The Federal Reserve is scheduled to launch a new payments platform - The first wholly new payments platform in 40 years. FedNow will enable financial institutions to help payers initiate a payment, facilitate clearing and settlement, and instantly credit a payee’s account. The goal is not only to recapture payment transactions volumes, but to attract and retain consumers and businesses that are hooked on fast money transfer. Think PayPal. Zelle, Venmo and other technology companies who have changed the payments industry in the past couple of years. With FedNow smaller banks and financial institutions will now have a fighting chance in the payments ecosystem. Access to faster payments is crucial to businesses and FedNow can be a game changer in the payments system. Any bank eligible for Federal Reserve financial services — regardless of size — will be eligible to use FedNow, leveling the playing field for smaller banks and credit unions,
From girl scout cookies sales to bond bail payments, the use cases for FedNow are numerous, especially if banks and credit unions partner with fintechs to create digital overlay services on top of FedNow. Businesses will be able to pay suppliers in real time, get paid in real time, and operate more efficiently by associating funds with the correct invoice businesses, improving cash flow management, payment operations efficiency, ease of access and security.
We will keep an eye on the launch of FedNow and as always keep you updated on all payments industry news as we look for ways to help your business grow.