A new, round-the-clock real-time payment settlement service will be developed by the nation’s central bank, becoming available in four to five years, the agency said Monday.
The new service from the Federal Reserve will be called the “FedNow Service” and is aimed at supporting faster payments in the United States.
The Fed also announced it is seeking comment for 90 days on how the new service might be designed “to most effectively support the full set of payment system stakeholders and the functioning of the broader U.S. payment system.”
The agency said it will also explore a round-the-clock expansion of Fedwire Funds Service and National Settlement Service hours to facilitate liquidity management in private-sector real-time gross settlement services for faster payments and to support a wide range of payment activities beyond those related to faster payments.
In its announcement, the central bank pointed out that, late last year, it requested public comment on potential services that it could develop to support faster payments. “Of the more than 350 comments that took a position on whether the Federal Reserve should develop a new service for faster payments, over 90% supported the Federal Reserve operating a round-the-clock real-time payment and settlement service alongside services provided by the private sector,” the agency said in a press release.
“The U.S. payment system faces a critical juncture in its evolution,” the Fed noted. “Advances in technology have created an opportunity for significant improvements to the way individuals and businesses make payments in today’s economy. Smartphones, high-speed computing and cloud capabilities, extensive communication networks, and other innovations allow individuals and businesses to send and receive messages, post and consume content online, search for and obtain information, and conduct myriad other activities almost immediately and at any time.”