Originally published on Fintech Nexus News.
Government-backed initiatives for real-time payments in the U.S. have lagged behind the rest of the world. However, the long-awaited FedNow is due to launch in a matter of weeks.
While the launch is merely the first step towards a fully launched federally developed real-time payments system, it is long overdue. The private sector has carried real-time payments until now, as the U.S. financial system has watched other jurisdictions, one by one, adopt country-wide instant payment networks.
As one of the most ambitious initiatives the Fed has taken in decades, it was sure to create a significant talking point, regardless of recent instability in banking. Some now see FedNow as a springboard for innovation, but for others, it is a railroad to instability, creating higher risks of bank runs and fraud.
How will the directive fit in for an industry still reeling from massive bank failures in March?
Many have concerns about adoption
Since the launch of The Clearing House’s RTP in 2017, only a small percentage (around 3.2%) of banks have supported it.
“It’s going to be interesting to see how banks will adapt to the demand and availability of FedNow for small businesses,” said Nick Chandi, CEO and co-founder of ForwardAI.
While many of these banks are the largest in the country, resulting in a 65% coverage of all U.S. demand deposit accounts, this is a small feat in an ecosystem of over 10,000 banks and credit unions. Read more on Fintech Nexus News.
