The US Federal Reserve launches new instant payments system FedNow
The Federal Reserve has gone live with FedNow, its latest system for processing instant payments.
FedNow is an interbank payment system that processes transactions between banks, credit unions and their customers, claiming that these can be completed instantly and at any time.
It is to operate in parallel with the Federal Reserve’s existing payment services, including Fedwire and FedACH.
Going live with the new system on Thursday, the US central bank says its aim is “to help make everyday payments over the coming years faster and more convenient”.
It anticipates that FedNow will provide “substantial benefits” for businesses and customers through better fund accessibility and cash flow management.
“For example, individuals can instantly receive their paychecks and use them the same day, and small businesses can more efficiently manage cash flows without processing delays”, the announcement reads.
The system has currently been adopted by 35 banks and credit unions, including the Bureau of the Fiscal Service operated by the US Department of the Treasury.
Early adopters also include 16 service providers, including ACI Worldwide, BNY Mellon and FIS, which will support banks and credit unions with payment processing.
Federal Reserve chair, Jerome Powell, expects that more banks and credit unions will adopt the system “over time”. When this happens, the system’s instant payments capability is poised to extend to their customers through associated apps, websites and other interfaces.