The Fed Gives a Timeline For FedNow, Its Payments Platform

An anonymous reader quotes a report from Axios: Federal Reserve Vice-chair Lael Brainard gave a timeline for the launch of FedNow, the platform it has been working on to enable nearly instant payment settlement within the U.S. FedNow should launch in 2023 between May and July. This is the most specific the Fed has been yet about when the service will go live. 'The payment system is a critical part of America's infrastructure that touches everyone,' Brainard said in a speech she gave today via webcast to the FedNow early adopters workshop in Rosemont, Illinois. 'We have been working hard to deliver on time, but ultimately the number of American businesses and households that are able to access instant payments will depend on financial services providers making the necessary investments to upgrade our payments infrastructure,' Brainard said.

FedNow is a platform the Fed will provide for banks to build on top of and create payment features in existing or new products. Products enabled by FedNow will have nearly instant settlement around the clock. Ever needed a cashiers check after all the bank branches had closed? FedNow could be an answer for that kind of situation. Depending on how its partners implement FedNow, it could be used consumer-to-business, business-to-business or consumer-to-consumer. Consumers probably don't realize that every time they swipe a debit card, it costs the merchant an average of $0.23, according to Merchant Maverick. Those costs stack up and ultimately get passed on in sticker prices. The FedNow platform, meanwhile, will cost a fifth of that to make a transaction. 'FedNow is not a blockchain-based product and it's not a central bank digital currency (CBDC). It still very much relies on third parties, to operate, for example,' notes Axios. 'But -- if it catches on -- it would make money as we know it more competitive with cryptocurrencies, by lowering the cost to transact and providing low risk settlement around the clock.'

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