I Was Asked About J.P. Morgan’s Blockchain-Based “JPM Coin.” I Ruthlessly Expand it to Other Payment Systems

Are banks trying to send credit-card-processing fee-gougers Visa, MasterCard et al. the way of Friendster?

The crypto world went into a tizzy when J.P. Morgan announced “JPM Coin.” They thought that the bank had switched sides finally, after CEO Jamie Dimon had blasted cryptocurrencies as “fraud.” Given my own blistering rants about cryptocurrencies – such as Bitcoin Plunges to $3,738; Whole Crypto Scam Melts Down, Hedge Funds Stuck – I was asked what I thought about JPM Coin. And so I expanded my answer to others in the payment-processing industry, and what they may be trying to do to fee-gougers, such as Visa and MasterCard.

Here’s what JPM Coin actually is not – and is.

JPM Coin is not a cryptocurrency. It cannot be “mined.” It cannot be traded. It doesn’t need an exchange or a “wallet” or anything like that. It won’t make anyone suddenly rich or poor.  It’s “not money per se,” J.P. Morgan explained.

Instead, it’s a “digital” coin that serves exclusively as a system to “transfer and settle money for clients around the world” via a blockchain network.

It represents US dollars, “held in designated accounts at JPMorgan Chase N.A.” and is “1:1 redeemable in fiat currency held by J.P. Morgan (e.g., US$).”

It’s a prototype to be tested “with a small number of J.P. Morgan’s institutional clients.” The pilot program “is currently designed for business-to-business money movement flows,” and if it works out, the test may be expanded. “We don’t have plans to make this available to individuals at this stage,” J.P. Morgan says.

It was created so that J.P. Morgan could use the blockchain technology for payments. Processing payments over a blockchain “requires a digital currency, so we created the JPM Coin,” J.P. Morgan said.

In other words, there is no cryptocurrency-magic to it. It’s just an instantaneous payment system that works over a blockchain network. You have to have the dollars in your J.P. Morgan account before the transaction. You exchange them into JPM Coins 1:1 and then send those coins to another J.P. Morgan account holder who exchanges the coins back into US dollars 1:1. All within a very short time.

Funny thing is: I can already do all this without blockchain, and for free.

There are already instantaneous payment systems in use by banks that are free for both, senders and recipients, and are not limited to J.P. Morgan account holders. Free for senders and recipients is the key.

Zelle (successor to clearXchange which got started in 2011) is one of them. It’s a digital payment system “between almost any U.S. bank accounts typically within minutes,” Zelle says. From my own experience, a payment is completed usually within seconds. It doesn’t need cryptocurrency-anything, and it doesn’t need blockchain. Users just need to have a smartphone or PC. You can send money in your bank account via your smartphone or computer to anyone else’s bank account on the system. The recipient is identified by phone number – not bank account number – and neither party needs to know the other party’s bank account number.

For J.P. Morgan account holders, this works too. And they can even send money to Wells Fargo account holders.

It’s free for both the sender and the recipient. It’s instantaneous. It’s easy. And the recipients get near-instant notification that the money has arrived in their accounts. This money can be used immediately, and the recipient doesn’t have to wait one, two, or three business days as is the case with checks or other payment forms. Senders cannot cancel payments they made to a Zelle participant (though they can cancel it if they tried to send the payment to a non-participant). It works – I use it regularly.

The system is owned by Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo. Over 200 banks and credit unions are currently participating in the system, and more banks are signing up. In Q4 2018, the network processed 135 million transactions for $35 billion. But there are still some inconvenient limits, including that payments can only be processed between US banks and credit unions, but not foreign banks.

There are starting to be other systems out there that work, are safe, easy to use, and that are free for senders and recipients. And that’s good. Other countries are way ahead of the US in that regard.

Getting rid of the fee gougers.

If you ever dealt with PayPal as a recipient, you realize what a gouge it is. And if you’re merchant or restaurant owner and take credit cards, you realize what a gouge they are – and they’re going to be an even bigger gouge starting in April because Visa, MasterCard, and Discover are going to raise their processing fees.

It’s about time modern instantaneous payment systems that are free for the sender and the recipient replace those gouges we have. So I applaud any effort to get there, whether this is via blockchain or some other technology.

Let the best solutions prevail. And if people don’t have the money to pay for things and need to charge it, banks can create a loan account attached to their payment system, so that folks can use these new methods and throw out the credit cards that are taking a cut out of every transaction.

Customers may not see that cut directly since merchants pay it, but they feel it because merchants pass that expense on to their customers via the prices they charge. And even cash-paying customers feel that fee in their wallet because they pay the same price.

It is interesting that the biggest banks are behind Zelle, and that the biggest banks are also working on blockchain-based payment systems. They’re the ones that handle credit cards, and they too pay Visa, MasterCard, Discover, et al. a fee for each transaction. Visa Inc. booked $21 billion in net revenues in 2018; MasterCard $15 billion. These $36 billion in revenues for just the two combined are largely the fees the banks pay them for processing credit-card transactions. But these companies carry no credit risk – the banks do.

