According to the latest news from the Federal Reserve, the long-awaited FedNow service will finally launch in July.
Federal Reserve Announces FedNow Service Launch in July
The Federal Reserve will start the official certification process for participants in the service’s launch during the first week of April. Early adopters will undergo a customer testing and certification phase in order to get ready to send live transactions through the system, which will be informed by feedback from the FedNow Pilot Program.
A comprehensive testing program with clear requirements for operational readiness and network experience is part of certification. To ensure readiness for the July launch, the Federal Reserve and certified partners will carry out production validation activities in June.
“With the FedNow Service, the Federal Reserve is creating a leading-edge payments system that is resilient, adaptive, and accessible. The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy.”
Tom Barkin, president of the Federal Reserve Bank of Richmond and the FedNow Program’s executive sponsor.
What is FedNow Service?
Developed by the Federal Reserve Banks, the service will be available essentially 24/7. It will be able to access it from any geographical location at any time of the day, on any day, allowing you to make or receive payments without worrying about the size of the transaction.
The financial institutions that will be part of this service will provide businesses and individual users with transaction freedom. Thus, you will be able to make instant transactions, manage your funds, or conduct other transactions at any time of the day.
What is the Difference Between FedNow and Fedwire?
A real-time gross settlement system called the Fedwire Funds Service was created to allow electronic money transfers between banks, companies, and governmental organizations. Fedwire has limited availability and can only process payments on certain business days and during business hours, despite its capacity to post and settle payments instantly. In contrast, FedNow is always accessible, with no restrictions on the hours it is open during the day or on weekends or holidays.
Is FedNow a Better Option to CBDC?
The planned FedNow payment service will address many of the issues that Fedcoin supporters hope the central bank digital currency (CBDC) will solve, according to a Federal Reserve Governor. Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, reiterated a stand she has maintained for years during the recent VenCent Fintech Conference in Little Rock, Arkansas, by praising FedNow as a superior substitute for Fedcoin.
“FedNow will help transform the way payments are made through new services that allow consumers and businesses to make payments conveniently, in real-time, on any day, and with immediate availability of funds for receivers. Our assessment of these benefits has not changed even as we consider whether a central bank digital currency (CBDC) might fit into the future U.S. money and payments landscape.”
Michelle Bowman
What are the Characteristics of FedNow?
A complete list of the services that will be offered in the FedNow service‘s inaugural iteration has not yet been made public by the Federal Reserve. However, some of the most likely business processes and features are as follows:
- Real-time payments: With the service, people and companies can send and receive payments in real-time.
- Interbank transactions: With FedNow, financial institutions will be able to send money instantly between various banks.
- Multi-channel access: The service will be available through a variety of channels, including online banking portals, mobile apps, and ATMs. These channels will be available to financial institutions, companies, and individuals.
Apart from the features listed above, we can say that many other features will be included in FedNow.
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