By Neil Bloomfield. The Federal Reserve Board (Federal Reserve) recently announced it will develop a “new round-the-clock real-time payment and settlement service”, named the FedNow℠Service to support faster payments in the United States. FedNow will be a national instant payment system that is designed to offer an option for consumers and businesses to transfer up to $25,000 24x7x365. Federal Reserve Board Governor Lael Brainard stated, “FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.”
The Federal Reserve noted its unique position as a provider of payment and settlement services, alongside and in cooperation with the private sector, to more than 10,000 financial institutions across the U.S. The Federal Reserve emphasizes a nationwide framework that would benefit emerging consumer needs and allow businesses more flexibility to manage their money.
FedNow will not be the only real-time payment system in the U.S. The Clearing House created its own real-time payment system in 2017 but it has not been widely adopted by small banks and credit unions. But the U.S. continues to lag behind payment systems in the E.U., Mexico, Australia, and elsewhere.
In 2018, the Federal Reserve Board solicited comments regarding their efforts to develop faster payments and received overwhelming support for an always available payment and settlement service. The Federal Reserve is now inviting public comment on how this service might be designed. FedNow is anticipated to begin operating in 2023 or 2024. The Federal Reserve is also seeking to expand the Fedwire Funds Service and National Settlement hours to operate up to 24x7x365.
In addition to its announcement, the Federal Reserve attached a notice and a list of FAQs.
About MVA White Collar Defense, Investigations, and Regulatory Advice Blog
As government authorities around the world conduct overlapping investigations and bring parallel proceedings in evolving regulatory environments, companies face challenging regulatory and criminal enforcement dynamics. We help keep our clients up to date in these fast-moving areas and to serve as a thought leader.
MVA White Collar Defense, Investigations, and Regulatory Advice Blog Updates
- The Consumer Financial Protection Bureau Stakes Out Its Enforcement Authority Over Unfair Information Security Practices
- FINRA’s Expansion of Safeguards to Prevent the Financial Exploitation of Specified Adults in Rule 2165
- Risks Associated with Cryptocurrency Activities Continue to be Top-of-Mind for Federal Banking Regulators
- Beyond “Security or Commodity”: Different Types of Digital Assets