The Federal Reserve today launched its new system for instant payments, the FedNow Service.
The U.S. Department of the Treasury’s Bureau of the Fiscal Service and 35 early adopter banks and credit unions, including Avidia Bank, Peoples Bank and Salem Five Bank in Massachusetts, are equipped with instant payment capabilities via the FedNow Service. In addition, 16 service providers are ready to support payment processing for banks and credit unions.
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” Federal Reserve Chair Jerome H. Powell said in a statement. “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.”
Banks and credit unions of any size can use the tool to instantly transfer money for their customers at any time of day, on any day of the year, the Fed said in a statement. As an interbank payment system, the FedNow Service operates alongside other longstanding Federal Reserve payment services such as Fedwire and FedACH.
Burlington-based EasCorp participated in the system’s pilot program; earlier this year President and CEO Cynthia Nelson said the credit union learned a great deal about “the value of collaboration” in the process
The Fed said it will continue to work with the more than 9,000 banks and credit unions across the country if they intend to join FedNow and support the widespread availability of the service.
“We welcome the Federal Reserve’s launch of FedNow and its official entry into the world of real-time payments. With The Clearing House’s RTP system already in operation, the arrival of FedNow means there are now two real-time payments options available to choose from,” Rob Nichols, president and CEO of American Bankers Association, said in a separate statement.
“We will continue to educate our members on the two systems and the benefits they offer consumers and businesses. Fully realizing the benefit of these new rails will require the Fed to work hard to encourage interoperability between the systems, urge banks’ core providers to quickly allow banks to offer these real-time options in a timely and cost-effective way, and ensure that America’s consumers and businesses have a strong understanding of the value and considerations for real-time payments use,” Nichols added.
