FedNow Explained: A Comprehensive Analysis of the United State Federal Reserve’s Real-Time Payment System


  • HRISHIT DHULIA Department of Finance, School of Business, George Mason University, Fairfax, VA
  • Jiasun Li Department of Finance, School of Business, George Mason University, Fairfax, VA




The field of instant (real-time) payment systems has witnessed significant advancements worldwide, with several countries successfully implementing real-time solutions to cater to the demands of modern financial transactions. To adopt this transformative field, the United States Federal Reserve has launched FedNow, a real-time payment system, to take a proactive approach to enhancing the nation’s payment infrastructure. Despite the growing importance of real-time payment systems, there is currently limited understanding of the intricacies and potential implications specific to FedNow, since previous research on instant payment systems has often focused on private-sector solutions or established instant payment systems implemented by other countries. To address these gaps in knowledge, this research explores the operational dynamics and unique features of FedNow. By conducting a comprehensive review and analysis of existing literature, academic papers, official reports, and online resources on FedNow, this research sheds light on the significance of FedNow. This study presents detailed insights into the key features, aspects, working mechanisms, and practical applications of the FedNow service. It also emphasizes FedNow's distinct position concerning private-sector fast payment solutions and private non-instant payment networks through a comparative analysis. The presented findings provide valuable insights for policymakers, financial institutions, and businesses to optimize their payment strategies. The paper further aims to examine FedNow's performance by comparing it with established real-time payment systems in other countries to optimize its impact on the financial ecosystem. 





School of Business: Department of Finance