Today, the Federal Reserve Announce The highly anticipated launch of the FedNow service – the new instant payment system in the United States. FedNow enables participating financial institutions to securely move funds in seconds, 24/7, every day of the year, and provide funds instantly to customers.
In the original FedNow participant is 35 banks and credit unions representing institutions of all sizes across the country. Other early adopters include the U.S. Department of the Treasury’s Office of Fiscal Services and 16 payment processing providers, who are working to onboard and enable FedNow for more financial institutions. No doubt the list of participants will grow in the coming months.
The FedNow network, developed by the Federal Reserve, is inclusive and available to all 10,000 banks and credit unions of all sizes in the United States, providing instant payments to businesses and consumers across the country. As real-time payments become more ubiquitous, FedNow’s RTP with the clearing house will present enormous opportunities for payments industry players to innovate and deliver new products and solutions. Financial institutions that join FedNow can attract and retain customers and stay competitive with new instant payment services.
FedNow is an interbank payment system like ACH and FedWire, not a consumer-facing service. Unlike Venmo or Zelle, FedNow doesn’t have a mobile app. Customers of banks and credit unions participating in the FedNow network can send instant payments quickly and securely using their financial institutions’ mobile apps, websites and other interfaces.
As more financial institutions connect to FedNow and partner with service providers to deliver innovative solutions, more consumers and businesses will be able to enjoy the benefits of instant payments. For example, shoppers will be able to pay for purchases in real time directly from their bank accounts, governments will be able to pay tax refunds instantly, employers will be able to pay their employees after each shift, and consumers will be able to pay their bills at the last minute without incurring late fees. These are just a few examples of potential real-time payment use cases. Today marks the beginning of the key changes that FedNow and Instant Payments will bring to the U.S. and global payments ecosystem.