Fed launches real-time payment system that enables U.S. users to transfer money electronically。Federal Reserve Chairman Jerome Powell said in a statement released on July 20 that the new system makes daily payments faster and more convenient。

The payment system, called FedNow, has been in development since 2019 and allows real-time transfers of up to $500,000.。However, the amount is less than the average estimated $5 million worth of transactions processed by Fedwire, the central bank's main money transfer system.。

Fed targets major banks

Top US financial institutions such as JPMorgan Chase and Wells Fargo are among 35 banks that have signed up to FedNow.。The central bank expects that as more lenders register for the real-time payment system, the system will be able to reach more consumers and businesses。

At the unveiling of the new system, the Fed said it expects more than 9,000 banks and credit unions across the country to use FedNow.。The new system will reportedly complement the central bank's existing payment services, such as Fedwire.。

Powell commented: "The Fed established the FedNow service to help make day-to-day payments faster and more convenient for years to come.。"Over time, as more banks opt to use this new tool, the benefits to individuals and businesses will include enabling individuals to receive their paychecks immediately, or enabling companies to have immediate access to funds when invoices are paid."。"

FedNow Real-Time Payments Controversy

FedNow is expected to intensify competition in the U.S. credit card industry, with major banks launching competitive services。JPMorgan, for example, launched a real-time digital payments service for institutional clients last year.。

Similarly, Clearing House, an electronic payment system owned by several large U.S. banks, launched a real-time payment network in 2017.。The system supports daily financial transactions such as paying bills, invoicing, processing payroll and settling insurance claims。

Unlike other advanced economies, the United States has long lacked an extensive real-time payment system.。In the UK, for example, the Bank of England operates the Rapid Payments System (FPS), which facilitates electronic payments between banks.。