FedNow
{{Short description|US Federal Reserve payment service}}
{{Infobox brand
| name = FedNow Service
| logo = FedNow Services logo.png
| logo_size = 250px
| logo_alt = FedNow Service logo
| logo_caption =
| image =
| alt =
| caption =
| producttype = Instant payment service
| currentowner = Federal Reserve
| country = United States
| introduced = {{Start date and age|2023|7|20|df=yes}}
| related =
| website = {{url|https://www.frbservices.org/financial-services/fednow}}
}}
FedNow is an instant payment service developed by the Federal Reserve for financial institutions in the United States, which allows individuals and businesses to send and receive money.{{Cite web |title=Federal Reserve Board – FedNow Service |url=https://www.federalreserve.gov/paymentsystems/fednow_about.htm |access-date=2022-09-23 |website=Board of Governors of the Federal Reserve System |language=en|date=2022-09-02}}{{Cite news |title=Analysis {{!}} The Fed's Messaging Needs an Upgrade |language=en-US |newspaper=Washington Post |url=https://www.washingtonpost.com/business/the-feds-messaging-needs-an-upgrade/2022/09/01/cfb869fe-29f6-11ed-a90a-fce4015dfc8f_story.html |access-date=2022-11-21 |issn=0190-8286|date=2022-09-01|department=Editorial}}{{Cite news |last= Duncan |first=Hannah|title=Fed(up)Now? Instant payments in the US finally on their way |url=https://www.thebanker.com/Transactions-Technology/Fed-up-Now-Instant-payments-in-the-US-finally-on-their-way |access-date=2022-11-21 |website=The Banker |language=en-GB|date=2022-10-14}}{{cite news|first=Jeanna|last=Smialek|title=Fed Wants Workers to Get Pay Faster|url=https://www.nytimes.com/2019/08/05/business/economy/fed-real-time-payments.html|work=New York Times|date=2019-08-05}} The service launched on July 20, 2023.{{Cite web |last=Morga |first=Adriana |date=2023-07-20 |title=Your paycheck could clear faster now that the FedNow instant payment service for banks has launched |url=https://apnews.com/article/fednow-money-banks-federal-reserve-payments-d499294a4fdcf9b551f42289cb7dc95f |access-date=2023-07-20 |website=AP News |language=en}} Financial institutions are able to build products on top of the FedNow platform.{{Cite news |last=Dale |first=Brady |date=2022-08-29 |title=The Fed gives a timeline for FedNow, its payments platform |url=https://www.axios.com/2022/08/29/fed-timeline-fednow-payments-platform-lael-brainerd |access-date=2022-11-21 |website=Axios |language=en}} By 2025, over a thousand financial institutions were live on the service.{{cite web |title=FedNow Service Participants and Service Providers |url=https://www.frbservices.org/financial-services/fednow/organizations |website=FRBservices.org |access-date=1 March 2025 |archive-url=https://archive.today/20250301025420/https://www.frbservices.org/financial-services/fednow/organizations |archive-date=1 March 2025}}
Operation
The FedNow Service began formal certification of participants in April 2023 and formally launched in July 2023.{{Cite news |date=2022-11-03 |title=Fed sets prices that banks will pay for FedNow |url=https://www.americanbanker.com/news/fed-sets-prices-that-banks-will-pay-for-fednow |access-date=2022-11-21 |website=American Banker |language=en|first=Kyle|last=Campbell}}{{Cite web |date=2023-03-15 |title=Federal Reserve announces July launch for the FedNow Service |url=https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm |url-status=live |archive-url=https://archive.today/20230316030011/https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm |archive-date=2023-03-16 |access-date=2023-03-17 |website=Board of Governors of the Federal Reserve System |language=en}}{{Cite news |date=2023-07-20 |title=Federal Reserve announces that its new system for instant payments, the FedNow Service, is now live|url=https://www.federalreserve.gov/newsevents/pressreleases/other20230720a.htm |access-date=2023-07-20 |website=Federal Reserve |language=en}} It operates on a 24-hour, 365-days-a-year basis,{{Cite journal |last=George |first=Esther L. |date=2020-12-18 |title=From Then to FedNow: Payments Innovation and the Federal Reserve |url=https://ideas.repec.org/a/fip/k00034/93643.html |journal=Policy Perspectives |language=en |issue=December|pages=1–3}} as opposed to the older FedACH system that is closed on weekends and holidays.