this post was submitted on 20 Jul 2023
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US Federal Reserve launches "FedNow" - the long-awaited instant payments service, modernizing the US banking system (www.reuters.com)
submitted 1 year ago by queue@beehaw.org to c/usnews@beehaw.org
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The "FedNow" service, which has been in the works since 2019, will seek to eliminate the several-day lag it commonly takes cash transfers to settle, bringing the U.S. in line with countries including the United Kingdom, India, Brazil, as well as the European Union, where similar services have existed for years.

FedNow is launching with 41 banks and 15 service providers certified to use the service, including community banks and large lenders like JPMorgan Chase (JPM.N), Bank of New York Mellon (BK.N), and US Bancorp (USB.N), but the Fed plans to onboard more banks and credit unions this year.

Unlike peer-to-peer payments services like Venmo or PayPal, which act as intermediaries between banks, payments made via FedNow will settle directly in central bank accounts.

The Fed also operates a real-time payments system called FedWire, but that's reserved for large-scale, mostly corporate payments and is only operational during business hours. While the new FedNow system is for everyone, it's likely to benefit consumers and small businesses the most, analysts have said.

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[โ€“] GeneralRetreat@beehaw.org 0 points 1 year ago (1 children)

Wait... why doesn't the USA have a system like this already?

I always found cryptobro preaching about instant cash transfers perplexing, but this explains a lot.

[โ€“] ericjmorey@beehaw.org 1 points 1 year ago

Financial institutions have been happy with the fees generated by not having this system in place. And the Fed is explicitly not allowed to compete with its member banks.