In an endeavour to modernise financial transactions, the Federal Reserve launched its instant payment platform, the FedNow Service.
The platform, which officially went live on Thursday, seeks to enable banks and credit unions of all sizes to process their clients’ transactions instantly. This represents a significant step in improving transaction speed and efficiency, providing greater flexibility to customers.
The Federal Reserve has announced that the FedNow service is operational 24/7, throughout the year. At the outset, 35 banks, credit unions, and the Bureau of the Fiscal Service of the US Department of the Treasury are ready to manage payments via FedNow. An additional group of 16 service providers is primed to aid banks and credit unions with payment processing.
The FedNow Service, while offering real-time payments, is not an attempt to replace traditional money, emphasised Federal Reserve Chair Jerome Powell. Rather, it’s a new tool akin to other Federal Reserve payment services, such as Fedwire and FedACH. Powell stressed that FedNow is not a form of digital currency, nor is it a step towards eliminating any existing form of payment, including cash.
Federal Reserve Chair Jerome Powell said, “The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient. 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.”
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