The Fed is perfectly positioned to help deliver that kind of ubiquity, Theien said, because its network reaches 10,000 financial institutions. That’s why it has been working on its own instant payment infrastructure, called the FedNow Service, which it hopes to deliver by 2024. FedNow will enable financial institutions across the U.S. to provide safe, efficient instant payment services in real time.
Through financial institutions participating in FedNow, businesses and individuals will be able to send and receive instant payments conveniently, and recipients will have full access to funds within seconds, giving them greater flexibility to manage their money and make time-sensitive payments.
“We think we can be a big part of delivering that piece of value to businesses,” Theien explained.
That’s critical right now, said Ken Kruszka, CEO of fintech company SnapCheck, because with the exception of large corporations, most U.S. businesses seem unaware of the potential for the digitized payment infrastructure that typically goes by the term “faster payments.”
“We’re very much in the infancy of faster payments in the U.S.,” Kruszka said, “even though much of the world has been there for a decade or more. It’s a mixed bag. When you talk to some of the larger corporates, they are very excited about the potential that faster payments have for their business, both on the payables and receivables. But the SMBs — it’s sad to say, but most of them really aren’t aware of what faster payments really are. They’re busy doing their day jobs and aren’t really aware of what this whole revolution in payments can do for them.”
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