Five Things to Know about FedNow, Right Now
Have you heard about FedNow® but you’re not quite sure what it is? Here are five things to know about the instant payments service the Federal Reserve launched in July 2023.
1. What is FedNow?
The FedNow Service is a real-time payment system between banks built and operated by the Federal Reserve. Banks using the service can send and receive payments in just seconds anytime–24 hours a day, seven days a week. FedNow modernizes the U.S. payment system by allowing banking customers to send and receive payments in near real time, any day of the year.
Banks and credit unions of any size can take advantage of this program by signing up with Federal Reserve Payment Services. Learn more about how financial institutions sign up for the program by participating in a guided journey.
2. Can I download a FedNow app on my phone?
No. FedNow is available only to banks and credit unions as a service they can offer to customers. So you might see that your financial institution has started offering instant payments in the app you already use. Want to see if your bank or credit union is participating? Check out this list of participants or contact your financial institution directly.
3. How do “real-time” payments work?
Have you ever deposited your paycheck on Friday but weren’t able to spend it until Monday? With real-time payments, deposits can clear the bank more quickly, giving you access to funds on the same day.
That eventually will be one of the benefits of the FedNow Service, Federal Reserve Board of Governors Chair Jerome Powell said in a July 20, 2023, press release announcing the service was live.
“Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid,” Powell said.
—Fed Chair Jerome Powell
4. Is FedNow up and running after its July 20 launch?
Yes! As of an Oct. 3, 2023, update, 107 financial institutions, as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service, were actively using FedNow and offering its services to their customers.
Kathy O’Neill Paese, St. Louis Fed interim president and CEO, discussed how FedNow came about and shared her perspectives on the service in a Regional Economist article.
5. Since FedNow is a digital payments system, is it replacing cash? Is FedNow a digital currency?
No. The FedNow Service is not a form of currency, so it can’t replace cash. It is a payment service available to banks and credit unions interested in real-time services.
FedNow, much like Fedwire® and FedACH®, is a settlement system and not related to digital currency in any way. In fact, when Chair Powell testified before the House Financial Services Committee in March, he stated that a central bank digital currency is “something we would certainly need Congressional approval for.”
Editor’s Note: Information in the post about the number of financial institutions using FedNow was updated Oct. 4, 2023.
This blog explains everyday economics, consumer topics and the Fed. It also spotlights the people and programs that make the St. Louis Fed central to America’s economy. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.