Fed announces development of new real-time payment service

The Federal Reserve announced this week that Federal Reserve Banks will develop a new round-the-clock real time payment and settlement service, called FedNow, to support faster payments in the U.S.

The Federal Reserve board now requests comment on how the new service might be designed to most effectively support the full set of payment system stakeholders and the functioning of the broader U.S. payment system. It also issued a frequently asked questions document on faster payments.

The board anticipates the FedNow Service will be available in 2023 or 2024. Comments are due within 90 days of the proposal’s publication in the Federal Register, which is expected shortly.

The Fed also announced its intention to explore the expansion of Fedwire Funds Service and National Settlement Service hours, up to 24 hours a day, seven days a week, 365 days a year, to facilitate liquidity management in private-sector real-time gross settlement services for faster payments and to support a wide range of payment activities, beyond those related to faster payments.

Sources: Credit Union National Association and the Federal Reserve