In an announcement Thursday morning, the Federal Reserve unveiled that its instant payment system, the FedNow® Service, has officially gone live. This tool aims to empower banks and credit unions of all sizes to facilitate instantaneous money transfers for their customers. The Federal Reserve claims that FedNow transactions can be executed 24/7, 365 days a year.
To start, 35 banks and credit unions, alongside the U.S. Department of the Treasury’s Bureau of the Fiscal Service, are among those already equipped to handle payments through the FedNow Service. Furthermore, a lineup of 16 service providers are poised to offer payment processing support for banks and credit unions.
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” said Federal Reserve Chair Jerome Powell. “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.”
When asked if the FedNow service is attempting to replace cash, and if it was a central bank digital currency (CBDC) or not, the Federal Reserve stated “No. The FedNow Service is not related to a digital currency. The FedNow Service is a payment service the Federal Reserve is making available for banks and credit unions to transfer funds for their customers. It is like other Federal Reserve payment services, such as Fedwire and FedACH. The FedNow Service is neither 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.