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Gov't to launch FedNow instant payment system - Top Class Actions

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Close up of FedNow logo displayed on smartphone screen, representing FedNow instant payment.
(Photo Credit: rafapress/Shutterstock)

FedNow instant payment system overview: 

  • Who: The Federal Reserve is preparing to unveil its real-time payment platform, FedNow, which already has a number of early adopters, including Wells Fargo and  Peoples Bank, among others.  
  • Why: FedNow is being touted as a first-of-its-kind service that will enable bill payments and money transfers to be made nearly instantaneously. 
  • Where: FedNow is expected to be adopted by financial institutions nationwide. 
  • What are my options: MoneyGram lets you send money around the world.

The Federal Reserve is preparing to unveil a real-time payment platform called FedNow later this month, a first-of-its-kind service that purports to increase the speed at which bill payments and money transfers can be made. 

The central banking system says FedNow will allow financial transactions to be made nearly instantaneously, with the service expected to be adopted by dozens of banks and financial institutions, reports Money.  

“The FedNow Service will be available to depository institutions in the United States and will enable individuals and businesses to send instant payments through their depository institution accounts,” the agency said on its website

More than 50 financial institutions in total will reportedly participate as “early adopters” of the service during its initial release, including banks such as Wells Fargo, JPMorgan Chase, and Peoples Bank, among others. 

All banks regulated by Federal Reserve eligible, not required, to implement FedNow

FedNow, which will be run by the Federal Reserve, is being touted as a 24/7 instant-payment system that will allow banks to instantly move money, while differing from peer-to-peer payment apps such as Venmo, PayPal, and Zelle, reports Money. 

Unlike a payment app that nearly all consumers can download and sync to their bank account, FedNow will reportedly only be available to bank account holders of banks that decide to use the service. 

The Federal Reserve said that any of the approximately 10,000 banks it regulates will be eligible to implement its FedNow service, but that none will be required to do so, reports Money. 

To enable this type of payment for their customers, banks and credit unions of all sizes need a new system that can send and receive funds in real time. The FedNow Service is this system,” the Federal Reserve said. 

In other news involving payments, a class action lawsuit was filed against Bank of America in May by a consumer arguing the financial institution collects illegal processing fees for mortgage payments. 

What are your thoughts on the Federal Reserve’s real-time payment service, FedNow? Let us know in the comments!



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