{{Cite news |last1=Barnett |first1=Keith J. |last2=Lui-Kwan |first2=Kalama M. |last3=Ostroff |first3=Ethan G. |last4=McCrory |first4=Carlin A. |date=2022-09-06 |title=FedNow Set for 2023 Summer Launch |url=https://www.lexology.com/library/detail.aspx?g=e6ce742a-d939-4bc0-b15c-42fc149201a9 |access-date=2022-11-21 |website=Lexology |language=en}}{{Cite web |title=Advances in Digital Currency Experimentation|url=https://www.newyorkfed.org/newsevents/speeches/2022/nea221104 |access-date=2022-11-21 |website=Federal Reserve Bank of New York|first=Michelle |last=Neal|date=2022-11-04}} FedNow charges financial institutions a transaction cost of $0.043 per transaction.{{Cite web |title=FedNow Service 2025 Fee Schedule |url=https://www.frbservices.org/resources/fees/fednow-2025 |access-date=2025-02-28 |website=www.frbservices.org}}
The FedNow Service is one of many instant payment services that have been developed around the world to offer immediate or close-to-immediate interbank transfers of money.
The Federal Reserve maintains a list of all financial institutions and fintech vendors that are certified and have live Send and/or Receive capabilities on the service.{{Cite news |date=2025-03-01 |title=FedNow® Service Participants and Service Providers|url=https://www.frbservices.org/financial-services/fednow/organizations |access-date=2025-03-01 |website=Federal Reserve |language=en}}
History
A private entity, The Clearing House Payments Company, launched Real Time Payments (RTP) in 2017. RTP is an instant payment system for all US financial institutions, owned by a group of large US banks.{{cite web |title=Real-Time Payments for All Financial Institutions |url= https://www.theclearinghouse.org/payment-systems/rtp |access-date=30 April 2023}}
In 2020, Lael Brainard announced the upcoming FedNow service would provide "a neutral platform on which the private sector can build to offer safe, efficient instant payment services to users across the country",{{cite web|url=https://www.bis.org/review/r200807a.pdf|title=The Future of Retail Payments in the United States|date=2020-08-06}} after 2018 the European Central Bank launched the TIPS instant payment settlement system.{{cite journal |last1= |first1= |date=2020-10-22 |title=On the edge of a new frontier: European payments in the digital age |url=https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp201022~d66111be97.en.html |journal=European Central Bank |quote=In 2018 the Eurosystem introduced a powerful platform for the continuous settlement of instant payments (TARGET Instant Payment Settlement, or TIPS), putting the euro area at the forefront of retail payments. Sweden has recently joined TIPS (see ECB (2020), “Sweden joins ECB’s instant payments settlement platform”) and the Federal Reserve is taking steps to build an instant payments infrastructure, FedNow (see Brainard, L. (2020), “The Future of Retail Payments in the United States”, speech at the FedNow Service Webinar, 6 August).}}
In the lead up to its release scheduled for July 2023, Moody's Investor Service released a report stating the service would likely lead to gains for households and businesses, giving them lower-cost methods of moving their money. But it also noted incumbents in the payments space could see revenue declines, those participating could be forced to make upgrades in technology and staff, and there was a greater possibility of bank runs, even with potential benefits like lower costs and more efficiency in the payments ecosystem.{{Cite web |title=Moody's report spotlights FedNow downside |url=https://www.paymentsdive.com/news/fednow-moodys-federal-reserve-banks-payments-faster-cheaper/654418/ |access-date=2023-07-03 |website=Payments Dive |language=en-US}}
See also
References
{{Reflist}}
External links
- {{Cite web |title=About the FedNow Service |url=https://www.frbservices.org/financial-services/fednow/about.html |access-date=2022-09-23 |website=FRBservices.org |language=en}}
Category:Federal Reserve System