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On Thursday, the US Federal Reserve announced The long-awaited ‘FedNow’ service has been launched to modernize the country’s payment system. The service will ultimately allow Americans to send and receive funds 24/7 within seconds.
Fed Chairman Jerome Powell said the FedNow service aims to make payments more efficient for individuals and businesses.
“The Federal Reserve built the FedNow service to make everyday payments faster and more convenient for years to come,” Powell said in a release. “Over time, as more banks choose to use this new tool, benefits for individuals and businesses will include immediate payroll for individuals and immediate access to funds for businesses when bills are paid.”
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The launch of FedNow puts the U.S. on par with other countries that have had similar systems for years, including the U.K., India, Brazil and the European Union. At launch, 41 banks and 15 service providers, including community banks and major financial institutions such as JPMorgan Chase, New York Mellon Bank and US Bancorp, have been certified to use FedNow, Reuters reported. report.
FedNow has been in development for nearly four years. CFOTO/Future Publishing | Getty Images
The Fed, along with the U.S. Treasury Department’s Office of Fiscal Affairs, also announced that 35 early adopter banks and credit unions now have instant payment capabilities through the FedNow service.
FedNow, which has been in development since 2019, aims to eliminate the days of delay that are common with cash transfers. Unlike peer-to-peer payment services like Venmo or PayPal, FedNow allows you to pay directly with your central bank account, eliminating the need for inter-bank intermediaries.
“The launch of FedNow will help connect money with the American people when they need it, instantly, in real time, and it will save consumers billions of dollars annually,” said Sen. Chris Van Hollen. statement on thursday.
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