FedNow is a DIGITAL payment system created by the US Federal Reserve Banking System

The US Federal Reserve System announced the Go Live date for its new digital payment system. today.

The Federal Reserve’s FedNow Service is an instant payments infrastructure that allows participating banks and credit unions to send and receive transactions within seconds on behalf of their customers — 24 hours a day, seven days a week.
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The big selling point appears to be instant payments or settlement. Something we take for granted in cryptocurrency, but not posssible until now between banks.

FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year.source

Official explainer video from FedNow website

According to the FedNow website about 35 banks and credit unions have signed up and become certified to offer the service for bank to bank transactions, and for customer transactions.

On July 20, 2023, the Federal Reserve announced the landmark instant payment infrastructure has launched with 35 participating financial institutions, the U.S. Department of the Treasury’s Bureau of the Fiscal Service and 16 service providers. The new FedNow Service enables participating U.S. banks and credit unions to safely and efficiently transfer funds instantly — any day, at any time — on behalf of their customers.
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How it works

According to the FedNow website, this is how the instant payment system works for a transaction:

"... What happens when Janice makes a payment of $300 to her handyman, Frank.

Initiation

To pay Frank, Janice connects with her bank. She logs in to her mobile banking app to set up a payment of $300 to Frank for his handyman services. Janice selects the account she wants to use for the payment and fills in the payment amount and Frank’s account or other identifying information, such as his mobile number or email that he associates with his account at his bank.

Authorization

Once Janice initiates this payment request, Janice’s bank confirms that her account has the funds to cover the $300 transaction. Once confirmed, Janice’s bank takes the money out of her account and pushes the payment information to Frank’s bank, using a faster payments system. At this point, Janice can no longer make any changes to the transaction.

Transmission

Frank’s bank receives and validates the payment message and Frank’s account.

Acceptance

Once Frank’s bank confirms the transaction, it notifies Janice’s bank through the faster payments system that it accepts the transaction and credits Frank’s account with the $300.

Receipt

Just moments after the start of the transaction, Janice receives notification from her bank that her payment to Frank’s account is complete. Frank also gets notice from his bank that he has $300 in his account, and he decides to use these funds immediately to pay his supplier.

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So five quick steps, and according to the FedNow website the transaction takes seconds from start to finish.

If you have an account at a participating bank, you can use the service also.

The list of participating banks and credit unions from the FedNow website:

1st Source Bank South Bend Indiana,
Adyen San Francisco California,
Avidia Bank Hudson Massachusetts,
BNY Mellon New York New York,
Bridge Community Bank Mechanicsville Iowa
Bryant Bank Birmingham Alabama
Community Bank of the Bay Oakland California
Consumers Cooperative Credit Union Gurnee Illinois
Corporate America Credit Union Irondale Alabama
Eastern Corporate Federal Credit Union Burlington Massachusetts
First Internet Bank of Indiana Indianapolis Indiana
Global Innovations Bank Kiester Minnesota
HawaiiUSA Federal Credit Union Honolulu Hawaii
INB Springfield Illinois
JPMorgan Chase New York New York
Mediapolis Savings Bank Mediapolis Iowa
North American Banking Company Roseville Minnesota
Peoples Bank Clifton Tennessee
Pima Federal Credit Union Tucson Arizona
Salem Five Bank Salem Massachusetts
Star One Credit Union Sunnyvale California
United Bankers' Bank Bloomington Minnesota
U.S. Bank Cincinnati Ohio
U.S. Department of the Treasury's Bureau of the Fiscal Service Washington, D.C.
Veridian Credit Union Waterloo Iowa
Wells Fargo Bank, N.A. San Francisco California

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So what do you think?

Do you think this is a precursor to a digital currency replacement for the US Dollar??
Do you think it is a useful service for banks?
Do you think it will be popular?

Posted Using LeoFinance Alpha

Posted Using LeoFinance Alpha