The Federal Reserve today announced the launch of its long-awaited real-time payment system, FedNow. After nearly four years of development, this initiative will establish the regulator’s first nationwide network for instant payments, a feature already present in other countries and a major U.S. processor. The launch date comes as the adoption of faster payments increases in the United States.
Earlier in the week, the word on the street was that the launch was imminent, said Steve Mott, a principal at payments consultancy BetterBuyDesign and a keen observer of real-time payments.
FedNow’s entrance into the market will bring about both competition and potential connectivity with other existing faster-payment systems, such as The Clearing House Payments Co. LLC’s Real Time Payments service, which has been operational since 2017 and has continuously expanded its reach to various financial institutions and payment volumes.
This strategic move by the Federal Reserve is a culmination of significant efforts to prepare financial-service providers since the announcement of building a real-time payment system back in 2019. Furthermore, top officials at the Federal Reserve Bank of Cleveland have indicated that FedNow’s course will likely involve diverting time-sensitive volume to the new platform, particularly in peer-to-peer payments.