The American instant payment service FedNow is officially launched. Representatives of the Federal Reserve emphasize that due to its capabilities, depository institutions will be able to provide additional services to their customers, but the service has nothing to do with the central bank digital currency (CBDC) development.
On July 20, 2023, the U.S. Fed’s website announced that the FedNow service, which provides local depository institutions with the ability to make instant payments to individuals and businesses through their bank accounts, has officially launched.
FedNow officials said the service is a flexible and neutral platform that supports a wide range of instant payments. It offers interbank clearing and settlement that allows funds to be transferred from the sender’s account to the recipient’s account in almost real time. FedNow is designed to provide continuous transaction processing, operating 24/7, including weekends and holidays.
At the time of FedNow’s official launch, the service offers features such as:
- fraud prevention tools;
- the ability to initially join as a payment recipient;
- the option to request a payment;
- tools to support participants in processing payment requests.
The Fed said additional features and enhancements to the service will be implemented as needed. At launch, the service supports 35 financial institutions and 16 service providers. However, there are plans to enroll more than 10,000 U.S. financial organizations in the future.
In addition, FedNow representatives once again emphasized that FedNow is an analog to other payment services, such as Fedwire and FedACH, which operate within the fiat ecosystem, and isn’t related to the central bank digital currency (CBDC) or any other form of currency, including cash.
Earlier, some regulatory officials didn’t deny the fact that FedNow could become an alternative to CBDCs in the U.S., which raised some questions about the sanctity of financial information and the economic freedoms of American citizens.
