Frequently Asked Questions
What is the FedNow® Service?
The FedNow Service is a new service for instant payments built by the Federal Reserve to help make everyday payments fast and convenient for American households and businesses. Banks and credit unions of all sizes can sign up for the FedNow Service and offer instant payment services to their consumer and business customers. The FedNow Service enables individuals and businesses to send and receive payments within seconds at any time of the day, on any day of the year, so that the receiver of a payment can use the funds immediately.
The Federal Reserve has always served as a provider of payment services to banks and credit unions across the country. These services are the backbone of commerce in the United States, allowing financial institutions to transfer money to each other on behalf of their customers for transactions like bill payments, vendor payments, payroll deposits, and large-dollar wire transfers. The FedNow Service is a modern payment system that operates alongside these other services.
What are instant payments?
Today, there is a growing need for speed and convenience that is generally not available with traditional payment services. Instant payments allow consumers and businesses to send and receive funds from their accounts at banks and credit unions in real time, any time of day, any day of the year, with immediate funds availability to receivers. Instant payments can provide real benefits for consumers and businesses, such as in cases where rapid access to funds is critical, or where just-in-time payments help manage cash flows in bank accounts. For example,
- individuals can have instant access to their paycheck and be able to spend it the same day, rather than waiting several days for it to process;
- consumers could pay a bill last minute on the due date, potentially avoiding late fees; and
- small businesses could have immediate access to funds when invoices are paid, helping them manage their working capital.
To enable this type of payment for their customers, banks and credit unions of all sizes need a new system that can send and receive funds in real time. The FedNow Service is this system. It is available to banks and credit unions.
Will there be a FedNow app for me to use?
No. There is no FedNow app. The Federal Reserve does not provide payment services directly to consumers and businesses. Banks and credit unions can provide their customers with access to instant payments through new features on their mobile apps, banking websites, or other interfaces such as those used for business payments. Bank and credit union customers will probably not even see the name "FedNow" on their bank's instant payments platform as the FedNow Service is the high-speed highway that helps payments move from one financial institution to another. Banks and credit unions build new products for their customers that connect to the highway.
When will my bank or credit union provide me access to these new instant payment services?
The Federal Reserve's goal in providing the FedNow Service is for consumers, households, and businesses across America to have access to instant payments through their banks and credit unions in the coming years. There are about 9,000 banks and credit unions in the United States, and sign up will happen gradually. It is up to them to adopt the FedNow Service and offer instant payments to their customers. Initially, consumers and businesses will only be able to send and receive payments via the FedNow Service with other consumers and businesses whose financial institutions have also signed up to use the FedNow Service. In the long run, however, once most financial institutions have signed up for the FedNow Service, we expect instant payments will be a routine part of everyday commerce.
How is the FedNow Service different from other payment apps that I already use?
The FedNow Service is unique in that transactions occur directly between bank accounts and are completed in a matter of seconds. Many popular payment apps and services allow individuals and businesses to quickly and easily send and receive payments. However, some require users to hold balances in the app rather than sending and receiving money directly to or from their bank account. Others allow users to send funds from their bank account with the funds instantly available to the recipient, but the money moves from bank to bank on a delayed basis, introducing credit risk.
In addition, many popular payment apps are mostly for people paying each other, whereas the FedNow Service can be used for all types of payments, including between businesses or between businesses and consumers.
Is the FedNow Service replacing cash? Is it a central bank digital currency?
No. The FedNow Service is not related to a digital currency. The FedNow Service is a payment service the Federal Reserve is making available for banks and credit unions to transfer funds for their customers. It is like other Federal Reserve payment services, such as Fedwire and FedACH. The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.
The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) and would only proceed with the issuance of a CBDC with an authorizing law. Testifying before the House Financial Services Committee in March 2023, Chair Powell said a CBDC is, "something we would certainly need Congressional approval for."
Does the Fed have access to my bank account with the FedNow Service?
No. The Federal Reserve and the FedNow Service cannot access individuals' bank accounts or control how they choose to spend their money. The FedNow Service is an instant payment service that the Federal Reserve offers to banks and credit unions to transfer funds for their customers. The Federal Reserve does not provide accounts or offer instant payment services to individual consumers and businesses.
How much did the FedNow Service cost to develop?
The FedNow Service is a new service for instant payments built by the Federal Reserve to help make everyday payments fast and convenient for American households and businesses.
Instant payments allow consumers and businesses to send and receive funds from their accounts at banks and credit unions in real time, any time of day, any day of the year, with immediate funds availability to receivers. Instant payments can provide real benefits for consumers and businesses, such as in cases where rapid access to funds is critical, or where just-in-time payments help manage cash flows in bank accounts. For example, individuals can have instant access to their paycheck and be able to spend it the same day, rather than waiting several days for it to process; consumers could pay a bill last minute on the due date, potentially avoiding late fees; and small businesses could have immediate access to funds when invoices are paid, helping them manage their working capital.
To provide new services for instant payments for their customers, banks and credit unions throughout the country needed new infrastructure. The FedNow Service is this infrastructure. To bring the broad benefits of instant payments to the public, the Federal Reserve invested $545 million to implement the FedNow Service. It began operating in July 2023 with banks and credit unions of all sizes and will continue to grow over time toward nationwide availability.
The figure reflects all implementation costs, including a new cloud-based design to support secure and resilient 24x7x365 processing, integration with existing Federal Reserve account management systems to enable ease of use for participants, and industry education and outreach to prepare stakeholders who decide to adopt instant payments.
The Federal Reserve announced its decision to develop the FedNow Service in 2019 following extensive feedback from a wide range of stakeholders, including requests for public comment in 2018 and 2019. Alongside services provided by the private sector, the FedNow Service will help establish a safe and efficient nationwide infrastructure supporting instant payment services in the United States that ultimately serves the American public.