Payments between depository institutions (e.g., check and ACH transfers) typically require "clearing" and "settlement" and can sometimes take a couple of days to process. The FedNow Service will change that by providing interbank clearing and settlement that enables funds to be transferred from the account of a sender to the account of a receiver in near real time, around the clock, 365 days a year. By participating in the FedNow Service, financial institutions will be able to process funds instantly.2
The Federal Reserve hopes that this new, more efficient instant payments system will facilitate and encourage economic activity by making it faster and easier for individuals and businesses to pay for goods and services. By having immediate access to funds, businesses and consumers will have greater financial flexibility, especially when making or receiving time-sensitive payments. In addition, the FedNow Service can reduce the risk to consumers of incurring overdraft and late fees and allow businesses to gain better control of their corporate budgeting and cash flow management.3
The FedNow Service will be available to all U.S. depository institutions, such as banks and credit unions. Businesses and consumers will be able to access the FedNow Service through their depository institution and send instant payments through their bank and/or credit union accounts. The FedNow Service will offer depository institutions the flexibility to choose from a combination of participation types within the FedNow Service in order for them to meet their specific business needs. Although some depository institutions are already preparing to adopt the system, others will need to explore an implementation and participation strategy, and some may decide not to participate.4
Each year, the Trustees of the Social Security and Medicare Trust Funds provide detailed reports to Congress that track the programs' current financial condition and projected financial outlook. These reports have warned for years that the trust funds would be depleted in the not-too-distant future, and the most recent reports, both released on March 31, 2023, suggest that the future may arrive even sooner than expected.