The Federal Reserve Board is developing a new real-time payment and settlement service.
The platform, called the FedNow Service, is designed to leverage technology that is more efficient and secure than existing infrastructure. Its purpose is to enable the Federal Reserve Banks to offer around-the-clock payments in the US, with a focus on speed, efficiency and security.
The near-instantaneous transfer of funds will be available seven days a week, 365 days a year, offering a key advantage over traditional banks that stop processing transactions on the weekends.
The Fed, which provides payment and settlement services to over 10,000 financial institutions across the country, says its FedNow Service will benefit all Americans with faster payments.
Says Federal Reserve Board Governor Lael Brainard,
“Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community. FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.”
In 2015, the Fed launched the Faster Payments Task Force to improve the US payment system. It lists an extensive roster of participants in the payments industry who are leading the steering committee including Bankers’ Bank, Consumers Union, The Clearing House, Ripple and U.S. Bank.
In the race against global competitors who are transforming the payments industry, the real-time interbank gross clearing and settlement service was originally targeting a 2020 launch date. That challenge is increasingly escalating with tech giants like Facebook entering the payments industry with digital currency project Libra.
While Libra is purportedly powered by a consortium of giant corporations, the Fed says its platform is powered by a group of stakeholders who were given a “Call to Action” back in 2015.