A Survey of the FedNow Payment Rail: A Comparative Analysis with Global Instant Payment Systems

Abstract

The field of instant payment systems has transformed financial transactions by enabling real-time fund transfers. This survey explores the FedNow payment rail, introduced by the U.S. Federal Reserve, and compares it with the instant payment systems of other countries to identify the strengths and weaknesses of FedNow. As FedNow is extremely new, a knowledge gap lies in understanding how the payment rail compares with other global instant payment systems in terms of efficiency, security, and scalability. This abstract also highlights the need for a comprehensive analysis of different countries' implementations to draw valuable insights for the development of future payment infrastructures. The research involved an extensive literature review of the FedNow payment rail and prominent instant payment systems like the FPS, SCT Inst, and UPI. By examining their features, security measures, and transaction processing mechanisms, this survey identified areas of improvement for the FedNow system and drew lessons from successful international implementations. The findings highlight the strengths of the FedNow payment rail, such as regulatory support and integration with existing financial infrastructure. However, challenges related to interoperability and scalability were also identified, which may impact its long-term success. Overall, this survey underscores the importance of learning from global experiences to enhance the efficiency and robustness of instant payment systems, with implications for the advancement of financial technology and inclusive financial services.