The Federal Reserve today officially launched its FedNow service for instant payments. Banks of all sizes can sign up and use the tool to instantly transfer money for their customers at any time of day, the agency said. As an interbank payment system, FedNow will operate alongside other Fed payment services such as Fedwire and FedACH.
The Fed previously announced that more than 50 early adopters would be able to use FedNow on launch, including 16 service providers that support payment processing for banks and credit unions. When fully available, instant payments “will provide substantial benefits for consumers and businesses, such as when rapid access to funds is useful, or when just-in-time payments help manage cash flows in bank accounts,” the agency said.
In a statement, ABA President and CEO Rob Nichols noted that with the Clearing House’s RTP network already in operation, there are now two options to choose from. “We will continue to educate our members on the two systems and the benefits they offer consumers and businesses,” Nichols said. “Fully realizing the benefit of these new rails will require the Fed to work hard to encourage interoperability between the systems, urge banks’ core providers to quickly allow banks to offer these real-time options in a timely and cost-effective way, and ensure that America’s consumers and businesses have a strong understanding of the value and considerations for real-time payments use.”
