Individuals and businesses are finally getting a service that will allow them to make and receive instant payments 24/7, 365 days a year. And it is coming courtesy of the Federal Reserve.
Fed announced on Tuesday that its instant payment service called “FedNow” is set to launch in June. The service will allow convenient and secure instant payments that will be immediately available to the recipient without further procedures or clearance times. It is also expected to come with cheaper transaction costs compared to traditional methods.
“With the FedNow Service, the Federal Reserve is creating a leading-edge payments system that is resilient, adaptive, and accessible,” said Tom Barkin, president of the Federal Reserve Bank of Richmond and the FedNow Program’s executive sponsor, in a statement.
The U.S. Treasury, a large number of national and regional banks, and various other financial institutions have already committed to using “FedNow,” according to Federal Reserve. The next step is to establish the list of early adopters that are willing to join the service’s testing phase before the big launch. This phase is expected to start in early April.
“FedNow” is expected to provide a number of benefits for customers and businesses, according to analysts. For example, individuals that are living paycheck to paycheck will be able to access their money faster, which should help them with everyday costs. On the other hand, businesses will have a more dependable cash flow and will be able to make payments to suppliers instantly and avoid incurring late payment fees.