• The Federal Reserve has launched the FedNow Service, a new instant payment platform to facilitate transactions 24/7 365 days a year for banks and credit unions.
• 35 banks and credit unions as well as 16 service providers are now prepared to handle payments through the FedNow Service.
• Federal Reserve Chair Jerome Powell clarified that FedNow is not related to digital currency or a step towards replacing any form of payment, including cash.
Federal Reserve Launches ‚FedNow‘ Instant Payment System
The Federal Reserve has launched the FedNow Service, an instant payment platform that aims to empower banks and credit unions by allowing them to execute transactions 24/7 365 days a year. 35 banks and credit unions, including the U Bureau of the Fiscal Service of the US Department of the Treasury, are already equipped to handle payments through the FedNow Service. Furthermore, 16 service providers are also prepared to support banks and credit unions with payment processing.
Benefits for Individuals & Companies
Explaining the benefits of this system, Federal Reserve 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, individuals will be able to instantly receive their paychecks while companies can access funds immediately when invoices are paid.“
Not Related To Digital Currency
Powell also clarified that the newly launched system is not attempting to replace fiat money stating that „FedNow is not related to a digital currency“. He added that “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.“
Banks & Credit Unions Prepared
The 35 banks and credit unions that are currently prepared for payments through this service include BankAmerica Corp., JPMorgan Chase & Co., Wells Fargo & Co., UBS Group AG, Bank of New York Mellon Corp., TD Bank USA NA, PNC Financial Services Group Inc., BB&T Corp., Capital One Financial Corp., Citigroup Inc., Santander Consumer USA Holdings Inc., State Street Corp. Additionally 16 service providers have been setup in order assist these banking institutions with payment processing needs.
Conclusion
Overall The Federal Reserve’s launch of its new instant payment platform called ‚Fed Now‘ promises many benefits for individuals and businesses alike such as facilitating immediate wage payments or invoice payments respectively. Although it does not attempt at replacing fiat money or being related in any way with digital currencies it still represents an important milestone towards faster financial transactions in today’s highly competitive world.