Banks would love to avoid having to pay these fees. And all these payment systems they’re working on would be free for banks. It may be that once they get the kinks worked out of whatever payment systems prevail, blockchain-based and/or other, those credit card companies are going the way Friendster.

Consumer exuberance maxed out last summer and has since changed direction. ReadWhy I’m Not in Panic Just Yet over the “Dreadful” Retail Sales that “Fell Most Since 2009,” But Nervously Look at the Trend

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  74 comments for “I Was Asked About J.P. Morgan’s Blockchain-Based “JPM Coin.” I Ruthlessly Expand it to Other Payment Systems

  1. Dano says:

    No fan of the big banks, but even less a fan of the CC companies. For once I am on the side of the banks. Just once.

    • mike says:

      Before any of you praise the banks, you may consider the following reasons why even the unsupported, “ponzi” cryptocurrencies (which I regard as unwise investments, to say the least) may be better over the long run than holding banks’ cryptocurrencies long term:

      1. Under the latest laws, depositors (and I am pretty sure holders of bank “cryptocurrencies”) would be in last place in priority if the banks go bankrupt again.

      (Under Dodd-Frank, such persons may lose everything and I am not even sure if FDIC government protection would cover their losses on bank cryptocurrencies. The FDCI really only has a relatively tiny, limited fund. Enormous losses would cause the U.S. government to try to print enough money and treasuries to help the banks by giving more funds to the FDIC.)

      2. Major banks are gambling so much in derivatives that they may incur enormous losses anytime. Banks’ derivatives exposure is so enormous in total that I leave it to you to check online, because you would not believe me if I told you. See https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjP7oTg0cngAhUnw1QKHaKoDYIQFjAAegQIChAB&url=https%3A%2F%2Fwww.ft.com%2Fcontent%2F201bce0c-289b-11e8-b27e-cc62a39d57a0&usg=AOvVaw2NjbOQB6q7GaSA9vfCXC-p

      3. The US government may become technically insolvent if interest rates go up, as I think that they will, ultimately, if it continues with its growing deficits. At some point when interest rates go up, all US government revenues will go to pay the debt and some limited, essential programs. There may not be anything left to help the poor, gambling-addicted, major banks or their bankster owners.

      4. Forbes estimates that current US liabilities are so enormous at over $120 trillion that I do not see how the US government can meet them and its other obligations with its current revenues. When baby boomers all retire there will be limited revenues to pay medicare, social security, etc. Eventually, at some future time, something has to give.

      5. Banks have a relative thin amount of capital that is supposed to cover enormous potential losses. Most people do not realize this: if there is a downturn, even if the banks do not incur enormous derivatives liabilities through their gambling in derivatives, the assets that banks hold may decline in value. That may again make banks insolvent as in 2007-2014.

      If a bank holds assets of 100 billion and has capital of 4 billion, whatever the currency, it will only take a 4.001% downturn in the value of its assets to make the bank insolvent. Of course, if the derivatives gambling, adds a $1 billion loss to that, then it will take over a billion dollars just to bail out that hypothetical bank.

      Thus, I opine that bank cryptocurrencies might be good for the rapid transfer of money. However, while other cryptocurrencies face the risk that their creator(s) (who usually hold huge amounts of them) may suddenly sell their coins and drive the price of the cryptocurrencies down, bank cryptocurrencies are even more likely to be worthless in the future.

      In other words, cryptocurrencies are like ancient money: seashells or cacao beans, or quetzal feathers. They really did not have inherent value commensurate with the values at which they once traded (e.g. indigenous, American cultures). They had value because people viewed them as having value. Any big holder could suddenly drop their value if they traded their hoard.

      Bank cryptocurrencies are like those quetzal feathers dipped in gasoline, which may suddenly ALL burn up and be lost on a bad day. It is best to trade with them cautiously and get rid of them rapidly. People that trade in them better hope that the banksters have purchased enough politicians in the US and EU, so their banks can get all the bailouts that they will need.

  2. njbr says:

    Blockchain babble…

    …..Cryptocurrency wallets get hacked all the time, but this hack was different, striking at the blockchain itself. The attackers were able to rewrite the supposedly permanent ledger of transactions, something that should be impossible. Cryptocurrency developers have known attacks like this were possible for a long time, but they’ve only recently become something exchanges have to defend against. That raises hard questions about the future of the blockchain, particularly for smaller coins…..


    • Wolf Richter says:

      Anything and everything can get hacked if it’s connected to the internet. The difference is, with a cryptocurrency, you’re on your own, and your stolen cryptos are gone. If your bank account gets hacked, or your bank transaction gets hacked, the bank has to make you whole — and pronto.

