FedNow is a service developed by the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

for

depository institutions Colloquially, a depository institution is a financial institution in the United States (such as a savings bank, commercial bank, savings and loan associations, or credit unions) that is legally allowed to accept monetary deposits from consumers. U ...

in the United States. It will enable individuals and businesses to send instant payments. Banks will be able to build product on top of the FedNow platform. FedNow is scheduled to launch between May and July 2023. FedNow will work on a 24-hour, 365-days-a-year basis, as opposed to the government's current system that is closed on weekends and

holidays A holiday is a day set aside by Norm (social), custom or by law on which normal activities, especially business or work including school, are suspended or reduced. Generally, holidays are intended to allow individuals to celebrate or commemorate ...

. FedNow's

transaction cost In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike produ ...

s will be five times cheaper than the existing solutions, that cost merchants an average of $0.23 per transaction. Instant payments address most of the problems that a

central bank digital currency A central bank digital currency (CBDC) (also called digital fiat currency or digital base money) is a digital currency issued by a central bank, rather than by a commercial bank. A report by the Bank for International Settlements states that, ...

(CBDC) would solve. However, FedNow is not a CBDC, because it is not a liability of the

Federal government A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...

References

External links

* Federal Reserve System {{US-bank-stub