Amid the banking crisis, the Fed confirmed the July launch of FedNow.
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FedNow is the instant payment service developed by the Federal Reserve for 10,000+ financial institutions in the US. It enables real-time payment 24x7x365.
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The project has been 3 years in the making. It was announced in 2020. The pilot was launched in 2022.
๐ Consumers and businesses need real-time payment solutions to better manage their finance.
๐ For the critical payment infrastructure, it is always good to have another service besides RTP - the Real-Time Payment Network launched by The Clearing House in 2017.
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๐ข New Opportunities
There will be less need for traditional products such as payday loan/check cashing. More opportunities for payment innovation and competition.
๐ก Fraud Risk
The authorized push payment fraud (scam) could become an even bigger issue, as what happens to Zelle. This calls for a balanced payment fraud strategy to create โgood frictionโ.
๐ด Liquidity Risk
One thing we learned from the SVB saga is how fast the fund can flow out of a bank now. The additional infrastructure continues to raise the bar for banks to prudently manage their financial risk.
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