this is, we grabbed Pratt Khot, founder and CEO of Fingrid, a money movement service that cuts fund transfer times – and costs – down to their primitives.
For starters, we need to group funds transfer services into their intended use cases. Note that we are focusing on non-card, digital transfers because nobody wants to lose 25% of their EBITDA to accept card.
Yes, there are people who cannot afford to wait for their customers to pay so they rely on expensive working capital from companies like Melio, but we’re ignoring that here.
The majority of faster, “cheap” payments have been focused on B2B use cases.
Today the incumbent methods of digital funds transfer are ACH and wire transfer.
ACH
ACH, started in 1972 as the ACH Network and operated by the Federal Reserve (FedACH) and the Clearing House (EPN), is incredibly slow. Might as well etch a payment on a stone tablet and send it by carrier foul.
Standard ACH takes 3 business days. It’s closed on weekends and federal holidays. Banks can place an additional 1-2 day hold on ACH transactions to check for sufficient funds or if the transfers require manual reviews (these are based on internal banking flags).
Over that 3-5 day period – assuming the transaction even settles – the vendor has to float the difference, meaning a good or service was provided but the vendor needs to come up with the working capital until the customer pays.
In 2016 NACHA, formerly the National Automated Clearing House Association (the non-profit governing body that oversees the ACH Network), launched a same-day ACH offering.
But there are rigid timelines.
You have three daily windows in which to send money: 10:30 AM ET, 2:45 PM ET, and 4:45 PM ET.
If you meet these cutoff times, funds are usually settled by 1:00 PM, 5:00 PM, or 6:00 PM ET the same day. Transactions submitted after the final 4:45 PM ET window are batched for processing on the next business day.
Each bank has its own internal cutoff (often 30–60 minutes before the network deadlines). Missing this window by even a minute can add a full day to the timeline.
And guess what?
Still closed on weekends and federal holidays, banks still put a 1-2 day hold to check for sufficient funds, and there can be an additional 1-2 day hold to ensure it’s not fraudulent.
The silver lining?
ACH is cheap.
The raw fees charged by the Federal Reserve (FedACH) or The Clearing House (EPN) for a standard transaction are incredibly low. For 2026, the FedACH fee schedule for high-volume users is:
- $0.0035 (roughly 1/3 of a cent).
- Volume Discount: Once a company processes millions of items a month (which Venmo does), the fee can drop to $0.0016 or lower per item.
If you’re curious, here are the volume tiers:
| Tier | Monthly Volume | Fee per Item |
| Base Rate | < 750,000 items | $0.0035 (1/3 of a cent) |
| Mid Tier | 750k – 12.5M items | $0.0018 |
| High Tier | > 12.5M items | $0.0016 |
| Elite Tier | > 30M items | $0.0012 |
But there are still costs associated with bounced ACH transactions ($2-5).
And you likely need to use Plaid or a similar service for account verification, and depending on the exact setup as an ODFI (Originating Depository Financial Institution) takes your company’s payment instructions and pushes them into the electronic payment system, warranting they follow NACHA rules.
These add costs as well, but paying $1 for something that costs a tenth of a penny is a 1000x markup and only exists because banks can collude to create market power.
Find us something else with such high margins that isn’t an obvious monopoly/oligopoly.
We’ll wait.
Wire Transfers
Next we have wire transfers.
Domestic wires are processed via Fedwire (Federal Reserve) or CHIPS (The Clearing House). These transactions settle in 1-4 hours (some can be minutes, technically) and unlike ACH, cannot be reversed. Any wires initiated between 2 and 5 PM ET (depends on the bank) get pushed to the next day.
International wires usually move through the SWIFT network, which acts like a series of connecting banks. It can take 1-5 days to settle but can be settled in under an hour if the sending and receiving banks use more modern APIs.
Still closed on Saturday and costs $25+.
Realtime Payments (RTP)
RTP was the first private industry response to slow payments.
At least domestically.
Launched in late 2017 under The Clearing House, which is a banking association owned by the world’s largest commercial banks (JPM, Citi, Wells Fargo), the goal was to create 24/7/365 payment system where funds settle instantly and individually and not in batch, a known limitation of ACH (hence the discrete time periods for ACH cut-off times).
RTP is irrevocable like wires, though it settles within 15 seconds (good enough for anything that’s not high volume retail, like grocery or restaurant).
Raw costs are 4.5 cents, unless you request a payment (ie “pulling”), in which case there’s an additional penny to initiate the request.
Most banks mark this up, however, so the final cost is between $0.25 and $2, depending on the bank.
It’s been established that 90% of US banks (and credit unions, et al.) support RTP, so it’s got good coverage.
But before we critique RTP, let’s look at FedNow since it will draw our same general gripe.
FedNow
FedNow is the US Federal Reserve’s response to RTP.
The Federal Reserve began researching faster money movement in 2019 and launched FedNow in 2023 with 35 bank partners and 16 service providers.
Like RTP, the settlement is per transaction (not batch), settles within 20 seconds, and operates 24/7/365.
FedNow charges banks for participating.
It’s $25/mo (usually waived) and 4.5 cents per transaction, with another penny cost for requesting payment.
Banks usually mark this up to their customers, though, so the cost is in the low single digit dollars most likely.
Unlike RTP, FedNow is only in about 40% of DDAs (demand deposit accounts) and is projected to cross the 90% threshold in 3-5 more years.
Zelle
Zelle is a B2B and peer to peer (P2P) tool, so it’s going to make it last onto our list of B2B payment tools.
Started in 2011 by BofA, JPM, and Wells Fargo as clearXchange, Zelle was a defensive play against tools like Venmo and Paypal which allowed “instant” P2P money transfer.
Note that “instant” is a bit of a stretch: the two participating financial institutions would confirm that the sender had sufficient funds, thereby making the funds usable in seconds to the receiver. In reality, it would take days for the money to settle over an ACH rail, though Zelle is increasingly using RTP rails..
Zelle requires that both parties use a Zelle for Business account. It covers about 95% of consumer checking accounts, like ACH is slow as hell (1-3 days or more for new accounts, we guess to “ensure” that it’s not fraud), has very low limits (literally $5,000 at some financial institutions), and is irreversible.
The good news is that Zelle is usually free to use, though some smaller banks will charge up to 1% of a transaction’s volume as a fee.
For the next part in the series we’ll get to discuss the part that matters: consumer to business transactions.
[…] Part 1 is here. […]
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