The Federal Reserve Board announced a long-anticipated faster payment system called the FedNow Service, which will allow near instantaneous payments and settlement in the U.S.

The service would allow individual consumers and businesses to make immediate payments and the Board also said it will consider a plan to expand the Fedwire Funds Service and National Settlement Service hours to 24x7 every day of the year, including holidays and weekends. 

"Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community," Lael Brainard, Federal Reserve Board Governor, said in a presention yesterday announcing the FedNow Service. "FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers."

The FedNow system could for example, be used to help consumers get instant access to their money, avoiding overdraft fees and high interest short-term loans, as well as offer the ability for businesses to make instant payments to consumers or other businesses, according to documents provided by the Fed. 

The agency is now asking for comments on how best to implement the system and anticipates a launch date of 2023 or 2024. 

The American Bankers Association issued a statement applauding the move and asking that banks consider whether to connect to the existing real-time payments network offered by The Clearing House. 

"We believe any Fed system must be fully interoperable with the RTP (real time payments) network, remain accessible only to chartered financial institutions and be available through all core processing companies and without the volume discounts that disadvantage smaller banks," Rob Nichols, president and CEO of the ABA, said in a statement.