The Federal Reserve Board ended months of speculation with Monday’s announcement that it plans to develop a “round-the-clock, real-time payment and settlement service.” Branded FedNow, the service will offer US financial institutions an alternative to the RTP rails launched by The Clearing House in late 2018.
According to the Fed, over 90 percent of the responses to its Request for Comment supported its participation in this arena. CUNA had submitted a comment letter endorsing the Fed’s entry, as did the Independent Community Bankers of America and the Merchant Advisory Group.
In its statement the Fed touted the promise of “economic benefits for individuals and businesses by providing them with more flexibility to manage their money and make time-sensitive payments,” through faster access to funds. Presumably the Fed will echo The Clearing House’s philosophy that it’s the role of banks and credit unions to design products delivering value to their customers leveraging these new capabilities, with network operators providing the enabling technology in the background.
Read the full Washington Wire here..