FedNow, the Federal Reserve’s new payments system that was launched last week, is predicted to bolster growth for the US fintech sector according to Plaid CEO Zach Perret.
FedNow went live last Thursday as a new service for banks and credit unions to instantly transfer money at any time. The interbank payment system aims to provide benefits for American consumers and businesses with rapid availability to funds and cashflow management.
Perret stated in an interview with Bloomberg that he believes FedNow could act as a “large accelerant” for the fintech industry by speeding up processes which previously took up to three days and now can be done instantly, such as paying employees and transferring funds digitally.
Perret noted that widespread adoption of FedNow could take years, but it offers numerous benefits to US financial institutions. He stated: “We expect it to increase consumer choice, increase competition, increase optionality for people out there. The big question in my mind is actually how fast banks are going to adopt it.”
At its launch date, there were 35 banks and credit unions ready to adopt the service along with the US Department of Treasury’s Bureau of Fiscal Service. 16 service providers will support payment processing for banks and credit unions using FedNow.