The new FedNow Service aims to make bank transfers truly instant.
A shopper pays cash for sales merchandise December 26, 2000 at the Lakeline Mall in Austin, Texas. Stores were hoping that after Christmas shopping could salvage what seems to be a disappointing holiday season.
For the past few years, fast bank payments have been thriving in numerous countries.
However, in the United States, bank transfers are still taking a few days.
PayPal, Cash App, and other online payment systems are somehow solving this problem.
However, they just show that the banking system in the U.S. is still slow.
Because of this, the Federal Reserve System-the central banking system of the U.S.-decided to create a new instant payment infrastructure.
FedNow Service To Make Bank Transfers Truly Instant!
According to Forbes, the new FedNow Service is expected to have monumental impacts on payment activities in the United States.
Picture of a one US dollar bill on top of Colombian one hundred thousand peso bills taken in Bogota, on October 24, 2022. - Colombia, like other countries around the world, is enduring high inflation, as well as an historic devaluation of the peso against the dollar. This is due to both international and local factors according to experts.
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This instant payment infrastructure could harness communication, data, and speed; allowing to make bank transfers truly instant.
Via its official website, the Federal Reserve explained that FedNow Service will allow financial institutes in the U.S. to provide effective and safe instant payment services.
"Businesses and individuals can send and receive instant payments in real-time, around the clock, every day of the year," said the American central banking system.
How FedNow Service Works
The upcoming FedNow Service is designed to facilitate payments via irrevocable and instant transaction settlement.
Aside from this, it can also make funds available to the payee in real-time. The FedNow Service also ensures the safety of instant bank transactions.
To do this, the system will provide optional fraud prevention tools, as well as allow consumers to become receive-only participants.
As of writing, the FedNow Service is still unavailable. The Federal Reserve System said that it will be deployed before July ends; with the instant payment infrastructure being deployed in phases.
The Federal Reserve System also said that enhancements and new features will be released as the FedNow Service's rollout phases happen.
You can click here to learn more about the new FedNow Service.
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