Debunking FedNow Service Misconceptions
posted by Dan Kramer on Thursday, November 30, 2023 in SHAZAM Blog
In July, the Federal Reserve announced its new instant payments system, the FedNow® Service, went live for pilot participants. This was an exciting milestone for early adopting financial institutions who were first to use the new tool to instantly transfer money for accountholders.
FedNow is now open to the general market, which means more financial institutions are offering the new instant payments option to accountholders.
As with any new technology, some individuals are hesitant to dive right in. Additionally, there are misconceptions about FedNow circulating online and causing confusion.
Facts From the Fed
One of the biggest falsehoods is that FedNow is a form of central bank digital currency. According to the Fed, FedNow isn’t related to digital currency. FedNow is a new tool the Fed is making available for financial institutions to transfer funds for their customers, similar to other payments services. Some people also fear FedNow is replacing cash, but the Fed has stated the service is neither a form of currency nor a step toward eliminating any form of payment, including cash.
If your accountholders have questions about FedNow Service, I encourage you to share these facts about the new payments capability.
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