      • milosz says:

        have you ever tried to get money back that you (or someone with your credentials) wired to a foreign bank account? based on this statement, i would guess no.

        the idea that this nonsense poc is the path to replacing a system as complex and entrenched as visa is only slightly less laughable than the idea that bitcoin will shortly replace fiat and usher in a libertarian utopia. the “gouging” (in my opinion not a bad deal considering the challenge of integrating the many underlying systems) will continue for some time.

        i think you may not be quite clear on how merchant fees work. most of the merchant fee is interchange, which is collected from the merchant by the credit card issuing BANK, not visa. visa collects an “assessment fee” which is relatively microscopic (~.1% of the ~2% on a typical cc transaction). while the banks would certainly love to go around visa and collect those pennies themselves, it would not be in their interest to eliminate processing fees altogether. since they’d be choking out one of their own rev streams.

        • Wolf Richter says:

          Your “relatively microscopic” processing fee collected by Visa and MC alone extracted $36 billion in 2018 from banks, as pointed out in the article. That’s $36 billion in pretax profits that the banks didn’t make. However you may wish to twist this, $36 billion is a large amount of money.

        • njbr says:

          The more “unhackable” something is, the more difficulty in proving that it has been “hacked”–where does the liability for proving “hacked” lay ? How to be made whole ?

          The tender mercies of JPM ?

          You, the supposed sender, the supposed recipient ?

        • milosz says:

          of course 36B is a lot, but your argument as i read it is that the banks will develop a system to circumvent the “gougers” (visa/mc/amex/discover) which will ultimately benefit the consumer/merchant. i think you would be hard-pressed to find an actor who would enthusiastically agree with you when the benefit on the table for the individual consumer is literally a few dollars a year (or its functional equivalent for a large business). there would be a great benefit to the banks and a general benefit (maybe) if you apply some kind of accretive utilitarian calculus, but the man on the street won’t be affected and won’t care.

      • mike says:

        Amen. I am not sure if the alleged quantum computers that are being advertised as genuinely quantum computers. However, if they are, or if they become genuine anytime soon, then hacking will become much easier.

        To transact coins, you have to communicate with someone, one way or the other. That will enable any person to hack your coins out of your wallet, if quantum computers really exist: quantum computers are reportedly able to crack any communications code in reasonable times.

        Of course, the same will happen even with bank transactions, unless there is some verification mechanism that cannot be hacked.

  3. Howard Fritz says:

    It’s worth noting that because this “coin” is pegged to the US dollar its known as a “stable coin” and runs off the Quorum Blockchain.

    • Helmut Beintner says:

      US Dollar stable..for right now,yes !

      • Howard Fritz says:

        Hi, Helmut thank you for your comment however you misunderstand.

        A “stable coin” is a cryptocurrency that is pegged to another stable asset, like gold or the U.S. dollar.

        Although it’s worth noting that all the gold backed crypto coins that I personally knew of collapsed.

        Whereas coins like Bitcoin or Etherium had enormous price volatility and are not tethered to any other asset.

        Originally, these coin’s primary selling point was to purchase illegal or banned items, I believe.

  4. Justme says:

    Zelle has one big problem: It uses your cellphone as your identity, and it does not accept cell services that use VoIP over 4G or Wifi or whatever. Zelle also says that it will check that your name matches the subscriber name of you cellphone service. So if you are using a prepaid SIM you are likewise screwed. Zelle also will not allow “landlines” for verification. That includes Google Voice, unfortunately, because anything that is VoIP is automatically classified as a “landline”. By the way, the craigslist versification system for posting an ad has the same draconian criteria.

    Just a week or two ago I received some update about Zella from a bank. Here is the relevant section, and I quote:

    • You can’t enroll in Zelle with a landline, Google Voice or VOIP (voice over internet protocol) phone number. (Section 3.C.3 Enrolling in the Service)
    • For your security, Zelle may use your mobile information to verify your identity with your wireless operator. (Section 4.O Disclosure of Account Information)

    I really resist the idea that my cellphone is my identity. What if I lose it? What if I am out of the country? What if someone manages to hack into it? There are so many things that can go wrong. Zelle has been nothing but trouble for me. If anyone from Zelle reads this, please, the service is useless as it is currently implemented.

    • Old Engineer says:

      You don’t even mention that phone number spoofing is rampant with all the spam calls, even on cell phones. Also SIM card hacking is growing exponentially. And cell phone companies have been shown to allow damn near anyone access to your account even without all the “required” information.
      But, there really is no security anymore. Even the IRS isn’t sure who they are dealing with all the time. All you can do is try to make it hard for amateurs and elementary kids to hack you.

    • Top-GUN says:

      I’ve started using Zelle… I like it,,, no problems here,,, quick and easy..

    • Wolf Richter says:


      I think there may be a bit of a misunderstanding here, possibly. So let me clarify:

      When I send money with Zelle, I’m on my PC logged into my bank account, just like I do for other things.

      I don’t know the recipient’s bank account number. Instead I put in their cellphone number and name. If the system recognizes that data, it sends the money…

      But the money doesn’t go to the cellphone. The money goes directly into the recipient’s bank account.

      Then the recipient gets a message on the cellphone that the money has arrived. The message is the only thing that goes to the cellphone.

