As digital commerce changes the way consumers shop, merchants, banks and payment providers in the U.S. have been engaged in efforts to implement a real-time payment and settlement infrastructure to modernize the half-century old electronic payments system currently managed by the Automated Clearing House. On Monday, the Federal Reserve entered the fray, announcing that it will develop what it is calling its FedNow Service to support faster payments in the U.S., competing with the bank-owned consortium running the ACH.
"Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community," said Federal Reserve Board Governor Lael Brainard. "FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers."
The service is expected to be available in 2023 or 2024 and, initially, support transfers of up to $25,000, according to reports. In its announcement, the Fed said it is soliciting public comment from interested stakeholders. For a detailed look at the Fed’s proposal or for instructions on submitting a comment, review the central bank’s entry in the Federal Register.