Retailers including Walmart and Kroger hope to one day take direct bank payments from customers this way, rather using credit cards.
By Jenny Surane and Katherine DohertyThe Federal Reserve debuted a new payments system designed to speed up the movement of money among banks around the US, the central bank’s first new network in decades.
“The Federal Reserve built the FedNow service to help make everyday payments over the coming years faster and more convenient,” Chairman Jerome Powell said in a statement Thursday. “Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.
RTP, which now has more than 350 institutions on its network, handled about $29 billion of payments in the second quarter. While that’s an 18% increase from a year earlier, it pales in comparison to the almost $20 trillion handled by the Automated Clearing House network — another system used by banks and other financial firms for electronic funds transfers — in a given quarter.
The Fed said that 35 banks and credit unions, as well as the US Department of the Treasury’s Bureau of the Fiscal Service, are ready to support payments on FedNow. More than a dozen service providers, such as Jack Henry & Associates Inc., which provides technology to thousands of regional lenders around the country, are also ready to support the new service.
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