These Banks Have Already Embraced Using FedNow

As of early February 2024, approximately 470 banks and credit unions have become part of the FedNow network, out of over 9,000 financial institutions in the U.S. The current participants of FedNow are mostly regional and community banks, with many larger and online banks still not participating. Here is a full list of the current participants.

The Federal Reserve’s Instant Payment Revolution Discover FedNow, the Federal Reserve’s groundbreaking instant-payment service, offering financial institutions the capability to facilitate payments that are not only sent at any time but also received in mere seconds, making funds instantly available for use. Unlike PayPal, Venmo, Cash App, and Zelle, FedNow is not a direct competitor but rather a complementary service, with its availability contingent on individual bank participation.

FedNow represents a significant leap forward by the Federal Reserve, providing an instant payment service that allows customers of participating banks and credit unions to send and receive money in seconds, at any time of the day, every day of the year. This service transcends the limitations of traditional online transfers, such as those via the Automated Clearing House Network (ACH), which are batch-processed and typically take one to three business days to settle.

“FedNow will empower all U.S. banks, regardless of size, to provide their customers with access to real-time payments and instantly available funds,” stated Fed Chair Jerome Powell to the House Financial Services Committee on March 8.

Participation in FedNow is open to all banks and credit unions without obligation. While consumers, businesses, and non-bank payment providers cannot directly access FedNow, they can utilize the service through a participating financial institution. Neobanks, or digital-only banks, would need to collaborate with a participating bank to offer FedNow services.

FedNow revolutionizes the payment process between banks by enabling immediate clearing and settlement. Clearing involves the exchange of payment information and fraud checks, while settlement refers to the actual transfer of funds to the recipient’s account. FedNow ensures these steps are completed within seconds.

FedNow’s instant payment capability is ideal for bill payments and account-to-account transfers, offering a solution for those facing late fees due to tight budgets. Instant payments mean bills can be paid precisely on their due date, with immediate confirmation of payment acceptance, and without the risk of overdrawing accounts or incurring overdraft fees. Instant transfers also simplify managing funds across different banks.

Although not the first real-time payment service in the U.S., FedNow is set to significantly broaden the availability of instant payments nationwide. The Federal Reserve already facilitates payment services to over 10,000 financial institutions, either directly or through intermediaries. In contrast, the RTP network by The Clearing House, operational since 2017, has a smaller footprint with about 400 participating financial institutions. FedNow’s adoption may be gradual, but its potential impact is underscored by the U.S. Department of the Treasury’s participation, signaling a push for wider adoption among banks.

FedNow ensures immediate fund availability, a stark contrast to the next-business-day guarantee for check deposits. This service eliminates the wait for fund availability, even for transfers between different banks, without the need for customer enrollment.

As an end-user, you don’t need to sign up for FedNow directly. Instead, inquire with your bank or credit union about the availability of instant payment services through FedNow. If your institution isn’t yet offering FedNow, explore alternative methods for swift bank-to-bank transfers.