FedNow, an instant-payments service by Federal Reserve, officially launched on Thursday. The 24-hour, 365-days-a-year service aims to help individuals and businesses send and receive money faster than ever before.
Announcing the launch of FedNow, Federal Reserve Chair Jerome H. Powell said that the Fed developed the service in order 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,” Powell added.
The current payment system in the U.S. has been long criticized for its long processing times. Businesses and individuals are forced to wait hours and even days before the funds become available to them. FedNow is looking to eliminate this and handle all the payments in a matter of seconds.
FedNow will require a participation fee of $25.00 per month in the future, although the service will remain free by the end of 2023. The transaction costs have been set at $0.045 per transaction.
At the moment, 35 banks and credit unions are listed as early adopters of FedNow, including JP Morgan Chase and Wells Fargo. Additional 16 financial service providers are “ready to support” the service.