      So even if you lose your cellphone, or if it gets hacked or whatever, the money is in your bank account, and the new owner of the cellphone doesn’t have access to it.

      • Old Engineer says:

        That sounds fairly safe. I wish you could it to institutions. I recently did an ETF from my bank account to open an online bank account and it took a week.

      • Justme says:

        No misunderstanding, Wolf. I was talking about how Zelle uses your cellphone and cellphone subscription to verify you identity. You can’t use the web interface to Zelle without having your identity verified first, VIA SMS TO AN “ACCEPTABLE” CELLPHONE SUBSCRIPTION. That turned out to be impossible using my cellphone service or landline.

        I called them and they gave me a 30-day verification after wasting much on explaining what the problem was. What happens after 30 days? Who knows.

        It is of course also a problem that the recipient likewise must have an “approved” cellphone subscription.

        The bottom line is that if either party is not able to receive verification SMS (a) at all times (don’t be out of the country!) and (b) on an “approved” cellphone subscription that is verifiably billed to your home address, then you are in for a heap of trouble.

    • Future Historian says:

      I use Zelle quite a lot (dozens of times a year) and I don’t recall needing a phone number at all. When I want someone to send me money, I tell them to use my e-mail address. “Send the money to my e-mail.” I do have an account with Chase, so they know how to associate my e-mail with my bank account. I do not have a smartphone, and it is not necessary to have one, and I don’t recall needing a cell phone at all. I do recall needing a cell phone to enroll in Google Voice.

  5. Hendrik Wagenaar says:

    Am I missing something or is this a reflection of the sorry state of consumer banking in the US (and UK)? As a European, for years I have been able to transfer money electronically to bank accounts within the Eurozone instantaneously and for free (sort of) via the IBAN and Sort Code system. Yes, I have a credit card but use it mostly for internet transactions. Payments to retailers, restaurants, etc are mostly done by debit cards, with very low costs for the latter. The JPM blockchain initiative seems another case of what, in the Netherlands we call: Why do it the easy way if there is a complicated way?

    • DCC says:

      I came here to say this.
      Americans don’t know how bad they have it.
      And worse, it shows the power their banks have at refusing anything, even progress.

      • Mark says:

        Naw It’s great living in a totalitarian oligarchy . You obviously haven’t experienced how nice the boot of the vulture “capitalists” feels on your throat.

    • Bankers says:

      “The JPM Coin makes it possible to move dollars between JPMorgan bank accounts instantly. That raises the question: Why was it not already possible to move dollars between two JPMorgan bank accounts instantly?”
      -Nathaniel Popper

      As the coin might end up as payment leg to other kinds of blockchain transaction it looks like it might be trying to become something similar to digital dollars, but passing always via JPM accounts. I guess that would expand the banks central position to financial and business activity.

      So it doesn’t compete with crypto currency in certain ways (i.e. is not public, it is permissioned) , but on the other hand is backed by its own network (a form of security) and fiat – everyone’s favourite currency ;-) ;-) ;-)


      For ordinary people like us not transferring six trillion a day, there are other methods available already as you pointed out, and they needn’t cost much at all either. Maybe blockchain will eventually prove safer somehow, I’m not sure.

    • JSM976 says:

      I think it’s not that different in the US. I can easily move money instantaneously between accounts, pay friends, etc. for zero fees. The issue at hand is paying vendors I believe. TBH I just skimmed the article, but in the US, Mastercard/AMEX have a stranglehold on the payment system. I personally like the arrangement as I rarely see a retailer that chargers for CC transactions. Why would I not use a CC and get reward points/miles if the retailer is gonna charge me the same to use a DC or cash?? Use a CC, get rewards, and pay your balance. Easy Peasy. I do try to pay cash for small vendors/individuals as I have been on the receiving end of the 3-5% fee (er vig).

      From the article above, all of that could/would go away obviously.

    • Covey says:

      Last time I sent money to ADAC in Germany from the UK via my IBAN bank account number, it cost £25 fixed rate fee!!

      • Realist says:

        No wonder you were gauged a £25 fee, the UK is outside Euroland. Inside Euroland there’s no fees for IBAN transferes between different countries belonging to Euroland. You pay what your bank cheges you as a montly fee for using its “services”, but there aren’t any separate fees for using IBAN transfers inside Euroland.

      • Bankers says:

        That might change. In Europe the SEPA platform is evolving for instant payments, and the UK is subscribed to the initiative. Various countries and banks are at various stages, so for Spain for example you have “Bizum” which works similar to Zelle, is planned in future to integrate retail use, but only works between Spanish banks. The slower Iban is also free across the continent (apart from account maintenance – in some countries that is free). Eventually the aim is a single free instant transfer format between all SEPA members.

