FedNow: What is it and how it works

FedNow launched July 20th, 2023. It allows businesses and individuals to send instant payments nationwide and in near-real time — any time or day of the year. Normally, bank account transfers can take a few hours or even days to complete, but FedNow hopes to give financial institutions a leg-up by advertising a delivery speed of literally seconds.

What is FedNow?

FedNow is a payment infrastructure developed by the Federal Reserve, which allows participating bank customers to send and receive money across the US in seconds.

But the only way to access it is if the financial institution or service provider you use signs up for this paid service, which will cost them $25 a month per routing number enrolled. Once signed up, financial institutions can offer their customers “full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments,” according to the Federal Reserve.

How it works

For customers of banks participating in the FedNow service, it’s a pretty straightforward process and similar to other instant transfer payment services. FedNow integrates with your bank’s mobile app or online portal, allowing you to instantly request to send a payment and have the funds delivered to the recipient instantly. This can be especially useful if you’re trying to quickly transfer funds to your friend or for time-sensitive things, such as car or credit card payments.

FedNow details and costs

Detail	Info
Delivery speed	Instant, within seconds
Transaction limits	Default limit of $100,000, which financial institutions can increase or decrease, with the maximum set to $500,000
Domestic or international	Domestic only
Fees	$0.045 fee per credit transfer paid by the sender

These limits were released in early 2022, and the Federal Reserve states these may be adjusted throughout testing and launch stages as needed.

What banks use FedNow?

We’re in the first stages of the launch, so FedNow has baseline functionality, which includes account-to-account (A2A) transfers and bill payments. Early adopters include many financial institutions and the US Treasury. Of the 26 early adopters, a few include:

• Corporate America Credit Union
• Global Innovations Bank
• JPMorgan Chase
• U.S. Bank
• Wells Fargo Bank, N.A.

• Graphic
• Data table

How is this going to affect consumers and businesses alike?

FedNow is designed to accommodate many use cases and supporting applications, namely account transfers and bill payments. One of its main goals is to allow banks and credit unions to innovate around this service, providing their account holders with instant payments to stay competitive with instant transfer apps like Venmo, Zelle and PayPal.

Ken Montgomery is the first vice president of the Federal Reserve Bank of Boston and a FedNow Service program executive. He states, “We couldn’t be more excited about the forthcoming FedNow Service launch, which will enable every participating financial institution, from the smallest to the largest and from all corners of the country, to offer a modern instant payment solution.”

How does FedNow compete with other P2P services?

One of FedNow’s main goals is to help banks and credit unions compete with peer-to-peer transfer apps, like Zelle, Venmo and CashApp. FedNow beats out other apps with transfer speed, and it’s high sending limits — and none of these services work internationally.

Transfer service	Bank transfer speed	P2P transfer speed	Cost	Limits
FedNow	Within seconds	Within seconds	$0.045 fee per credit transfer paid by the sender	Send up to $100,000 per credit transfer
Zelle	Within minutes, up to three days	Within minutes, up to three days	$0	Send up to $2,500 per day
Cash App	Standard deposits within 1 to 3 business days, or instant delivery w/ 0.5% to 1.75% fee	Within minutes for instant deliver	0.50% to 1.75% for instant delivery, minimum fee of $0.25	Send up to $250 within 7 days, and receive up to $1,000 within 30 days.
Venmo	Within 1 to 3 business days	Within 30 minutes for instant delivery	1.75% fee for instant delivery, or free for standard delivery	$5,000 per transfer limit