Federal Reserve officially launched ‘FedNow’ instant payment system.
The U.S. Federal Reserve’s controversial instant payments service, FedNow, went live Thursday with 35 banks and credit unions participating, the central bank announced.
Early adopters include JPMorgan Chase and Wells Fargo, with 16 other institutions supporting processing of payments that the Fed argues will offer just-in-time access to paychecks and invoices.
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” Federal Reserve Chair Jerome Powell said in a statement.
It can take multiple days for simple bank transactions to settle. Compare this sub-par result to the daily consumer experience with most fintech apps like PayPal, Cash App or Bitcoin payments which makes such transactions nearly instant, and you’ll see why America is in need of better banking payment solutions.
FedNow is a bipartisan solution to modernize government payments — yet reactions have been unfavorable, wrong and weird. Misinformation and fear mongering conversations about central bank digital currency (CBDC) bogeymen muddles the reality that the FedNow system is a viable and favorable option for fast bank-to-bank payments. Although FedNow has faced some criticism over potentially building a bridge to a future digital dollar, in a July 10 FAQ, the central bank denied the move was tied to putative plans to issue the dollar in digital form.
“The FedNow Service is not related to a digital currency,” the Fed said, with officials such as the Treasury’s Janet Yellen arguing the U.S. should consider a central bank digital currency (CBDC). “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
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