        Here is an example of where UK stands at the moment

        (“Taking instant payments to the next level: Hello Euro!” by search if the link is considered advertising)


  6. 2banana says:

    Sounds like Gold Banknotes from the 1800s….. :-)


    JPM Coin is not a cryptocurrency. It cannot be “mined.” It cannot be traded. It doesn’t need an exchange or a “wallet” or anything like that. It won’t make anyone suddenly rich or poor. It’s “not money per se,” J.P. Morgan explained.

    Instead, it’s a “digital” coin that serves exclusively as a system to “transfer and settle money for clients around the world” via a blockchain network.

    • Paulo says:

      For buying online from individuals, email money transfers work well. (The institution takes the risk and guarantees the transaction). For commercial transfers, my CC gives me % back, is accepted anywhere and is insured. If there are ever dubious purchases I get a phone call asking me if I am buying anything today?

      I am sure big commercial account holders are able to make a simple phone call. They don’t need a crypto method. This new method seems like an unneeded add-on to what is already available.

      I am also pretty sure the big boys have their Michael Cohen type lawyers do all the arranging, contracts, and scut work. In the big money it’s all relationships and favours from what I understand.

      I have met a gang type (won’t mention the biker gang, excuse me club…….) who buys and rebuilds bars. It takes a few years after he acquires one and virtually everything is done with cash. Spending a few thousand every day adds up to some serious money laundering over time. Then he can launder through operations. The crooked types don’t want trails, paper or crypto. Cash always works.

      If things are working for all levels right now, why change anything? The very rich don’t have to worry about security, and there are methods used by those of more modest means that work just fine without a ‘smart phone’ being hacked. Crooks do it crooked, and if someone rips them off they die right after they pay everything back.

  7. Olivier says:

    If a payment method is “free for senders and recipients”, what is the business model?

    • Wolf Richter says:

      Banks trying to keep their own customers from going somewhere else (the effect of competition).

      • RagnarD says:

        What’s has gone unmentioned is
        How the JPM coin concept puts the lie argument that BTC has $$$$ value because it can do what JPM coin is doing for FREE.

        That is, theoretically, If I were to keep my money in gold / cash, and simply transferred whatever money I needed for a transaction into JPM coin, why would I ever need to use BTC? Which is to say, why is BTC valued $3,900, when gold and a free JPM Coin type essentially do the same thing but with
        A much reduced hacking / scam / irrecoverable risk?

        To say nothing of the long term credibility of gold vs any CC.

  8. nick kelly says:

    I guess all will be aware that there has been ANOTHER monster disappearance of crypto in, of all places, Canada.

    Apparently the main man had them stored in a ‘cold wallet’ only accessible by himself and now he is deceased.

    Hundreds of millions are inaccessible, assuming they haven’t been stolen.

    I’m not puzzled by Morgan or any other bank working on funds transfer scheme especially one that creates (as in days past) a Morgan ‘currency’ but what is the need for block chain?

    I thought the lure of block chain was that it was anonymous, like passing cash hand- to- hand but over the internet except in a dark alley.

    And if you register with your phone are your transfers really private?

    • Paulo says:

      yeah Nick, I read about that one the other day. The guy died and no one else knew the passwords or how to get in. It’s kind of like someone putting the winning lottery ticket into the recycling. (I read that one, too, a few years ago).

      “Honey, have you seen that Pirate Map I had laying around? I can’t find it anywhere. And where the hell is that winning lottery ticket? I left it on the dresser”.

      • RD Blakeslee says:

        “Honey, do you remember where we buried that gold?”

        • Gold is just..gold says:

          Gold.. What gold? Who would bury gold when (drum roll..)

          Gold is just… gold

        • Gold is just..gold says:

          I look forward – with no sense of ‘I told you so’, rather an appreciation of Wolf’s rather quick intellect – to his acknowledgement of gold being …. well, rather special.

          My best guess: down to $900 to 2020. 2021 + $2,500 and rising.

        • Wolf Richter says:

          I’ve been told for eight (?) years that gold would spike to $2,500 “next year.” At least you give yourself some wiggle room and are now telling me that it will spike to $2,500 year after next year (2021). Other metals have spiked and collapsed too. And then re-spiked. That doesn’t make them or gold or anything else “special.”

        • GuiriCateto says:

          “Sure do, but mowing the lawn would help… and why not have another look at that gazebo we were considering while we are at it ?”

    • Kaz Augustin says:

      Actually @nick, even blockchain isn’t private. To me, blockchain has always been a covert surveillance method aimed at wannabe geeks. (In Ozspeak, a “Clayton’s anonymity”: the anonymity you have when you’re not having anonymity.) The issue is that the addresses on a coin (or part thereof) are added to and can be traced right back to the moment that coin was mined. Bearing in mind how data can be cross-referenced at the speed of light using various AI- and other-algos, in what universe is this “private”? So that’s one.

      Two, as you add addresses, the entire coin (or part thereof) gets more and more unwieldy because it becomes longer and longer. It cannot scale unless something like quantum supercomputers are used to process transactions, but this isn’t a good idea because if you have quantum, then you can crack blockchain. Any blockchain. Which kinda defeats the purpose. So add “obsolete” to “non-scalable”.

