- The U.S. Federal Reserve is rolling out FedNow, a novel instant payment solution aiming to facilitate rapid B2B transactions akin to Venmo and Cash App. However, blockchain firms have been largely excluded from this venture.
- Upon its launch, FedNow will enable immediate fund transfers, eliminating waiting times for online payments to process or checks to clear. The service is set to expand to all U.S. banks, with 57 organizations already completing their testing and certification.
As the digital finance revolution continues to unfold, the U.S. Federal Reserve is making a strategic leap forward by introducing FedNow, an innovative instant payment infrastructure. Interestingly, this leap seems to be made without the inclusion of blockchain firms, provoking questions about the vision and comprehensive adoption of the solution.
A New Age for U.S. Payment Infrastructure
Designed to expedite payment services to match the standards of popular payment apps such as Venmo and Cash App, FedNow aims to facilitate real-time financial transactions for institutions of all sizes across the United States. When the system becomes operational, it will eradicate the delays traditionally associated with online payment clearance or check processing.
In a move that follows the footsteps of the UK’s Faster Payments system and the Eurozone’s Single Euro Payments Area, FedNow will enable businesses, banks, and individual users to transact funds instantly at any time throughout the year. The service is expected to be extended to all 10,000 U.S. banks.
As of June 29, 57 early adopter organizations, including financial institutions and service providers, successfully completed formal testing and certification. These early partners are now undergoing the final trial runs of the service, with a scheduled launch at the end of July.
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However, only two blockchain networks, including Metal Blockchain developed by Metallicus, will be integrated with FedNow. Despite Metallicus’ initial assertion of their network’s compatibility with FedNow for the instant conversion of cash to stablecoins, their name was surprisingly erased from the list later.
Catching Up in the Race
The implementation of FedNow is critically timed, considering the U.S.’s delayed progress in the payment infrastructure realm compared to peer nations. For instance, the UK’s Faster Payments system was initiated as early as 2008, and contactless payments have seen much slower adoption in the U.S. compared to countries like Australia.
The integration of key Ripple partners, including ACI Worldwide, Volante Technologies, and Finastra, in developing FedNow raises speculations about potential benefits for Ripple’s XRP. Nevertheless, whether these digital innovations will be harmoniously merged or deliberately kept at arm’s length by traditional financial infrastructures remains to be seen.
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