FedNow

What FedNow is

FedNow is an instant payment service developed by the Federal Reserve. It lets participating US banks and credit unions send and receive payments for individuals and businesses. The service went live on July 20, 2023, and operates 24 hours a day, 365 days a year.

FedNow is payment infrastructure, not an app or a card network. You initiate a payment through your financial institution's website, app or other interface. Both the sending and receiving institutions must participate for the payment to move through FedNow.

FedNow moves money through participating banks, so your access and fees come from your financial institution.

How a FedNow payment works

Your financial institution submits a payment message to FedNow, which validates and forwards it to the receiving institution. That institution accepts or rejects the payment. In the standard payment flow, settlement completes or the payment is rejected within 20 seconds.

For an accepted payment, the Federal Reserve settles between the institutions' designated Federal Reserve Bank accounts. The receiving institution must make the funds available to its customer immediately after accepting the payment. The payment service runs on weekends and holidays as well as weekdays.

What it means for your costs and cash flow

FedNow is not a card transaction, so it does not create card interchange or card-network assessment fees. The Federal Reserve's service information does not give businesses a standard fee schedule. Any business-facing fee depends on the payment service your financial institution offers, so compare its stated per-payment charges before using FedNow for regular invoices or vendor payments.

The direct business benefit is faster access to an accepted payment, including outside banking business hours. FedNow does not automatically change the fees on your card statement, and official FedNow materials do not specify a standard statement label for these payments. Keep your bank transaction records to match receipts and payments to invoices.

FedNow and Real-Time Payments (RTP)

FedNow is one US instant-payment service. Real-Time Payments (RTP) is a separate service operated by The Clearing House. The names are not interchangeable: your financial institution's participation in one service does not by itself confirm access to the other. Both are designed to move payments in real time, but this article covers the Federal Reserve's FedNow service.

What you can actually change

You cannot use FedNow directly or make a nonparticipating institution join. You can decide whether its speed and your institution's terms fit the way your business collects and sends payments.

• Confirm that both your business's and the recipient's financial institutions support FedNow.
• Compare your institution's per-payment charge with the cost and timing of ACH or other payment methods.
• Verify the recipient's account details and payment amount before sending.
• Reconcile incoming and outgoing FedNow payments against invoices and bank records.

1. 01
   Check participation. Confirm that your financial institution supports FedNow and that the other party's institution can receive the payment.
2. 02
   Compare payment costs. Review your bank's stated FedNow charge alongside the fees and timing for ACH and other ways you pay.
3. 03
   Set a verification step. Require staff to confirm the recipient and amount before initiating a payment that settles in seconds.

Frequently asked questions