      Three, and off track, morons (including Linuxers who damnwell should know better) laud carrying out their crypto txns via the Tor network…which was created by a certain US intelligence agency. I mean, would *you* trust the CIA to develop a so-called “anonymous” internet routing system without any backdoors? And, indeed, some have been found, although such news isn’t widely available to the unsuspecting “Mr. Robot” groupies. :eye-roll:

      (Disclaimer: Having left internet security many years ago, I know I don’t have the utter nitty gritty deets nailed down to the angstrom, but I’m reasonably sure my broad brush conclusions are commercially correct.)

      With all this in mind, phones have their own and separate issues, although they do have unique MAC addresses (not “Apple Mac”, a different “MAC”). But I direct the alarmed prospective user to search on “spoofing MAC addresses”, where they will get an education they probably wished they didn’t. And then you have the closed operating systems of both Apple ioS and Google’s Android. And malware. And keyloggers, both external and operating system native, not to mention use of unsophisticated passwords, human vulnerability to phishing, etc etc

      So no, nothing’s private. And, of course, even with cash, start evangelising about its superiority to your friends and it won’t be long before someone a couple of degrees removed decides to relieve you of the fruits of your ideology. Basically, nothing’s completely safe; it’s just a matter of where you want to draw the line.

      Have a nice day! ;)

      • nick kelly says:


      • GuiriCateto says:

        Poverty draws that line.

      • GK says:

        > as you add addresses, the entire coin (or part thereof) gets more and more unwieldy because it becomes longer and longer. It cannot scale unless something like quantum supercomputers are used to process transactions

        This doesn’t make any sense at all. History length isn’t the primary scaling problem bitcorn suffers from, and quantum computers don’t solve either type of scaling problem anyway. They CERTAINLY don’t help with excessive history length and I can’t imagine why anybody would think they do.

  9. John Taylor says:

    It still seems weird to me that credit cards charge so much and retailers can’t charge for their use. Lobbying dollars at work I suppose.

    It also seems strange that banks haven’t really been able to get around it yet – Visa, MasterCard & Amex don’t really do all that much for their large fees, nothing banks couldn’t replace.

    As for blockchain- I think JPM got the idea that Wolf made fun of a lot in the past – say you’re doing anything related to “blockchain” and your stock goes up from the hype.

    • California Bob says:

      “It still seems weird to me that credit cards charge so much and retailers can’t charge for their use. Lobbying dollars at work I suppose.”

      But some retailers–a couple of gasoline chains, for instance–offer a ‘cash price’ that is usually a few cents/gallon less than the CC price. I did the math, and it’s more ‘profitable’ for me to pay with my Costco Visa card and get the 4% rebate in ‘Costco Cash’ (has to be spent at Costco, but who can’t find plenty of stuff to buy at Costco?).

  10. Setarcos says:

    Not a fan of Pay Pal, but I think transfers between friends & family are free as well. Maybe the fundng account choice triggers a fee?

    The banks built and owned the MC and Visa networks, which were not for profit enterprises until about a decade ago.

    The merchants sell their stuff on cards and the banks take the credit risk. With interbank cards, merchants were able to eliminate their in-house credit plans (which were money losers for most merchants). And 97% of the card purchase amount is better than 100% of whatever cash someone has in their pocket. And cash isn’t free for merchants to handle for numerous reasons.

    There is a great little restaurant I know of that doesn’t take cards. Many times we have been headed there to eat and then realized that we didn’t have enough cash, so went elsewhere. I understand they don’t want to pay the fees and I hope they understand I don’t always carry enough cash.

    • Shane From Melbourne says:

      A lot of places in Melbourne only take cash, but that is more to do with under declaring profits and avoiding paying more tax than paying credit card fees……

  11. Ronnie says:

    It’s a sign, the Rats are disembarking the Titanic2.

    • Bankers says:

      This is happening slowly in many areas, from USA, to Euroland, to Iran to Venezuela, all in subtly different ways. Crypto currencies are similar for the general public, gold payment frameworks, electronic vouchers even.

      I suppose with JPM the scale is such that if say fiat tanks, then it owns its own global payment and accounting scheme, basically a currency outside of a currency, which would allow a continuation of the existing financial and business model, somehow insulated from the wider circumstance.

      It all verges on sci-fi, but today’s world when first looked at from a hundred years ago would show the same level of difference probably. A hundred years is not that long, and some kinds of evolution are near instant even within that timeframe. Well they seem so, but usually there is a lot of preparation gone on behind the scenes beforehand.

  12. gunther says:

    The sleepy credit unions in Germany offer a way to transfer money instantly.
    Log in the account, put in the reciever’s data, check “instant transfer,” hit send and the money is within seconds at the reciever if the bank supports it.
    I do not know how the transaction is processed but instant transfer is doable.
    In the age of internet three days processing time for a transfer is a joke.

  13. Joe Harrison says:

    Avoiding getting gouged or overcharged on anything is my religion and I work hard at it. Currently finding Revolut superb for FX or international money transfer. I have no connection except merely a satisfied customer etc.

