It’s America’s money, and we need it now

FedNow, the Federal Reserve’s new platform that would enable nearly instant payment settlement within the US, is set to launch between May and July of next year, Vice-Chair Lael Brainard announced on Monday.

🏦💳 A deeper dive… While many financial transactions, such as buying an item at the store, may seem instantaneous to the consumer, some payment methods actually take days to reach recipients and settle in their accounts. But that’s not the case with FedNow.

At its most basic level, FedNow aims to allow consumers, merchants, and financial institutions to pay friends and customers, settle bills, and transfer money immediately – at any time, any day of the year (a process called Real-Time Payments, or RTP).

• For example, proceeds from a house sale or your paycheck would be available immediately. You could also load money into an online broker account and have the funds ready to trade within seconds, or even get a cashiers check after all the bank branches have closed.

✋ Yes, but… There’s no guarantee the Fed’s new payments platform will catch on – and we don't really know what it'll eventually look like. The central bank is leaving it up to third parties to build their own services on top of FedNow, or incorporate it into existing or new products.

+In the know: Every time you swipe your debit card under the current payments system, it costs the merchant an average of $0.23 (which is usually passed on to the consumer). The FedNow platform will cost ⅕ of that price to make a transaction, per Axios.