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Business/Finance See other Business/Finance Articles Title: FedNow FAQs: What The Fed’s New Instant Payments System Is—And Is Not FedNow FAQs: What The Fed’s New Instant Payments System Is—And Is Not by Rachel Witkowski Editor Doug Whiteman Editor Updated: Jun 30, 2023, 1:19pm Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. FedNow FAQs: What The Fed’s New Instant Payments System Is—And Is Not Getty The Federal Reserve plans to roll out its long-anticipated faster payments system, called FedNow, in late July. This will be the first government-created platform to help your bank transfer money in real time. It’s similar to what the private sector has already created through payment apps like Venmo and Cash App that send funds almost instantly but outside of bank accounts. FedNow has been years in the making. Its potential impact on the global banking industry—with thousands of financial institutions able to access the system—has generated not only praise but also concerns and confusion about what FedNow will actually do. So let’s set the record straight. What Is FedNow? FedNow is the first U.S. government-created and -backed portal allowing banks to send and receive funds almost instantly. The Fed already has a payments portal but it doesn’t operate in real time, unlike Venmo, Cash App and other money transfer apps that allow users to instantly send money between app accounts. But to receive money in your bank account—whether from a check, direct deposit or payments app—you may have to wait a few business days, or bide your time over holidays or weekends. When FedNow launches, you’ll be able to make payments—say, on your mortgage—ideally within seconds. You’ll be able to send funds on the due date rather than having to plan several days out for an online payment to clear, or up to a week for a check to be processed. Business owners will be able to send and receive invoice payments in real time online. Will FedNow Replace Cash? No, the FedNow system won’t replace the dollar, or digital currency for that matter. Think of it as a platform that will transfer your dollar online, the same way popular money apps transfer funds. The promise of FedNow is that it will allow financial institutions to make those transfers happen between bank accounts, and in the blink of an eye. And while there have been claims on YouTube and TikTok and other social media that FedNow will replace the dollar with a new digital currency, these claims are false. As the Fed puts it, “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.” Will FedNow Create a Digital Currency? Critics have speculated that FedNow will create a digital currency, but the Fed has tried to dispel this false assumption by flatly saying, “FedNow is not related to a digital currency.” Part of the confusion stems from separate discussions on whether the Fed should create what’s called a central bank digital currency (CBDC). The Fed has clarified that it has made no decision on issuing a CBDC, and that it would “only proceed with the issuance of a CBDC with an authorizing law.” Issuing a CBDC is “something we would certainly need congressional approval for,” Fed Chair Jerome Powell told the House Financial Services Committee in March. Countries including the Bahamas, China, India and Nigeria have launched CBDCs, and more than 100 other nations are exploring the idea, according to the international policy think tank the Atlantic Council. Some countries are looking at whether a central bank digital currency could be a safer, faster way of transferring funds between banks. Others are considering whether to offer a CBDC as fiat money for the public, with the accounts held at a central or commercial bank. Does FedNow Replace Money Apps like Venmo and Cash App? The Fed has made clear that FedNow is not intended to kill or replace other money transfer options like Venmo, Cash App, PayPal or Zelle. Rather, it is meant to work alongside the current systems built by the private sector. But FedNow could be a game changer because thousands of banks already using the Fed’s current, slower payments system may see FedNow as a safe and faster option that has government backing. There are 57 organizations that have adopted the new program and become certified as of June 29, the Fed said in a press release. There already is a Real-Time Payments (RTP) network, a private service launched in 2017 and used by more than 100 financial institutions to offer instant funds transfers. Zelle is the only app-based payments system that operates within the RTP network. That’s why you might see Zelle’s service offered directly when you log into your bank or credit union. The financial institutions using the RTP Network can also opt into the FedNow system. Featured Money Transfer Partners Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 1.
#1. To: BTP Holdings (#0)
Good, this is WAY past time.
#2. To: Lod (#1)
I made a deposit at local bank using two checks. The bank accepted the checks. I used their bank debit card and bought iTunes gift cards at Wal Mart. Both checks bounced like rubber balls. The account was overdrawn by $2,000. They wrote off the debt. This collection agency picked it up. They called my cell number and the guy said, "Let's talk about this money you owe." I said, "What? Who is this? I don't know what you are talking about." Then I hung up. They record those calls and if you admit to owing money, they've got you. They are not the original creditor and have no claim unless you admit you owe the debt. ;)
I can't imagine anything the government does as being good. I might need a special briefing on this issue.
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