FedNow's Rollout Puts Pressure on Finance Apps

    This Week in Tech

            July 20th, 2023

    FedNow's Rollout Puts Pressure on Finance          Apps

        At 10 AM today, The Federal Reserve started the rollout of its new instant payment service. FedNow has been met with mixed feelings by consumers and is starting a slow rollout this first week. It is currently live and working with 16 unnamed banks, but assumptions can be made that large banks such as JPMorgan, Chase, US Bancorp, and Wells Fargo have the app working on their systems. FedNow claims it does not intend to compete with apps such as Venmo or Cash App as they are person-to-person based, but as more banks enter into FedNow, person-to-person payment will be made easier and with fewer fees than other apps. FedNow also allows for transfers of up to $500,000 dollars, much more than most payment apps.

        Some are hesitant to use FedNow. There is some worry that FedNow is just going to be used to spy on the American People's transactions and cash flows. FedNow has sworn up and down that it is not a means of monitoring people's funds, but this hasn't stopped people from being skeptical. The Federal Reserve states that they do not get access to banking data and information by using the app, and only gets the transfer information necessary to complete transactions such as account number and routing number.

        Regardless of worries about FedNow, it is a net positive and provides huge benefits for businesses and individuals alike. It allows businesses to complete transactions with fees that are far less than using other banking institutions. The streamlining of the banking and transfer sectors will give great benefit to the economy as money transfers faster between buyer and seller.