A key milestone in the development of the FedNow Service was marked in August when Federal Reserve Board Governor Lael Brainard announced approval of the service’s design and features.
The virtual announcement was live-streamed and included opening remarks from Kansas City Fed President Esther George, who also serves as the executive sponsor for FedNow. When launched, FedNow will be a clearing and settlement infrastructure enabling participating institutions to safely and efficiently provide instant-payment services.
“At the most fundamental level, when you think about what's being delivered here, FedNow is designed to be an interbank settlement engine that will allow funds transfers from a sender’s bank account to a receiver’s bank account in near real time, at any time,” George said during the webinar.
Brainard discussed how FedNow intends to improve the payments process.
“In good times as well as bad, instant payments will enable millions of American households and small businesses to get instant access to funds, rather than waiting days for checks to clear,” Brainard said. “An instant payment infrastructure ensures the funds are available immediately, which could be especially important for households on fixed incomes or living paycheck to paycheck, when waiting days for the funds to be available to pay a bill can mean overdraft fees or late fees that can compound, or reliance on costly sources of credit.”
Learn more about External Linkplans for the FedNow Service.