Real-Time Payments Provide A Path To Fewer Overdrafts

When the Federal Reserve announced earlier this summer the launch of FedNow, a new service to enable instant payments for American households and businesses, some critics argued that the fanfare was overblown. After all, The Clearing House had launched the nation’s first instant payment system in 2017, and even that was decades behind other developed economies. Skeptics also questioned whether the Fed’s system would generate sufficient financial institution uptake, both for sending and receiving payments.

While questions remain around the pace and scale of adoption, I remain optimistic about FedNow’s potential. Why? Because FedNow offers the opportunity to finally align payments to the pace of daily life – to send or receive funds at any time of day, 365 days a year. This is critical at a time when so many families are living on the financial edge, and when the complexity and opacity of the current system ultimately cost them real money.