5 things to know about FedNow

The central banking system in the US just launched an instant payment framework

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The Federal Reserve today announced the launch of its long-awaited instant payment system: the FedNow Service.

Here are five key points:

• This system allows banks and credit unions of all sizes to instantly transfer money for their customers at any time of the day, on any day of the year.

• Currently, 35 early-adopting banks and credit unions, along with the U.S. Department of the Treasury's Bureau of the Fiscal Service, have the capability to use instant payments through the FedNow Service. Additionally, 16 service providers are ready to support payment processing for these financial institutions.

• When fully implemented, instant payments may offer significant advantages for consumers and businesses. Individuals will be able to receive their paychecks immediately, and small businesses can efficiently manage cash flows without delays. Customers of banks and credit unions that sign up for the service will be able to use their financial institution's mobile app, website, and other interfaces to send instant payments securely.

• The FedNow Service operates as an interbank payment system alongside other longstanding Federal Reserve payment services like Fedwire and FedACH.

• The Federal Reserve is collaborating with more than 9,000 banks and credit unions nationwide to ensure widespread availability of the service for their customers in the future.