Fed to develop a 24/7 instant payment system in US
The proposed payment system demonstrates an important effort by the Board to bring the US payments services closer to those of other major economies
The proposed payment system demonstrates an important effort by the Board to bring the US payments services closer to those of other major economies
The United States is set to get a round-the-clock, seven-day a week real-time payment system by 2023/2024 after the The Federal Reserve announced its FedNow instant payment system.
The Fed has invited comments on how the new service might be designed to most effectively support the full set of payment system stakeholders and the functioning of the broader US payment system.
In a similar attempt in 2018, the Fed invited public comments on potential services that it could develop to support faster payments. Of the more than 350 comments received, over 90% supported the Federal Reserve operating a round-the-clock real-time payment and settlement service alongside services provided by the private sector.
Further to this announcement on building FedNow Service, the Board has announced the expansion of Fedwire Funds Service and National Settlement Service hours, up to 24x7x365, to facilitate liquidity management in private-sector real-time gross settlement services for faster payments and to support a wide range of payment activities, beyond those related to faster payments.
A statement by the Fed read: “The rapid evolution of technology presents a pivotal opportunity for the Federal Reserve and the payment industry to modernize the nation’s payment system and establish a safe and efficient foundation for the future. The Federal Reserve believes faster payment services, which enable the near-instantaneous transfer of funds day and night, weekend and weekdays, have the potential to become widely used and to yield economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments.
“Since its founding more than a century ago, the Federal Reserve has provided payment and settlement services, alongside and in cooperation with the private sector, as part of its core function of promoting an accessible, safe, and efficient US payment system. The Federal Reserve has established over its history a broad reach as a provider of payment and settlement services to the more than 10,000 financial institutions across the country. That reach will help the FedNow Service support a nationwide infrastructure on which the financial services industry may develop innovative faster payment services for the benefit of all Americans.”
Federal Reserve Board Governor Lael Brainard said: 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.”
Earlier this year, the Fed Board had invited comment on a proposal to apply netting contract protections to a broader range of financial institutions.