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The United States Federal Reserve has officially launched its much-hyped FedNow payment service as it seeks to usher in a new age in monetary value transfer.
The Payment Revolution Through FedNow
The Federal Reserve has touted the FedNow service as one that will allow Americans to send and receive payments instantly and for 24 hours a day, round the clock. The modernization of the American payment system through the FedNow service is a testament to the flexibility of the apex bank to join the revolution in payments by providing an equally robust service for all Americans.
The payment system in the country, as it stands, is rife with many setbacks, including but not limited to the high transaction costs and delays in settlement. The Federal Reserve has been making the move to launch this service since as far back as 2019, seeing that new technologies, especially blockchain are beginning to dominate the payment landscape.
The FedNow service is not the first of its kind as other sovereign countries including the United Kingdom, Brazil, and India have floated related services in the past.
The FedNow service is making its market debut with 41 banks and 15 service providers already licensed by the Federal Reserve to utilize the service. While the approved users, for now, are quite robust, the Federal Reserve intends to onboard more users in the near future.
Many industry stakeholders have hailed the FedNow service with clear differences drawn between its operational model and those of third-party payment service providers like Paypal and Venmo.
Worthy Competitor With Crypto?
The launch of the FedNow payment service is billed to impact the crypto ecosystem depending on how much Americans embrace the new technology. Bitcoin (BTC) is already touted as one of the most revolutionary payment tokens around and while its legal tender status is currently being shrugged off by policymakers, its influence cannot be undermined.
Following the recent XRP ruling, there has been a growing hint that American banks may also soon start integrity XRP and the On-Demand Liquidity (ODL) service from Ripple Labs for cross-border transactions. These are systems that have operated and have been tested for years and despite the broad coverage, FedNow will have these protocols to compete with.
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