In an announcement Thursday morning, the Federal Reserve revealed that its instant payment system, the FedNow® Service, has officially launched. This tool aims to empower banks and credit unions of all sizes to facilitate instant money transfers for their customers. The Federal Reserve claims that FedNow transactions can be executed 24/7, 365 days a year.
To begin with, 35 banks and credit unions, along with the US Treasury Department’s Bureau of Fiscal Service, are among those already equipped to handle payments through the FedNow Service. Additionally, a group of 16 service providers are on hand to provide payment processing support for banks and credit unions.
“The Federal Reserve built the FedNow Service to help make everyday payments faster and more convenient over the coming years,” said Federal Reserve Chairman Jerome Powell. “Over time, as more banks choose to use this new tool, the benefits for individuals and businesses will include the ability for a person to receive a paycheck immediately, or a company to immediately access funds when a bill is paid.”
When asked if the FedNow service was trying to replace cash and whether it was a central bank digital currency (CBDC) or not, the Federal Reserve said “No. The FedNow service is not related to a digital currency. The FedNow service is a payment service that the Federal Reserve is making available to banks and credit unions to transfer funds to their customers. It is not like other Fed-reserved services, such as FedNow. It is not a form of currency, nor a step toward eliminating any form of payment, including cash.”
A comprehensive list of early adopters already equipped with instant payment capabilities can be found in an attached document. Further information can be found on the Federal Reserve Financial Services website.
