This week, The Federal Reserve announced that it’s working on a new, real-time payment system, called FedNow. FedNow will allow 24x7x365 payment processing for bank transfers up to $25,000 and is expected to become available in 2023 or 2024. This service will address the long-time demand for a real-time Federal network, and we’re excited about this enhancement for many reasons– a few of which we’ll outline in this post.
The Evolution of “Payments-as-a-Service”
It’s important to note that intermediary technology is needed to connect to the Federal network and make FedNow directly available to businesses and consumers. At Actum, we’re excited about the future potential that could exist in offering instant Payments “as-a-Service” to our customers and extending the value of our ACH payment processing Software-as-a-Service. While our team has over 20 years of ACH processing expertise, we’re always up to expand our functionality to continue adding new value for our customers. With Actum, our customers could reap added benefits of instant payment technology, on top of transaction submission and reporting, identity and bank account verification, KYC data, and our easy-to-integrate API.
FedNow and ACH Could Improve Redundancy
While ACH transactions are subject to settlement times, they continue to grow at a rapid pace (the ACH Network moved 23 billion payments and $51 trillion in 2018). It’s safe to say that ACH, which is critical for direct deposit, bill payments, loans, and other use cases, is not slowing down anytime soon. In fact, as NACHA recently announced, Same Day ACH transactions are getting even faster, with earlier transmission times and later submission deadlines. NACHA is also increasing ACH transaction limits in the near future.
We believe having a second U.S.-based banking network will provide greater redundancy for payment operations. If a network bottleneck happened, for instance, our merchants would likely still have another system available to send and receive funds.
FedNow Could Support Payment Interoperability
The Federal Reserve has indicated that interoperability between the Fed’s real-time payment network and the ACH network is a goal. While it may not be an initial feature of FedNow, we’re excited about its potential. Both real-time and ACH payments currently serve a purpose; with the ability to send and receive payments across multiple bank networks, our customers would have even more flexibility.
You can watch a video of the full announcement here. The future with FedNow looks bright, and we’re excited to keep you updated as we continue to learn more.
Contact Us to discuss how ACH payment processing can help your business efficiently send and receive payments.