The US Federal Reserve Board announced a real-time payments system called FedNow on Monday. The service is being developed now and will be available by 2024, the Federal Reserve said, adding it'll be "ubiquitous, safe and efficient."
Real-time payments systems, such as, already exist. But the Federal Reserve said most current services are "closed loop" so only people with the same app can transfer money to each other, and some apps can't reach all 10,000 different banks across the US.
For the new inter-bank system, the Federal Reserve will speed up its settlement and clearing processes for payments between banks. It'll be available 24/7, 365 days a year, and will be initially limited to $25,000.
"FedNow will permit banks of every size in every community across the country to provide real-time payments," said Lael Brainard, Federal Reserve Board governor.
It'll benefit both consumers and small businesses, the Federal Reserve said, because it negates the need for expensive check cashing services, high-cost and short-term borrowing and overdraft and late fees.
"The Federal Reserve's new FedNow Service, alongside services provided by the private sector, will help establish a safe and efficient nationwide infrastructure supporting faster payment services," the Federal Reserve said Monday in an FAQ about the payments system [PDF].
"This infrastructure will assist banks across the country and the broader payment industry in their efforts to build modern, innovative and safe faster payment services."