Still, it could be a long time before FedNow is used for such purposes, according to analysts, since it remains unclear if the Fed or others will develop services such as fraud detection, dispute resolution or other risk-management offerings for the system. Large merchants have long bristled at the fees they’re charged by card networks such as Visa Inc. have heralded the Fed’s move to develop FedNow, which they hope would one day allow them to take direct bank payments from customers, rather than relying on credit cards, as well as better handle refunds. A spokesperson for the bank declined to comment. Citigroup plans to join FedNow in the coming months, according to the people. “Given the rapid pace of innovation in this space, our participation will help us learn, grow and better serve our customers as a result.” ‘Very enthusiastic’īank of America is “very enthusiastic” about the future of faster payments in the US and will provide clients with a “robust set” of services, a spokesman said in an emailed statement. “Expanding the reach of real time payments will give people the ability to make payments across the country in a matter of seconds,” said Takis Georgakopoulos, global head of JPMorgan’s payments business. While others, including Citigroup and Bank of America Corp., have been discussing the development of the network with the Fed, they won’t be among the first to join the new system, according to people with knowledge of both banks’ work on the matter. JPMorgan and Wells Fargo are among the biggest US banks that have been performing final trial runs on the service in recent weeks as they readied their systems to support FedNow. More than a dozen service providers, such as Jack Henry & Associates Inc., which provides technology to thousands of regional lenders around the country, are also ready to support the new service. The Fed said that 35 banks and credit unions, as well as the US Department of the Treasury’s Bureau of the Fiscal Service, are ready to support payments on FedNow. The Fed didn’t immediately respond to a request for comment about the post. The Bank Policy Institute, a trade group representing US lenders, said in a post on its website this week that it’s received anecdotal reports that banks are receiving pressure through regulators’ supervisory processes to join and use FedNow. It comes more than a century after the agency helped establish Fedwire, the world’s first wire-transfer system, and almost 50 years after the Fed supported the development of ACH. “The banks were thinking, ‘Am I going to spend another investment that’s very similar to what I would have to do with RTP? Or wait and see?’”įor the central bank, FedNow will operate alongside other networks the Fed already offers to banks. “There was a lot of confusion in the marketplace when the Fed said, ‘We’re also going to build the exact same thing,’” Rusiru Gunasena, senior vice president of the RTP Network for The Clearing House, said in an interview. Instead, they’ll have to rely on their banks and credit unions to give them access through their mobile apps or websites. “Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.”Ĭonsumers and businesses won’t have direct access to the new system. “The Federal Reserve built the FedNow service to help make everyday payments over the coming years faster and more convenient,” Chairman Jerome Powell said in a statement Thursday. At the time, the central bank’s move was seen as a major rebuff to an intense Wall Street lobbying campaign because the system competes with a similar, private network formed by the biggest US banks. The new network is a long time coming, with the Fed in 2019 announcing plans to create the system. So far, about 50 institutions have completed the formal testing and certification needed to send or receive payments on the new network, the central bank said. The new system, called FedNow, will allow eligible banks with accounts at the Federal Reserve to send money instantly starting Thursday. The Federal Reserve debuted a new payments system designed to speed up the movement of money among banks around the US, the central bank’s first new network in decades. By Jenny Surane and Katherine Doherty | Bloomberg
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