JPMorgan, and Wells Fargo, among others, join Federal Reserve's “FedNow” payment system

• The Federal Reserve has launched the FedNow service and stated it is committed to working with over 9,000 banks to increase the reach of this service. 
• Currently, 35 banks and 16 service providers, along with the US Department of the Treasury's Bureau of the Fiscal Service, support instant payment.
• The FedNow will act as an alternative to the existing instant cross-border payment settlement options such as Ripple and Stellar Lumens.

The Federal Reserve, after a long wait, finally launched the service it claims is set to modernize the payment system of the United States. Using "FedNow," banks and users will be able to make transactions within seconds all day, every day of the week. Put simply, this is a direct competitor to the likes of Ripple and Stellar Lumens, who make similar systems.

US Federal Reserve's instant payment service goes live

The US Federal Reserve has been developing its instant payment service for a long time now. As announced in the beginning, the service will allow citizens to send and receive payments in seconds, akin to countries like India, the United Kingdom and Europe.

The FedNow service went live on Thursday with about 35 banks and 16 service providers who will be facilitating the service to its users. The early-adopter financial institutions participating in the initial launch include the likes of JPMorgan Chase, Wells Fargo, BNY Mellon, as well as the US Department of the Treasury's Bureau of the Fiscal Service.

In line with the launch of the service, Federal Reserve Chair Jerome Powell stated,

"The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient.

The Fed also noted in its press release that it is committed to working with the more than 9,000 banks and credit unions across the country to stretch this service's reach.

While the instant payment service is new to traditional financial institutions and users, it has already existed for a while now in the crypto space. Payment processing platforms such as Ripple and Stellar Lumens have been supporting instantaneous domestic and cross-border payments using distributed ledger technology (DLT). FedNow would serve as a direct competitor to them now.

FedNow is not the only payment system on the block, the New York Federal Reserve's (NYFR) Innovation Center is running its own experiment using similar technology. Banks such as HSBC, Bank of America, and Citi, along with institutions including Mastercard and payment network SWIFT, have been participating in the same.

NYFR labeled its experiment a "regulated liability network" and is focused on conducting settlements using digital Dollars without impacting the legal treatment of deposits. The experiments conducted so far have borne successful results, which could enhance domestic and cross-border payments, although not as quickly as the FedNow service would.

Read more - New York Fed successfully tests bespoke digital asset payment system even though technology already exists

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