FedNow, a much-anticipated quick payment service that enables customers and companies to send and receive money in seconds, was officially launched by the Federal Reserve on Thursday.
The method enables Americans to pay for goods promptly, for company payments to suppliers, or for personal payments between individuals.
Growing Benefits Of FedNow For People And Businesses
It will have full access to funds right away and be available every day of the year, 24 hours a day.
Although FedNow is not made available to people or businesses directly, it will form the backbone of the infrastructure for fast payments through connecting banks.
Banking transactions allow money to be transferred instantly from one bank account to another.
Although the initial setting of the transaction limit will be $100,000, the maximum per-customer credit transaction will be $500,000.
Money can be transferred from consumer to consumer, from consumers to businesses, or from business to business.
According to Federal Reserve Chair Jerome Powell, the FedNow Service was created to make regular payments in the upcoming years quicker and more convenient.
As more banks decide to use this new tool over time, the advantages to people and businesses will grow.
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Real-Time Money In Your Hands
For example, a person will be able to receive their paycheck right away, and a business will be able to promptly access cash when an invoice is paid.
Unlike Venmo, which only allows transfers to and from your bank account, FedNow allows transfers to and from your bank account directly. It takes some time to occur.
Customers might believe that receiving money through Venmo is instant, but Venmo doesn’t offer a real-time settlement, according to Rusiru Gunasena, SVP of RTP Product Management and Strategy at The Clearing House. “There is no money in your hands.
Because of the complicated back-end procedures required to settle the payment, it is not a true real-time payment.
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