The United States Federal Reserve aimed to launch a new instant payment system for the US population by next summer.
FedNow is a centralized payment system, which is almost ready to use. The Federal Reserve is the leading body to bring the origin of FedNow. The testing of this new payment system will start by September of this year and it is expected that it will eliminate the significant role of the Federal Reserve in the online payment system at a significant level.
On 29 August, Lael Brainard, the Vice Chairperson of the Federal Reserve, announced that FedNow will be launched by next year between May to July. And also confirmed that it will first go under the testing phase by the next month of this year.
“we will be ready to launch the FedNow Service between May and July of 2023, bringing this innovative core instant payment.”
Brainard suggested to all the United States-based financial institutions and software providers to bring upgrades in their systems to integrate the FedNow instant payment system.
The shift to real-time payment infrastructure requires a focused effort, but the shift is inevitable,” Brainard said. “The time is now for all key stakeholders…to devote the resources necessary to support instant payments.”
According to the Federal Reserve, FedNow will help all types of online payment users to facilitate instant payment, whether they are small/big businesses or household-related payments.
FedNow will be highly scalable because of the cloud computing power and it will be able to facilitate transactions within a few seconds, as per information provided by Fed Res.
Earlier this, on 17 August, Michelle Bowman, Governor of Federal Reserve, said that the introduction of Central Bank Digital Currency (CBDCs) needs congressional approval and also it will require huge technical engineering, which may consume around 5 years to make a useful digital dollar. Indirectly he noted that FedNow will fulfill the need of CBDC.