Have you ever noticed how even with “instant” payment apps like CashApp, Venmo, and Zelle it takes a few days to send a payment to your bank? And how it also takes several days for your paycheck to post to your account after it has been sent?
The Federal Reserve is looking to change that with its launch of FedNow, a new instant payment system.
FedNow: What To Know About the New Instant Money Service
“Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year,” says a Federal Reserve news release.
People have been reaching out to Clark.com and our Consumer Action Center to inquire about FedNow and its availability. So of course, we dove right in to find out more.
In this article, you’ll find out what FedNow is all about, which banks have signed up for it and how money expert Clark Howard feels about it.
What Is FedNow?
FedNow is an instant payment system that allows individuals and businesses to immediately pay or receive money.
“For example,” the release says, “individuals can instantly receive their paychecks and use them the same day, and small businesses can more efficiently manage cash flows without processing delays.”
“The idea is your money should be available to you instantly if you want to pay somebody or an organization, no hold,” says Clark. “Not after five days or 10 days or however long your bank decides when they’ll give you access to your fund’s availability.”
According to Wells Fargo, which is participating in FedNow (more on that later), the platform will serve domestic account-holders “24 hours a day, seven days a week, 365 days a year, with irrevocable transactions.” There will be a $500,000 per-transaction limit.
Where Can You Use FedNow?
Currently, FedNow is in the soft-launch phase. According to the Federal Reserve, 35 banks and credit unions have signed on to offer FedNow so far.
Here’s a list of financial institutions that have been certified to offer FedNow according to Federal Reserve Banks Services, which provides financial services to banks and credit unions:
- 1st Bank Yuma
- 1st Source Bank
- Alloya Corporate Federal Credit Union
- Atlantic Community Bankers Bank
- Avidia Bank
- Bankers’ Bank of the West
- BNY Mellon
- Bridge Community Bank
- Bryant Bank
- Buffalo Federal Bank
- Catalyst Corporate Federal Credit Union
- Community Bankers’ Bank
- Consumers Cooperative Credit Union
- Corporate America Credit Union
- Corporate One Federal Credit Union
- Eastern Corporate Federal Credit Union
- First Internet Bank of Indiana
- Global Innovations Bank
- HawaiiUSA Federal Credit Union
- JPMorgan Chase
- Malaga Bank
- Mediapolis Savings Bank
- Michigan Schools & Government Credit Union
- Millennium Corporate Credit Union
- Nicolet National Bank
- North American Banking Company
- Peoples Bank
- Pima Federal Credit Union
- Quad City Bank & Trust
- Salem Five Bank
- Star One Credit Union
- The Bankers Bank
- United Bankers’ Bank
- U.S. Bank
- U.S. Century Bank
- U.S. Department of the Treasury’s Bureau of the Fiscal Service
- Veridian Credit Union
- Vizo Financial Corporate Credit Union
- Wells Fargo Bank, N.A.
When the rollout is complete, the Federal Reserve hopes to have more than 9,000 banks and credit unions offering FedNow services.
How Can You Access FedNow?
Currently, FedNow doesn’t have a website to sign up for the service, but you can find out more information at Explore.FedNow.org. Again, this is just a soft-launch and there should be more information available soon. My guess is that the banks and credit unions that offer it will offer access through their websites.
When I called a Wells Fargo location in Atlanta to inquire about FedNow, the banker that I spoke to had no idea about it or how to access it. He put me on hold for more than 10 minutes, but diligently looked up information about it.
“It’s out there, but I don’t show any official announcements of making it available to clients just yet,” he said.
Clark says because FedNow will end the practice of banks holding your funds for days and days, many financial institutions won’t be thrilled about it and may even slow down its rollout. But, Clark says, “over time this will be the way things are done.”
Getting your hard-earned paycheck faster is a good thing. Although FedNow has begun its rollout, it will take some time for banks and other financial institutions to get on board with it.
When that happens, you can expect banks and credit unions to incorporate it into their mobile apps, websites and more. And as always, you’ll need to watch out for money scams, which typically follow instant payment apps.
Have you asked your financial institution about FedNow? Tell us their rollout plan and share your thoughts in our Clark.com Community!