The United States (US) Federal Reserve (Fed) has announced the launch of the FedNow Service. It’s a new interbank payment system that allows banks and credit unions of all sizes to instantly transfer money for their customers no matter the time or date.
The Fed said that the service is launching with several dozen early-adopting partners including banks, credit unions, and service providers. Some well-known banks that are among early adopters include JPMorgan Chase and Wells Fargo but you can find a comprehensive list on the Federal Reserve’s website.
Commenting on the launch of FedNow Service, Fed Chair Jerome Powell said:
‘The Federal Reserve built the FedNow Service to help make everyday payments over the coming years 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.’
In terms of practical benefits, the Fed said that individuals will receive their paychecks and use them the same day they are sent. Small businesses will be able to manage their cash flows more efficiently as there won’t be any processing delays.
At launch, the Fed has less than 60 partners but it said it’s committed to scaling this up to include all of the country’s 9,000 banks and credit unions so customers can benefit from a faster service. End users won’t have to do anything, they can just log on to their bank account and start making instant payments as soon as their bank supports the FedNow Service.
Compared to some other countries, the availability of instant payments has taken a long time to come to the US. In the United Kingdom, for example, many people are accustomed to payments going through relatively quickly thanks to the Faster Payments Service (FPS) which launched 15 years ago.
Source: Federal Reserve