Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Business

Federal Reserve launches FedNow instant payment service that could bypass Venmo and PayPal

by July 25, 2023
July 25, 2023
Federal Reserve launches FedNow instant payment service that could bypass Venmo and PayPal

The U.S. Federal Reserve has launched a long-awaited service which will aim to modernize the country’s payment system by eventually allowing everyday Americans to send and receive funds in seconds, 24 hours a day, seven days a week, the central bank announced on Thursday.

The “FedNow” service, which has been in the works since 2019, will seek to eliminate the several-day lag it commonly takes cash transfers to settle, bringing the U.S. in line with countries including the United Kingdom, India, Brazil, as well as the European Union, where similar services have existed for years.

FedNow is launching with 41 banks and 15 service providers certified to use the service, including community banks and large lenders like JPMorgan Chase, Bank of New York Mellon, and US Bancorp, but the Fed plans to onboard more banks and credit unions this year.

The Fed said on Thursday in a statement that 35 banks and credit unions were currently utilizing the service, as well as the Treasury Department’s Bureau of Fiscal Service.

The service will compete with private sector real-time payments systems, including The Clearing House’s RTP network, and was initially opposed by big banks who said it was redundant. But many have since agreed to participate on the basis FedNow will allow them to expand the services they can offer clients.

“For us, FedNow really is a wonderful way of expanding reach,” said Anu Somani, head of global payables and embedded payments at U.S. Bank.

Unlike peer-to-peer payments services like Venmo or PayPal, which act as intermediaries between banks, payments made via FedNow will settle directly in central bank accounts.

The Fed also operates a real-time payments system called FedWire, but that’s reserved for large-scale, mostly corporate payments and is only operational during business hours. While the new FedNow system is for everyone, it’s likely to benefit consumers and small businesses the most, analysts have said.

“We want our clients to benefit from these capabilities, and we want that to be a competitive edge for us,” said Carl Slabicki, global co-head of payments for BNY Mellon’s Treasury Services.

Smaller banks, which often connect to FedWire via larger lenders, encouraged the Fed to develop FedNow, arguing that it would allow them access to real-time payments without having to pay larger competitors for the service.

“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,” said Lance Noggle, senior vice president of operations and senior regulatory counsel at the Independent Community Bankers of America, a trade group.

FedNow will not charge consumers, although it’s unclear whether or how participating banks will pass on any costs associated with the service.

Democratic Senator Chris Van Hollen, who had urged the Fed to develop a real-time payments system, said in a statement the launch of FedNow is “good news for American consumers and our economy.”

“The launch of FedNow will help connect Americans with their money — when they need it, immediately, in real-time — and will save consumers billions of dollars annually,” he said.

Some market participants have raised concerns that FedNow could super-charge a potential bank run by facilitating fast outflows from financial institutions, a fear that was amplified after the failure of Silicon Valley Bank earlier this year.

But Fed officials have downplayed those concerns, arguing that banks have tools available to mitigate a wave of outflows.

At the outset, FedNow will have a maximum payment limit of $500,000, but banks can choose to lower that cap if need be.

Reuters reporting by Hannah Lang in Washington; Editing by Michelle Price and Andrea Ricci

This post appeared first on NBC NEWS
0
FacebookTwitterGoogle +Pinterest
previous post
The Halftime Show: Defense and Value on the Move
next post
FTX lawyers accuse Sam Bankman-Fried of financing his criminal defense with $10M in misappropriated funds

Related Posts

Novo Nordisk to build $4.1 billion North Carolina...

June 26, 2024

Southwest Airlines will charge to check bags for...

March 12, 2025

Disney to raise monthly price on ad-free Disney+...

August 10, 2023

The great wealth transfer has started — but...

May 9, 2024

McDonald’s is working to introduce a $5 value...

May 11, 2024

Olive oil prices surge over 100% to record...

September 21, 2023

LongHorn up, Olive Garden down: Darden earnings hint...

June 24, 2024

Burger King must face lawsuit claiming its Whoppers...

August 31, 2023

Returning a holiday gift? It could end up...

January 8, 2024

UPS workers overwhelmingly approve new contract, ending strike...

August 23, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

    • Week Ahead: NIFTY Stays In A Defined Range; Moving Past This Level Crucial For Resumption Of Upmove

    • Editor’s Picks: Gold Faces Bumpy Week on Trade Tensions, Platinum Stages Breakout

    • Run Your Stock Portfolio Like a Pro Sports Team

    • Leadership Rotation Could Confirm Corrective Phase

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

    Categories

    • Business (1,223)
    • Investing (2,504)
    • Politics (3,699)
    • Stocks (1,616)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved