FedNow

FedNow is an instant payment service developed by the Federal Reserve for depository institutions in the United States, which allows individuals and businesses to send and receive money. The service launched on July 20, 2023. Banks will be able to build products on top of the FedNow platform. By 2024, hundreds of banks and credit unions were reportedly utilizing the service.

Operation
FedNow was scheduled to begin formal certification of participants of the program in April 2023, with a formal launch planned in July 2023. It operates on a 24-hour, 365-days-a-year basis, as opposed to the older FedACH system that is closed on weekends and holidays. FedNow charges financial institutions a transaction cost of $0.043 per transaction.

Instant payments with FedNow can accomplish many of the improvements for which a central bank digital currency (CBDC) was proposed. However, FedNow is not a CBDC, because it is not a liability of the federal government.

The Federal Reserve published a list of all financial institutions and fintech vendors that were certified and have live Send and Receive on launch day.

History
A private entity, The Clearing House Payments Company, launched Real Time Payments (RTP) in 2017. RTP is an instant payment system for all US financial institutions, owned by a group of large US banks.

In 2020, Lael Brainard announced the upcoming FedNow service would provide "a neutral platform on which the private sector can build to offer safe, efficient instant payment services to users across the country", after 2018 the European Central Bank launched the TIPS instant payment settlement system.

In the lead up to its release scheduled for July 2023, Moody's Investor Service released a report stating the service would likely lead to gains for households and businesses, giving them lower-cost methods of moving their money. But it also noted incumbents in the payments space could see revenue declines, those participating could be forced to make upgrades in technology and staff, and there was a greater possibility of bank runs, even with potential benefits like lower costs and more efficiency in the payments ecosystem.