  14. This is an important step in building a “transaction” only cryptocurrency. The current version of crypto is like the Flintstones car, you still power it with your feet. Credit agencies are going to replace credit cards you will buy and sell credit units, your credit score will be your bank account. When crypto can circumvent currency exchange constraints we are in a whole new world. The Euro was the first crude experiment and the blowback over the massive bureaucracy has proved limiting. Uniform pricing might not be the answer, but the system will take those differences into account.

  15. MoreMoneyPlease says:

    I have noticed multiple banks have systematically limited both my daily and monthly ACH network limits (Automated Clearing House network).

    Even with my business accounts, the transfer limits have been reduced from $50,000 daily and unlimited monthly to as low as $15,000 daily and $25,000 monthly, depending on the bank. My business can be capital intensive, thus the monthly limit was beyond reasonable.

    The reason banks are destroying ACH limits seems to be to push users into Zelle (and other systems, like online wire transfers at home), as admitted by my personal private bank manager last week. It seems to be a way for the banks to make more profits I assume? I’d much rather just have them charge me for using ACH personally, anyone know why ACH is “less productive”?

    I get around this hassle by using multiple banks. I also use one bank with a $100,000 daily ACH transfer limit, unlimited monthly. Funny thing is, I can pull pull $100k daily from a bank with a tiny ACH limit (some as low as $2k daily), as long as I am “pulling” funds from the higher ACH limit bank, versus “pushing” funds from the lower ACH limit bank.

    I feel like I’m 95 years old (actually in my 40s) when it comes to “change”, as I simply I feel like 25% of my life is spent on “LIFE ADMIN”. Keeping up with changing bank technology has become part of that “LIFE ADMIN”. I used to be much more productive when life was way more simple. Constantly changing technology has become disruptive to my productivity at this point, does anyone else think the same? For example this is the only forum I can find on any financial site that allows me to post without a Facebook account (never had, never will), etc. I can’t even converse with fellow citizens without “logging in” to another “LIFE ADMIN” system to be tagged, tracked, and bagged for used by some entity of Corporate States of America. At this point, it feels like change for the sake of change, and change for greed…MoreMoneyPlease!

    • Wolf Richter says:


      I have a question for you, and let me know when you try it out: Can you even switch your larger ACH transfers to Zelle? Say, you needed to pay another company $20,000, will Zelle even let you do it?

      My Zelle payments (from my corporate account) are in the range between $100 and low 4-figures, but there is a payment-size limit on my account, and I could not make a $20,000 payment out of the blue. I assume this is a safety feature. Maybe if I needed to, I could try to get the bank to extend the size limit.

      So if you succeed in making a larger payment with Zelle, let me know.

      • Bankers says:

        After researching out of own interest this is what I find :

        Zelle page says you cannot request increases.

        ACH pull limits on a bank with lower push limits are not consistent :

        “ACH limits can be for both pushing from one bank or pulling from another, or the reverse. I have had an account at at least one bank that applies the limit to both. That bank would not let me send more than a certain amount and if a pull from another bank came in over that amount, it would reject the transaction.”

        Pull transactions can have added delay.

        Mobile check deposits are maybe one way around the limits


        but I suppose more cumbersome. The limits stated there are as example, the comments discuss this a bit.

        From the same site “Zelle Pay Limits at the Top U.S. Banks” gives details on those etc.

        That is all a bit chaotic to my view, ACH limits seem odd and are maybe for the reason MoreMoneyPlease said. I also agree that there is more distraction than plain service across the web, for transfers the improvements seem to come at other costs when the simplest and cheapest would do, as well as being perfectly functional.

      • MoreMoneyPlease says:


        Zelle – $2,500 daily/$4,000 monthly is the starting point with one bank I use. That could be increased I am told if I use a “Funding Account” set up through the private banker side. Also it states “the amount of money you can send a new recipient may be initially restricted; however, we may adjust the transfer limited when you send subsequent payments to the same recipient.” Delivery speed is “minutes up to 2 days”. I do know that when I select “Zelle” online at this bank, it requires me to “accept” a 10-15 page contract to continue, which I have not. The contract is more complicated that I desire, as you can not make Zelle “tax payments”, “fine” payments, “overdue debt” payments, “court-ordered” payments, yada yada yada. I did glance at the “Power of Attorney” section and it seems like an unnecessary power grab at best compared to ACH. As far as I know, ACH does not require I sign off on Power of Attorney over my accounts.

        What gets strange is there is “$0” fee to use Zelle, unlike for example ExpressSend which is $8, and personal wires online which starts at $30. I am guessing ACH costs the banks more than Zelle. Still wonder where Zelle makes money???

    • 91B20 1stCav (AUS) says:

      MMP-concur heartily with your banking/financial obligations running on technological steroids observation. In my downscale, mundane world I term this as: ‘the tools are now more important than our actual value-producing jobs…’. The high priests of both seem more than happy to keep our attentions on their ‘products’ as long as revenues keep flowing their way every month/quarter. Thank you again, Wolf, for your oasis in this desert-at least I always have some idea of the make, model, color and license number of the truck that is hitting me! May we all have a better day.

