Alaina -- thank you for the comments! I don't get enough of these. You are correct of course that any electronic payment is subject to Reg E or Z. What I meant was not that they weren't subject to the regulations, but that they were not configured to deal with legitimate Reg E disputes like "never delivered" and "wrong item", or second-party fraud or ATO. They just don't have mature chargeback processes to deal with consumer commerce. So the disputes will still happen but the friction associated with those disputes is much higher than the card ecosystem which has been dealing with chargebacks since inception
Super helpful blog as always. One minor correction: instant systems do have Reg E protections. An instant payment from or to a consumer account is an EFT and so Reg E’s error resolution requirements apply. Of course there is no inter-bank liability shift for unauthorized instant payments since they are credit-push and, as you note, they are irrevocable so no guarantee that funds will be returned by the receiving bank. But this does not change a sending bank’s Reg E obligations to its consumer sender.
Beyond the use case, that still needs some tweaking as you mention, what does the actual value chain with a stablecoin as the rails look like?
Consumers will still 'swipe' their credit card most likely, unless we expect them to use their alternative wallets (a crypto wallet, Paypal wallet etc) - which sounds too niche to me.
Sounds like a back end use case IMO and not a consumer facing one?
Alaina -- thank you for the comments! I don't get enough of these. You are correct of course that any electronic payment is subject to Reg E or Z. What I meant was not that they weren't subject to the regulations, but that they were not configured to deal with legitimate Reg E disputes like "never delivered" and "wrong item", or second-party fraud or ATO. They just don't have mature chargeback processes to deal with consumer commerce. So the disputes will still happen but the friction associated with those disputes is much higher than the card ecosystem which has been dealing with chargebacks since inception
Super helpful blog as always. One minor correction: instant systems do have Reg E protections. An instant payment from or to a consumer account is an EFT and so Reg E’s error resolution requirements apply. Of course there is no inter-bank liability shift for unauthorized instant payments since they are credit-push and, as you note, they are irrevocable so no guarantee that funds will be returned by the receiving bank. But this does not change a sending bank’s Reg E obligations to its consumer sender.
Beyond the use case, that still needs some tweaking as you mention, what does the actual value chain with a stablecoin as the rails look like?
Consumers will still 'swipe' their credit card most likely, unless we expect them to use their alternative wallets (a crypto wallet, Paypal wallet etc) - which sounds too niche to me.
Sounds like a back end use case IMO and not a consumer facing one?