Late last week, the U.S. Federal Reserve confirmed that its FedNow instant payments system is live. The new system, in development for the last four years, promises to provide Americans with nearly instantaneous fund transfers.
The launch of FedNow instant payments
In a statement announcing the system’s launch, the Fed described how FedNow will be rolled out to the public. Initially, the system will be used by dozens of early adopting banks and credit unions, and the Treasury Department’s Bureau of the Fiscal Service. Also, more than a dozen other providers are reportedly prepared to provide support for payment processing.
The Federal Reserve noted that it plans to continue to work with financial service providers to make the service available to their customers. According to the Fed, that commitment extends to all 9,000-plus U.S. banks and credit unions.
What can FedNow do?
The new FedNow payments system is designed to provide a whole host of benefits to banks and their customers. For example, faster payment processing will enable workers to get access to paycheck funds without the current delays. The new system is also expected to facilitate cash flow management for the nation’s businesses.
As Federal Reserve Chair Jerome Powell noted:
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient. Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.”
The launch of the FedNow instant payments system means that the U.S. central bank now offers services similar to those enjoyed in the EU, UK, and other countries. Until now, those fast payment services have only been available from private sector entities like The Clearing House.
