Brumbaugh Wealth Management: What You Should Know About the Federal Reserve’s New Instant Payments System

Image via Board of Governors of the Federal Reserve System.

The use of mobile payment apps and person-to-person (P2P) payments are more popular than ever, giving businesses and consumers the ability to send and receive money instantly. According to a recent study, the share of P2P payments made with mobile apps nearly doubled in one year, increasing from 15 percent in 2020 to 29 percent in 2021.1 In response to the growing demand for these types of instant payments services, the Federal Reserve will be launching its own real-time, instant payments system called the FedNow Service (FedNow).

What is the FedNow Service?

Payments between depository institutions (e.g., check and ACH transfers) typically require “clearing” and “settlement” and can sometimes take a couple of days to process. The FedNow Service will change that by providing interbank clearing and settlement that enables funds to be transferred from the account of a sender to the account of a receiver in near real time, around the clock, 365 days a year. By participating in the FedNow Service, financial institutions will be able to process funds instantly. 2

How can the FedNow Service benefit consumers?

The Federal Reserve hopes that this new, more efficient instant payments system will facilitate and encourage economic activity by making it faster and easier for individuals and businesses to pay for goods and services. By having immediate access to funds, businesses and consumers will have greater financial flexibility, especially when making or receiving time-sensitive payments. In addition, the FedNow Service can reduce the risk to consumers of incurring overdraft and late fees and allow businesses to gain better control of their corporate budgeting and cash flow management. 3

Who can use the FedNow Service?

The FedNow Service will be available to all U.S. depository institutions, such as banks and credit unions. Businesses and consumers will be able to access the FedNow Service through their depository institution and send instant payments through their bank and/or credit union accounts. The FedNow Service will offer depository institutions the flexibility to choose from a combination of participation types within the FedNow Service in order for them to meet their specific business needs. Although some depository institutions are already preparing to adopt the system, others will need to explore an implementation and participation strategy, and some may decide not to participate.4

When is the FedNow Service scheduled to take effect?

The initial launch of the FedNow Service is scheduled for July 2023. Additional features and service enhancements will be released over time in phases. 5 For more information, visit

1) The Federal Reserve Bank of San Francisco, 2022

2-5) The Federal Reserve, 2023


Registered Representatives offering securities and advisory services through Cetera Advisor Networks LLC (doing insurance business in CA as CFGAN Insurance Agency LLC), Member FINRA/SIPC, a Broker-Dealer and a Registered Investment Advisor. Advisory services also offered through AdvisorNet Wealth Management. Cetera is under separate ownership from any other entity.

This information was prepared by Broadridge Investor Communications Solutions, Inc. and has been made available for Cetera Advisor Networks and their representatives for distribution to the public for educational information only.  Broadridge Investor Communications Solutions, Inc. is not affiliated with nor controlled by Cetera.  The opinions/views expressed within are that of Broadridge Investor Communications Solutions, Inc. and do not necessarily reflect those of Cetera or its representatives.  In addition, they are not intended to provide specific advice or recommendations for any individual.  Neither Cetera nor its representatives provide tax or legal advice.  You should consult with financial professional, attorney, accountant, or tax advisor regarding your individual situation prior to making any investment decisions.

This communication is strictly intended for individuals residing in the state(s) of PA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Advisor Solutions Copyright 2023.

Connect With Your Community

Subscribe to stay informed!

"*" indicates required fields

This field is for validation purposes and should be left unchanged.