The Federal Reserve has launched its new instant payments system, the FedNow Service, which allows banks and credit unions of all sizes to instantly transfer money for their customers, 24/7, 365 days a year.
Federal Reserve Chair Jerome H. Powell mentioned in a press release that this new tool aims to make everyday payments faster and more convenient for individuals and businesses.
As more banks adopt this system, benefits will include immediate access to paychecks for individuals and instant fund access for businesses upon invoice payment.
At its initial rollout, 35 early-adopting banks and credit unions, along with the U.S. Department of the Treasury’s Bureau of the Fiscal Service, are equipped with instant payment capabilities through the FedNow Service. Additionally, 16 service providers are prepared to support payment processing for banks and credit unions.
When fully available, this system will offer significant advantages for consumers and businesses, enabling rapid access to funds and better cash flow management for businesses, as well as allowing individuals to receive and utilize their paychecks on the same day.
The FedNow Service operates alongside other long-standing Federal Reserve payment services like Fedwire and FedACH.
It serves as an interbank payment system, and the Federal Reserve aims to collaborate with over 9,000 banks and credit unions across the country to ensure widespread availability of this service for their customers in the future.
Customers of banks and credit unions that sign up for the service will be able to use their institution’s mobile app, website, and other interfaces to send instant payments securely and efficiently. Overall, this move by the Federal Reserve represents a significant step towards modernizing and expediting payment transactions in the United States.
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- Source: https://alexablockchain.com/federal-reserve-officially-launches-fednow-service/
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