FedNow
FedNow is a real-time gross settlement (RTGS) service being developed by the Federal Reserve System in the United States. Here are the key aspects of FedNow:
Purpose:
FedNow is designed to provide a 24/7/365 real-time payment and settlement service to enable instant and final transactions between participating financial institutions (FIs). It aims to enhance the speed and efficiency of payments, particularly for retail and business transactions.
Real-Time Payments:
Unlike traditional payment systems where transactions may take hours or days to settle, FedNow will facilitate instant settlement of payments. This capability supports faster access to funds for recipients and improves cash flow management for businesses.
Accessibility:
FedNow is intended to be accessible to all banks and credit unions in the United States. Participating financial institutions will be able to send and receive instant payments through the FedNow Service, promoting broad adoption and interoperability across the financial industry.
Infrastructure:
The infrastructure supporting FedNow includes the development of a new interbank settlement service and a messaging protocol that allows participating FIs to communicate and settle transactions in real time. This infrastructure is designed to be resilient and secure, meeting the high standards required for critical financial systems.
FedNow represents a major initiative by the Federal Reserve to modernize the U.S. payment system, enabling faster and more efficient real-time payments to meet the evolving needs of consumers and businesses in the digital age.
