The newly launched FedNow Service aims to empower banks and credit unions.
FedNow will allow for the execution of 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.
The FedNow® Service, the Federal Reserve’s instant payment platform, went live officially on Thursday morning. The service will allow banks and credit unions of all sizes instantly process the transactions of their clients.
The Federal Reserve asserts that FedNow transactions can be carried out every day of the year, around the clock.
To begin with, 35 banks and credit unions and the Bureau of the Fiscal Service of the US Department of the Treasury are among those who are already prepared to handle payments through the FedNow Service. Furthermore, a group of 16 service providers is prepared to support banks and credit unions with payment processing.
Prudent payments for individuals and companies via FedNow
Explaining the benefits of the instant payment 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, 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.”
Jerome Powell, however, clarified that the newly launched system is not attempting to replace fiat money. He said 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.”