Does anybody understand how the FEDNOW system will help the average consumer? I’ve read and heard pro and con, the latter saying this is a Trojan Horse into a central bank digital currency. The pro says other countries have had this set-up already and surprised we are just recently adapting it.
Ultimately, we are talking about how the money we earn and save may or may not be subject to new ownership rights.
Think of it as a modernization of the outdated ACH network, which can take up to 3 days to move funds electronically. You will be able to do many transactions within the same day. I suspect this will reduce the need for wire transfers…
This is an absolute necessity before we could adopt a CBDC.
Looks like Clark did a segment on his YouTube channel about it. Watching it currently.
Here is a list of organizations which are participating in FedNow:
FedNow Service Participants and Service Providers (frbservices.org)
It’s shameful that even more advanced emerging market economies have instant availability of funds. They laugh at ACH, they laugh at US railroads, they laugh at US airports, they laugh at US healthcare, they laugh at our students’ math and science and reading test scores, about the only thing we make is pretty good weapons… but clearly we’re not the only ones (witness Polish Krab howitzers, UK anti-tank missiles, Iranian drones). We’re good at making debt securities the rest of the world like to trade in. Don’t mind me, I’m having a moment… need some more coffee.
Serious question though… being a FedNow non-participant I view as a serious “ding”, I’d use that as one of my criteria for evaluating if I should stay with bank or credit union. I don’t expect my providers to be early adopters, but I’m thinking… if they’re not on-board in 36 months, if they keep me tied to the insecure, slow, 1970-vintage ACH system maybe I should move. Is 36 months the period of time I should wait? That coincides with me being newly retired, so I think it makes sense to find a “forever credit union” in 2026. Sound reasonable?
36 months seems like too long to wait to me. I suspect pressure will increase to adopt it sooner rather than later as people won’t put up with the ACH delays any longer. I had a Chase account for a while and even last year I could transfer from Chase to my other banks instantly. Don’t know what system they were using, but it was nice. I hated to give that account up but I only had it to take $300 from them for opening the account.
I agree with you though on whichever timeframe you choose. If the bank/CU you’re with doesn’t get onboard with FedNow soon, vote with your feet and wallet.
I just asked my local credit union, and I adore them, they immediately emailed me back and told me it’s on their 2024 project list. That’s why I love credit unions, I get secure emails back from the same small number of employees, we all know each other. I really hope they can get it together. I copied my verbiage from this post and sent it to them as a new feature request.
My original Credit Union (HP) was very forward thinking. We could scan checks to deposit way back. before smartphone technology. I used my HP flatbed scanner at the time.
The Credit Union was merged with other (Like Tektronix) and became First Tech. They are now the 9th largest Credit Union in the country.
I assume they will be onboard soon with FEDNOW.
Here is Clark’s take:
I have a concern about all instant pay systems like the Fednow system. A few years ago I received a $5,000.00 check in the mail from Wells Fargo Bank. It included a letter letting me know that they were unable to transfer that amount from my credit card to the bank in Texas as I had requested because the account number was wrong. I had made no such request. When I contacted them I found out it was fraudulent and that another transfer was in process. The bank was able to stop that payment at the federal reserve and I was saved from a big hassle and possible loss of funds. This new system does not allow a chance to challenge a fraudulent payment as it happens instantly. We need to be cautious with these types of money transfers. With AI moving into cybersecurity fraud creation, I believe we will see a lot of problems with instant transfers in the future.
What are the scenarios where an account is hacked and the stolen money is not covered against this? Could your bank account get hacked and the bank tells you there is nothing they can do for you?
Wells Fargo bank told me that I could be held responsible because it was a business credit card.
John Lindbloom A+, Network+, Server+, TCC, MCP
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We belong to Legacy Community Federal Credit Union, Evidently 4 or 5 months ago, they instituted FedNow. Instead of them holding our SS checks, they are now available 4 or 5 days early. Love our Credit Union.
This is nothing more than a precursor to the “CBDC”. Way back when. When employers offered direct deposits I’ve always received my paycheck funds immediately without delays. So no need to change.
The thing about a CBDC is how will corporations be treated if and when one is instituted? Companies like Apple have billions of dollars in cash. Is that money going to be locked up in another currency off shore? Will a CBDC be forced upon Apple 's cash holdings? Curious how a CBDC will benefit a capitalistic organization.