Accordingly, the new instant payment network of Feb called FebNow will settle payments in seconds and can support transactions between consumers, merchants, and banks. It does not rely on blockchain technology. The new service is also seen as an alternative to the CBDCs’ digital currencies and stablecoins.
“With the FedNow Service, the Federal Reserve is creating a leading-edge payments system that is resilient, adaptive, and accessible,” said Tom Barkin, president of the Federal Reserve Bank of Richmond and the FedNow Program’s executive sponsor.
It’s an important step for the US government because FebNow is controlled by the Federal Reserve Bank, as opposed to Clearing House’s RTP network, which is run by a consortium of large banks.
The expected time to launch FebNow is July, with the U.S. Treasury and a “diverse mix of financial institutions of all sizes” ready to use the network from launch.
The Fed said it will “begin the formal certification of participants” during first week of April in preparation for the launch.
“Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, to prepare for sending live transactions through the system,” the announcement reads.
FedNow was announced in 2019 and will offer real-time, round-the-clock compounding payments by transferring commercial bank funds from the sender through the Fed’s credit account to the recipient. It also has built-in features like fraud risk management.
Following the official launch, the Federal Reserve outlined that it would push as many financial institutions as possible to increase instant solvency.