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The news:The Federal Reserve released pricing and fee details for FedNow, the real-time settlement network it will launch in 2023, per a press release.
FedNow will charge a $25 monthly participation fee for each routing transit number (RTN) that receives credit transfers.
Senders will pay $0.045 per credit transfer, including returns.
There will be a $0.01 fee for a request for payment (RfP) message that requestors must pay. This includes both new payment messages and returns.
The default credit transfer limit will be $100,000, but financial institutions (FIs) will be able to lower it or raise it to $500,000.
FedNow’s advantage: Because FedNow will be operated by the government, it’s mandated to break even and cannot turn a profit. This may let FedNow offer more competitive pricing compared with other faster payment systems, which might help spur adoption.
Forty-four percent of organizations polled by the US Faster Payments Council cited cost and complexity as a challenge to adopting faster payments.
Competitive pricing could help FedNow overcome its late entry into the market: Systems like the Same Day Automated Clearing House or The Clearing House’s Real-Time Payment system have had years to integrate with FIs and have been building out their networks.
The bigger picture:Demand for faster payments is apparent across all fronts, which sets up systems like FedNow for success.
Forty-six percent of treasury and finance professionals said faster or real-time payment processing represented the largest opportunity for innovation within treasury in 2020, per a TD Bank poll. Faster payment activities can create a clearer picture of cash flows for FIs. And consumer-facing faster payment innovations could also open new revenue streams for FIs.
A “substantial majority” of US businesses said using faster payment platforms was important, and 90% said they expected to make and receive faster payments within the next three years, per a brief published by the Fed last fall. Payroll was the top use case cited for faster payments by businesses, which might be because of the potential employee retention benefits.
More than half of US consumers (58%) said they’d use real-time payments, and 30% said access to real-time payments was a key factor when selecting an FI, according to a PYMNTS report. Like businesses, faster payments give consumers a better picture of their finances and help them avoid things like overdraft fees.
Related content: Check out “The Rise of Real-Time Payments” report to learn more about FedNow and how it compares with other faster payment systems.