Federal Reserve Unveils New Instant Payments System FedNow

On Thursday morning, the Federal Reserve announced the official launch of its real-time payment system, FedNow® Service. This service is designed to enable banks and credit unions of all sizes to conduct instant fund transfers for their customers, with round-the-clock availability, throughout the year.

In its initial phase, the service has already been adopted by 35 banks and credit unions, as well as the U.S. Department of the Treasury's Bureau of the Fiscal Service. In addition, 16 service providers stand ready to support payment processing for these financial institutions.

Federal Reserve Chair Jerome Powell highlighted the potential benefits of the FedNow Service. He stated, "the Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient." 

Powell added that as the usage of FedNow expands to more banks over time, the advantages to individuals and businesses will become more prominent. These benefits may include an individual's ability to receive a paycheck instantly or a business's capability to access funds the moment an invoice gets settled.

In response to queries regarding whether the FedNow service aims to replace cash, or whether it is a central bank digital currency (CBDC), the Federal Reserve clarified: 

No. The FedNow Service is not related to a digital currency. The FedNow Service is a payment service the Federal Reserve is making available for banks and credit unions to transfer funds for their customers. 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.

An attached document provides a detailed list of early adopters capable of instant payment processing. Additional information about FedNow is available on the Federal Reserve Financial Services website.