WASHINGTON—The Federal Reserve Board on Monday announced that Federal Reserve Banks will develop a new around-the-clock real-time payment and settlement service, called the FedNow℠ Service, to support faster payments in the United States. The Board anticipates the FedNow Service will be available in 2023 or 2024.
The Federal Reserve said it believes faster payment services, which enable the near-instantaneous transfer of funds day and night, weekend and weekdays, have the potential to become widely used and to yield economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments.
The Federal Reserve last year announced plans to update its payments system to process transactions almost instantly. Currently, the government’s system doesn’t operate on weekends and can take days to process bill payments and direct deposits.
The Board said it is requesting comments on how the new service might be designed to most effectively support the full set of payment system stakeholders and the functioning of the broader U.S. payment system.
In December 2018 comments to the Federal Reserve, NACS urged the Fed to update the U.S. payments system, specifically to adopt and administer a real-time gross settlement system.
Big banks, meanwhile, are fighting the Fed’s effort to speed up how quickly money moves through its payments system, claiming that plans for near real-time payments could derail the private bank-developed network operated by the Clearing House Payments Co., reports the Wall Street Journal.