FedNow acts as the clearing service for financial institutions’ transactions so they can provide immediate end-to-end payments to customers.
The key difference between this service and the Fed’s previous system is that FedNow will be online 24/7, processing transactions in real time.
The FedNow service is open to more than 10,000 financial institutions that operate within the Fed’s network. Private money-transfer apps like Venmo and Cash App are not part of that system. That’s one reason it takes a few days for you to transfer money from these apps to your bank account: The bank has to “clear” the funds.
Financial institutions participating in FedNow can opt into several different services within the system, including sending funds back and forth across financial institutions or choosing to only receive funds. They can also opt into settlement service transfers and high-dollar-limit credit transactions called liquidity management transfers.
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