FedNow, an instantaneous payments and transfer service brought to you by the US Federal Reserve, is now live. FedNow is available 24/7/365 for approved institutions.
According to a statement by the Fed, 35 banks and credit unions, along with the U.S. Department of the Treasury’s Bureau of the Fiscal Service, can send and receive instant payments. In addition, 16 service providers are ready to support payment processing for banks and credit unions.
Federal Reserve Chair Jerome H. Powell said that FedNow will help to make everyday payments 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 Fed noted that employees may now receive salary deposits immediately, and smaller businesses may better manage their cash without delays. Expectations are that immediate payments will be incorporated into approved entities enabling immediate payments for all consumers via Apps and websites.
While FedNow should be viewed as a natural evolution of payments and transfers, one must wonder how this will impact commercial applications that also provide instant transfers. And then, there are stablecoin issuers that seek to provide a similar service that may have to compete with FedNow.
While 35 entities are approved to use FedNow, there are over 9000 banks and credit unions that will be looking to add the service soon.
