The Federal Reserve has launched its instant payments system, the FedNow Service, which allows banks and credit unions to instantly transfer money for their customers at any time of the day, any day of the year; a July 20 press release said. Jerome Powell, Federal Reserve chair, stated that this new tool aims to make everyday payments faster and more convenient for individuals and businesses.
The system is now live, with 35 early-adopting banks and credit unions as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service already equipped with instant-payments capabilities via the FedNow Service.
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” Powell said in the release. “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.”
Any large bank or credit union can register and utilize the new facility to rapidly transfer money for their clients at any time of the day or year, the release said. Sixteen service providers are prepared to assist banks and credit unions with payment processing.
When completely implemented, fast payments will have a significant positive impact on both consumers and businesses, especially in situations when quick access to money is necessary or just-in-time payments can help control cash flows in bank accounts, the release said. For instance, people can receive their paychecks immediately and use them the same day, and small firms can manage cash flows more effectively and without delays. Customers of banks and credit unions who sign up for the service should be able to transmit immediate payments swiftly and securely through their financial institution’s mobile app, website and other interfaces in the upcoming years.
The FedNow Service functions as an interbank payment system in conjunction with other venerable Federal Reserve payment services such as Fedwire and FedACH, the release said. In order to facilitate the widespread availability of the service for their clients over time, the Federal Reserve is dedicated to cooperating with the more than 9,000 banks and credit unions located throughout the nation. The Federal Reserve Financial Services website provides additional information.
