The Federal Reserve recently unveiled the FedNow® Service, an instant payment system that offers customers and businesses immediate money transfers anytime and on any day.
The platform allows banks and credit unions across the United States to offer customers the convenience of instant money transfers, even on weekends and holidays, according to a July 20 Federal Reserve press release.
"The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient," said Federal Reserve Chair Jerome Powell. "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."
Over 30 banks and credit unions, along with the Department of the Treasury's Bureau of the Fiscal Service, have integrated instant payment capabilities through the FedNow Service, the release stated. Currently, 16 service providers are ready and able to support payment processing for other financial institutions.
The FedNow Service was designed to empower financial institutions in the U.S., regardless of their scale or location, with a secure and efficient instant payment system, according to the Fiat Reporter.
“By participating in this service, these institutions will be able to facilitate seamless and immediate transactions around the clock,” the Fiat Reporter reported. “This will revolutionize the way businesses and individuals handle their finances, enabling them to send and receive funds at any time, day or night.”
The instant payments system could revolutionize banking and how businesses manage cash flows, according to the Federal Reserve release.
Officials hope to bring the technology to 10,000 financial institutions across the U.S., according to a June 29 Federal Reserve press release.
Through the FedNow Service, “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 release stated.
In the future, customers of banks and credit unions that sign up for the service should be able to use their financial institution's mobile app, website, and other interfaces to send instant payments quickly and securely, according to the Federal Reserve.