On Monday, the Federal Reserve Board announced that it is planning for a fast payment service known as FedNow. It is going to be a payment service that will facilitate and settle payments in real-time. Considering the way in which Fintech has grown, it is only natural that the Federal Reserve now wishes to push banks towards adopting such a swift payment service. However, experts believe that such a payment service could be a difficult proposition for some of the smaller banks in the United States.
The FedNow is going to be available to banks of all sizes, and when that happens, even smaller banks will be able to provide service that one usually expects from the world’s biggest banks. However, it is necessary to point out that a payment sent through the FedNow will need to be settled instantaneously by the bank in question. This can create a problem for the smaller banks, which might not have the tools in place to check for fraud and other red flags. Hence, their expenses might go up as they need to grapple with this particular issue.
However, it goes without saying that FedNow is a necessary service that will greatly benefit small community banks and provide people with a service that has now become commonplace in most countries. It goes without saying that in the initial days, the smaller banks might need to spend more in order to ensure that the system works smoothly. In the long term, this will only be beneficial for the banks and their customers. Moreover, the fact that such a service is being made available to any bank in the country is a highly progressive step, considering the clamor for instant payments all over the world.