Updated: Jul 20, 2023, 11:24am
Saying FedNow would be a game changer is almost downplaying the potential impact. Because the Fed has had the largest banking universe housed within its previously existing slower payments setup, its thousands of participating financial institutions have waited years for a real-time system supported by the government.
Currently, there is the Real-Time Payments (RTP) network, a private service launched in 2017 that is used by many of the larger financial institutions to transfer funds. Among the newer phone-based money transfer apps, Zelle is the only one that operates within the RTP network. That’s why you might see Zelle’s service offered directly through your bank or credit union.
More than 100 financial institutions already use the RTP network, and they can opt to use the FedNow system as well. Some critics say FedNow will end up competing with private-sector companies offering such services, while others have argued it will serve as an expansion or added service.
Either way, FedNow will open the door to thousands more financial institutions that will be able to offer instant transactions for consumers and businesses. The implications are likely to be global.
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