The Fed will introduce the long-awaited instant payments service in the US

July 20 (Reuters) – The Federal Reserve should launch a long-awaited service in the foreseeable future that aims to modernize American payments, allowing Americans to send and receive money in seconds, 24/7.

Developed since 2019, the FedNow service aims to speed up money transfers in the United States, which currently take several days. In the UK, India, Brazil and the European Union, similar services have been in existence for several years.

Initially, FedNow will partner with 41 banks and 15 service providers – including city banks and major lenders such as JPMorgan Chase, Bank of New York Mellon and US Bancorp.

The service would compete with private real-time payment systems, including The Clearing House RTP network, and FedNow was initially seen as redundant by major banks. However, later many of them agreed to participate in the project as it would allow them to expand the range of services they could offer to their clients.

Unlike Venmo or PayPal, which act as intermediaries between banks, payments via FedNow will come directly from Central Bank accounts.

Fed also supports FedWire, a real-time payment system, but it’s only for large, mostly corporate payments, and only works during business hours. Analysts say consumers and small businesses will benefit the most from FedNow.

FedNow will not charge users, although it is unclear whether participating banks will incur any costs for this service.

At the initial stage, the maximum payment limit via FedNow will be $500,000, but banks will lower it if necessary.

The original message in English is available at the code: (Hannah Lang in Washington)

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