The Federal Reserve has officially launched the FedNow Service, a new system for instant payments designed to empower banks and credit unions. This announcement means that banks and credit unions of all sizes can now sign up for and utilize this tool to facilitate immediate money transfers for their customers, 24 hours a day, every day of the year.
According to Federal Reserve Chair Jerome H. Powell, the FedNow Service was created with the aim of making everyday payments faster and more convenient in the years to come. As more financial institutions adopt this new tool, individuals and businesses will benefit greatly, including the ability to receive paychecks instantly and gain immediate access to funds when invoices are paid.
The initial phase of the FedNow Service rollout includes 35 early-adopting banks and credit unions, as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service. Additionally, there are 16 service providers prepared to support payment processing for banks and credit unions.
Once fully operational, the FedNow Service will offer significant advantages to consumers and businesses alike, particularly in situations that require quick access to funds or when just-in-time payments are necessary for managing cash flows. For example, individuals will be able to receive and use their paychecks on the same day, while small businesses can efficiently manage cash flows without delays in processing. Over time, customers of participating banks and credit unions will be able to conveniently send secure instant payments through their financial institution’s mobile app, website, and other interfaces.