Could Payment Processing Speed Up?

Merchants, you like to get paid right? Of course you do. It’s how you stay in business. In the past this has sometimes been excruciatingly slow but that will be changing. The Federal Reserve has announced plans to implement a 24/7 payment system so payments will be processed faster and funds will be transferred at near real time. That is great news for merchants.

Speeding Up Payments

The Federal Reserve has provided payment and settlement services since it was founded in 1913. Its core function is to promote an accessible, safe and efficient payment system here in the US. Their goal is to give everyone the ability to make and receive payments as quickly and securely as possible. Their planned service, FedNow, will support the infrastructure nationwide and develop innovative and faster payment services for Americans.

When a customer makes a payment the funds are deducted from their account in near real-time however as you are aware it takes several hours or even days before those funds clear and make their way into your account. For merchants this can be extremely frustrating. It’s your business’ money, you should be able to get access to it immediately.

Overwhelming Support For FedNow

The Federal Reserve Board began the process in 2018 by requesting public comment of potential services that could be developed to decrease payment times. More than 90% of all comments supported the Fed operating a round-the-clock real-time payment and settlement services. It is hoped that a system could be in place by 2024.

In a few years you will be able to make and receive payments in near real-time at any time of the day. This will allow the US to catch up to other nations like those of the European Union, Australia and Mexico that already have near real-time solutions. We have some catching up to do.

What Will The Fed Be Doing?

Based off of what the Fed has published they plan on making this possible in two steps. First the Federal Reserve Banks will develop the previously mentioned FedNow service, which will be a new interbank real-time gross settlement service to support faster payment services by banks or their agents. Second the Fed will expand the expansion of the FedwireⓇ Funds Service and the National Settlement Service to 24/7/365. These will modernize the Fed’s payment and settlement services and foster the development of faster payment services.

Potentially great news for merchants around the country!