Amid much opposition, the US Federal Reserve is soon launching its ‘FedNow’ payments service. It aims to revolutionize the country’s payment system by enabling real-time fund transfers at all times.
BeInCrypto previously reported that the Fed marked July 2023 as the launch month for the pilot program.
FedNow Launch With Several Banks
The idea of FedNow kickstarted in 2019 to eliminate the lag in settling fund transfers. This came after countries like the United Kingdom, India, Brazil, and the European Union had similar systems operational for some time.
Reuters reported on Thursday that FedNow is entering the US market with 41 banks and 15 service providers. The certified service providers reportedly include community banks and lending giants like JPMorgan Chase and Bank of New York Mellon.
The report notes that the central bank would expand the list further this year.
The new service will contend with private payment systems. However, some Americans worry that FedNow is being utilized as a surveillance tool before the Fed introduces a full-fledged CBDC.
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Notably, CBDC trials have frequently followed instant payment options in several nations. Not to mention that some countries see a central bank backed-digital currency as a substitute for private crypto. Amid crypto communities, there is already an ongoing debate on how the digital dollar would diminish financial freedom and violate citizen privacy.
Additionally, a report in July confirmed that FedNow has largely excluded blockchain firms.
Concerns of Fed-Led Services
Anu Somani, head of global payables and embedded payments at U.S. Bank, expressed enthusiasm about FedNow, calling it a “wonderful way of expanding reach” for their institution.
In contrast to peer-to-peer payment services, FedNow’s payments will be settled directly in central bank accounts. It is similar to the payment system called FedWire, which primarily caters to large-scale corporate payments but during business hours.
Unlike some concerns raised by market participants about potential bank runs, Meanwhile, Fed officials have downplayed fears of fast outflows.
At its launch, FedNow will impose a maximum payment limit of $500,000. However, participating banks will have the flexibility to adjust this cap to suit their requirements.
After its launch, FedNow will be closely monitored by financial experts and the general public alike. Its arrival has generated a buzz within the financial and crypto community. Will it disrupt the current landscape, potentially impacting crypto’s appeal as a means of instantaneous transactions?
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