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Federal Reserve to Launch FedNowService for Real-Time Payments

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Federal Reserve to Launch FedNowService for Real-Time Payments

According to reports, the Federal Reserve will launch a real-time payment system, FedNowService, in July, aimed at solving the problem of delays in clearing existing inter agency financial transactions. The system will begin authenticating the first batch of participants in early April. （CoinDesk）

The Federal Reserve will launch a real-time payment system to solve the problem of delayed clearing of financial transactions between institutions

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The Federal Reserve of the United States is set to launch its real-time payment system, called FedNowService, in July. This new system aims to address and solve the recurring problem of delays in clearing existing inter-agency financial transactions. According to reports, the authentication process for the first set of participants will start in early April.

The new payment system will enable faster and more secure interbank payments, compared to the currently available payment and settlement infrastructure in the country. This is a much-needed improvement, as traditional systems often cause delays, affecting both businesses and individuals who rely on timely payments for their transactions.

FedNowService is a direct response to private sector payment companies that have already initiated their own real-time payment platforms. The Fed decided to step in and create its own payment system to ensure that it meets the needs of all banks and payment service providers equally.

With the launch of FedNowService, the Federal Reserve aims to provide an effective, reliable, and accessible payment solution for everyone. The new payment system should enable consumers and businesses to initiate and settle payments quickly, anytime and anywhere.

Apart from its real-time functionalities, FedNowService will also provide additional features for enhanced security and convenience. This includes the integration of fraud mitigation tools and advanced payment message structuring.

At the moment, the Federal Reserve is working on designing and developing the system, including its protocols, standards, and features, in collaboration with payment industry stakeholders. Initially, the payment system will be available for banks and payment service providers. However, the Federal Reserve acknowledges that in the future, individual consumers and businesses could also be included as eligible users.

In conclusion, the launch of FedNowService by the Federal Reserve is a welcome development in the payment and settlement infrastructure of the United States. It is a positive step towards providing a more efficient and secure payment system that will benefit all stakeholders involved in financial transactions.

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