Payments
Federal Reserve intros instant payment service
July 21, 2023
The U.S. Federal Reserve has launched an instant payment service called FedNow, which aims to allow Americans to send and receive funds in seconds. This service aims to remove the lag cash transfers usually take to settle, according to a report by Reuters.
The Fed said 41 banks and 15 service providers are certified to use FedNow, including JPMorgan Chase, Bank of New York Mellon and US Bancorp, with more to be added throughout the year. FedNow will compete with other payments systems in the private sector including The Clear House's RTP network.
"For us, FedNow really is a wonderful way of expanding reach," Anu Somani, head of global payables and embedded payments at U.S. Bank, told Reuters.
The service will not charge customers and will have a maximum payment limit of $500,000, which banks can lower.
"Having the Fed in the space makes our members feel more comfortable that their needs will be met, that they will be treated fairly for pricing," Lance Noggle, SVP of operations and senior regulatory counsel at the Independent Community Bankers of America, told the news outlet.
Some have concerns FedNow could lead to a bank run by enabling fast outflows of withdrawals, like what happened with Silicon Valley Bank. Fed officials have claimed banks have tools that can mitigate this, according to the report.