  16. ewmayer says:

    “1:1 redeemable in fiat currency held by J.P. Morgan (e.g., US$).”

    This new ‘cryptocoin’ needs a snazzy moniker – how about “Fiata Morgana?”

    (I realize the name better applies to ‘true’ CCs, which are much more inherently “mirage-ulous” than the JPM coin – but ya go where the puns is at, I say.)

  17. ewmayer says:

    Interestingly, while Wolf justifiably rags on Paypal as a gouger, Paypal does have a “send money to friends or family” feature which is 0-fee under most circumstances. I find it very useful – e.g. I share an apartment, every month I cut a check to the management office and my roommates paypal me their share, which eliminates the need for them to write me a check and for me to deposit it at my bank. I also maintain a freeware software package for which I offer a Paypal donations widget – while the amounts (so far) are so small that the Paypal 3% gouge is relative chump change, I do add a note next to the widget mentioning that if the user Paypals me directly via the send-money-to-friends-and-family feature using my e-mail address they can avoid losing that 3% to the gouge.

    • Wolf Richter says:


      Actually the fee can be a lot larger than 3% on small amounts. PayPal charges a flat fee of $0.30 for each transaction, plus 2.9%. So on a $2 payment, the total fee is 36 cents, or 18%.

      On a $5 payment, this works out to a fee of 9%.

      • J.M.Keynes says:

        – Interesting. I always was wondering how PayPal was earning (its) money.

  18. Gerald says:

    A couple problems with Zelle. My tenant tried to pay me rent but they could only send $1000 per day. Makes it a hassle because it takes two days and two transactions. Secondly, you can’t use Zelle to pay a business. That would be banks stabbing themselves in the foot because it threatens their credit card profits. However – merchants can now accept safe, stable cryptocurrency at point of sale – with absolutely no fees. The customer pays a small network fee of a few cents to send their payment. More at crypto for merchants dot com.

    • Wolf Richter says:


      “Secondly, you can’t use Zelle to pay a business.”

      My corporation “Wolf Street Corp” pays unincorporated contractors (1099-types) with Zelle. I ended up having to call the bank to figure out how to do it. Maybe this depends on the bank. I have not yet tried to do a corp-to-corp payment.

      Concerning the size limits: my limits were raised automatically after a few transactions. So if your tenant makes a few regular payments (such as split rent payments), the limits may be raised automatically to where he/she can make the rent payment in one sitting.

  19. Jeff says:

    Why are you people still using money center banks? We aren’t very smart if we continue to support these crooks.

  20. J.M.Keynes says:

    – I have a credit card but I don’t use it very often when I am buying something online. Only when I don’t know the number of the bankaccount of the seller I use the credit card.
    – My bank has set up a clever system to circumvent the credit card companies and I can pay the seller directly (online). And A LOT OF online companies use this system. No (large) fees for the credit card companies. And this system is surprisingly secure because I don’t need to mess with usernames or passwords. (No, no details.)

  21. LooseChange says:

    Avid reader and huge fan of your work, Wolf!

    International bank transfer fees fall under 2 categories: explicit (e.g. wire transfer fees) vs. implicit (e.g. hidden fees on exchange rate)

    It’s amazing how much banks make on fees alone (i.e. wire transfer fees with avg. domestic fee of USD 25 and international fee of USD 50) but the most compelling fee is how much banks charge on the exchange rate – typically, spreads of 3% to 5% on major currencies (e.g. EUR, GBP, CAD, etc.) while 5% to 8% on exotic currencies (e.g. BRL, INR, KRW, CNY, etc.) which customers have no transparency on until after the transfer is processed.

    For example: if your company transfers USD 10K weekly to your employees/supplier in UK, your bank charges you USD 50.00 per wire transfer fee (i.e. explicit fee) and generates USD 300.00 to 500.00 per transfer on hidden fees (i.e. implicit fee) — that means your bank generates USD 10.4K in wire transfer fees and USD 15.6K to 26K in hidden fees per year from only one customer.

    – LooseChange

    • Wolf Richter says:

      Yes, my company makes one wire transfer per month to the Eurozone. So dollars to euros… The banks (2) are making some money on the exchange and fixed fees at both ends (I pay both). But it’s still cheaper for transfers of over $1,000 than PayPal’s international rates. Can’t wait for something like Zelle to go international.

      • LooseChange says:

        Agreed – for transfers above USD 1K, PayPal and even your bank are not the most advantageous routes…

        If I could offer a similar alternative to Zelle (i.e. bank-to-bank) for international payments that charges no wire transfer fees and gets a better exchange rate, would you have any interest in learning more about it, Wolf?

  22. Manny says:

    BHIM, upi

    which “MA” and “V” are working very hard to stop


    Bharat Interface for Money

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