What is Fed Now?
It is brought to you by the Federal Reserve:
FedNow is an Instant Payments Service:
- The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services.
A good definition of Fed Now by @taskmasters4450 :
A new instant payment service that is being designed by the Federal Reserve Banks. It will enable financial institutions, no matter what size or where they are located within the US, the ability to utilize safe and efficient payments in real time.
Businesses and individuals who use the service will be able to send and receive instant payments while also having access to the funds immediately.
The service will provide interbank clearing and settlement that enables money to be transferred from the account of a sender to the account of a receiver in near real-time and at any time, any day of the year.
source
FedNow Webpage Definition:
The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services.
Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year. Financial institutions and their service providers can use the service to provide innovative instant payment services to customers, and recipients will have full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments.
The FedNow Service will be deployed in phases, with the initial launch taking place July 2023.
There is a YouTube Explainer Video on the site:
The webpage also provides off site explanations of the types of instant payments to be offered.
Instant and other types of faster payments can be used for a variety of everyday transaction scenarios.
Person-to-Person (P2P): These are payments made by individuals to friends, family members or other individuals for a variety of purposes, such as reimbursing shared rent or paying someone to walk the dog.
Consumer-to-Business (C2B): These payments are made by an individual to a business. For example, paying the grocery store for groceries, paying a bill or paying a salon for a haircut.
Consumer-to-Government (C2G): These are payments made by an individual to a government entity. Examples would be paying federal, state or municipality taxes, park passes or licenses.
Government-to-Consumer (G2C): This includes payments from the government to consumers, such as tax refunds, Social Security benefits or stimulus payments.
Business-to-Consumer (B2C): These are payments made by a business to a person, such as a business refunding money to an individual, paying employees their wages or disbursing insurance claims.
Business-to-Business (B2B): This type of transaction occurs between businesses. This could be a payment to suppliers for inventory or services.
Business-to-Government (B2G): This includes payments from a business to a government entity, such as federal or state tax payments.
Account-to-Account (A2A): This is the transfer of funds from a customer’s account to another account, typically owned by the same customer, at either the same or another financial institution, such as transferring money from a bank account to a brokerage account.
The term “person” can be used in place of “consumer” in these instances. For example, consumer-to-business (C2B) may be referred to as person-to-business (P2B).
FedNow Payment Flow
FedNow Payment Flow
Payments processed over the FedNow Service will settle between financial institutions in real time and end users will have immediate access to money sent to them.
Financial institutions that participate in the FedNow Service can meet the evolving needs of their customers and keep pace with the competition. Other benefits include:
- Attracting and retaining customers
- Growing revenue (e.g., transaction fees, fees for new service or product offerings)
- Lowering costs through increased efficiency (e.g., automation and operations)
- Reducing interbank settlement risk
Source
This video follows a payment over the FedNow Service from start to finish and shows what financial institutions need to know about their role in the process.
The FedNow system does not contain:
- A Token, so it is not a CBDC
- It doesn't contain a blockchain
- There is concern for it being a precursor to a Central Bank Digital Currency.
- Those that understand the power of the blockchain, and anyone watching what's happening in the Peoples Republic of China knows this provides the government complete control over the knowledge of all your purchases, and because a CBDC is programmable this would give the central bank controlling the curency and the government complete control over your purchases and effectively curtain your freedoms.
- A very good discussion of this can be found in this video:
I suggest you educate yourself on this issue.