FedNow's 2023 date seems like a lifetime from now. The good news is there is no need to wait three or four years to begin taking advantage of the innovations driving real-time payments.
Banks and merchants can already access solutions that can provide a real-time experience and process payments on the best set of rails for any particular use case.
But the open access and universal acceptance of FedNow will turbocharge the speed at which real-time payment solutions expand into every area of transactions.
FedNow will enable cross-network real-time payments. Banks and merchants will be able to settle real-time transactions no matter which financial institution is receiving or sending the funds. For companies that already offer real-time payment solutions, this provides them the foundation to work with any FI or merchant regardless of whether they use RTP, FedNow or another real-time payment network.
This open network will also enable merchants and financial institutions to evolve their payments services both in partnership with each other and in direct-to-consumer offerings.
On the consumer side, the people most impacted by slow payments networks are often those living paycheck to paycheck. Solutions such as real-time bill payments, processing of paychecks, or insurance and medical payment settlement can help consumers free up liquidity, avoid late charges and better manage their funds for just-in-time payments.
On the business-to-business front, real-time payments increase liquidity, especially for small businesses with smaller reserves. Being able to provide faster response with accounts payable and receivables improves customer service and improves efficiency by settling credits and debits to accounts in real time.
FedNow will specifically enable merchants and institutions to work with the fintech providers of their choice, since they will not be limited to those companies who can work with TCH or Nacha Same-Day ACH network.