Adedapo Adesanya
By Adedapo Adesanya
The United States will join the likes of Nigeria, India, and Thailand, among others, with a banking system that supports instant payments following plans by the US Federal Reserve to roll out its FedNow Service.
The US is the largest economy in the world but it has one of the most rigid banking systems in the world as banking services are mostly conducted within business hours. This means that even if a transaction is done within seconds, it may take hours or several hours for the receiver to get the funds.
Money-moving apps like Venmo, Zelle, and CashApp have sprung up to cover this gap in recent years, but regardless, the problem persists since these transfers are operated on networks that work during working hours.
The US central bank with FedNow will offer banks a way to make instant payments available in the country, a feature that Nigerian customers have enjoyed for almost 10 years.
The upgrade will make it easier for payments to be cleared quickly and businesses will able to clear bills, salaries, and other needs on time.
FedNow will be 24/7/365 run by the Federal Reserve and is expected to roll out later this month via dozens of banks and financial institutions including
“What FedNow will do is it will enable all the banks — any bank in the United States, not just the big ones — to offer instantly available funds and real-time payments to their customers,” Fed Chair, Mr Jerome Powell, said in a recent testimony to the US House Financial Service Committee.
“We’ll have real-time payments in this country very, very soon,” he added.
The Federal Reserve will also offer an additional suite of tools to the banks to allow them to prevent fraud and better manage their cash flow, noting that additional features will be released over time.
“The FedNow service is designed to exist alongside private-sector options,” the US Fed said.
India leads the country in terms of real-time payments with 81.4 per cent of total electronic transactions carried out last year, according to ACI Worldwide’s 2023 Prime Time for Real-Time report. This was followed by Nigeria with 74. 1 per cent, Thailand at 63.7 per cent, while Brazil stands at 37.4 per cent.
