The Federal Reserve finally catches on to real-time payments

The launch of FedNow, the US Federal Reserve’s instant payment service for US banks, which allows individuals and businesses to send and receive money immediately, has largely been unreported outside the United States.

The service, the Fed’s first major upgrade since the 1970s, was launched on July 20, and allows banks to incorporate the payment system into their apps and build products on the FedNow platform. The fact that the U.S. Federal Reserve lacks a real-time payments system, which most central banks around the world, from the Bank of England to India to Brazil (Pix) already have, has led some critics to label FedNow as “FedYesterday”.

Why is nobody interested? First, because it is aimed at clients of US banks. It will compete with private apps such as PayPal, Venmo or Zelle, some of which are well established, but this time launched directly by the Federal Reserve, with the idea of creating an immediate, secure, free system (although it is not known whether or not the participating banks will decide to charge any kind of commission to their customers).

But secondly, and more importantly, because it’s the Federal Reserve that is launching FedNow. Seen from Spain, for example, this the equivalent of Bizum, which a year after its launch was replicated in the United States by Zelle…