FedNow is coming…now-ish. And that means money transfers are expected to get a whole lot faster.
Sure, you can currently Venmo or Zelle your friends instantly, but the banking system hasn’t kept up. Most transfers currently run on old systems that take hours, or even days, to process the money. That’s all set to change later this month when the Federal Reserve unveils its new system, FedNow, to allow banks to send domestic payments instantly — even at midnight on a Saturday, or on a holiday like Christmas Eve.
The Fed has so far been quiet about the exact date of release, but said in June that the service would roll out in late July with about 55 banks, credit unions and other providers approved to use the transfer service.
That means that companies like mortgage lenders can fulfill invoices right away, employees can get paid quickly and workers can receive their paychecks right away.
But there are also some potential downsides. Customers could take all of their money out of a bank in a second, resulting in an instantaneous bank run with no time for the government to intervene. FedNow is set to launch with a $500,000 per-transaction limit, which should help limit severe bank runs but that may not be low enough to prevent devastating runs on smaller banks.
Read more at CNN.com
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