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August 6, 2019 08:03 pm

The Fed Is Getting Into the Real-Time Payments Business

An anonymous reader quotes a report from CNN: The Fed announced Monday that it will develop a real-time payment service called "FedNow" to help move money around the economy more quickly. It's the kind of government service that companies and consumers have been requesting for years -- one that already exists in other countries. The service could also compete with solutions already developed in the private sector by big banks and tech companies. The Fed itself is not setting up a consumer bank, but it has always played a behind-the-scenes role facilitating the movement of money between banks and helping to verify transactions. This new system would help cut down on the amount of time between when money is deposited into an account and when it is available for use. FedNow would operate all hours and days of the week, with an aim to launch in 2023 or 2024. Currently, the process of sending and receiving money can take up to 72 hours, leaving businesses and consumers, and especially low-income people, in limbo. "For example, the current system can create problems for people paid by check at the end of a month, because they must deposit the check into their bank accounts and wait for it to be cleared before they can use that money to pay a utility bill at the start of the next month," reports CNN.

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