The Federal Reserve has planned to create a system that will enable faster money transfer from the big banks. In the future, they will also support other payment options. It is anticipated that it will be available to the public by the year 2023 or 2024.
According to the reports from the WSJ, the system will provide instantaneous bank transfers, bill payments, and paychecks which are contrary to the current government systems that take days to settle the transaction and closed on the 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,” Fed Gov. Lael Brainard said in a speech at the Federal Reserve Bank of Kansas City Monday.
Oxford reports learned that the support payments will be allowed up to $25,000. The Fed went for the decision after the vote of 4-1 that called out for an independent bank. Looking forward, big banks such as Citi Group, JP Morgan Chase, have invested hundreds of millions of dollars to make their own payment system.
Amid the Fed plans to launch its own system, other banks say that an updated Fed system to would lead to delay in widespread adoption as hundreds of financial institution need to wait until Fed releases its own technology instead of connecting on the existing one.
“We have a real-time payments network. It’s operating,” said Steve Ledford, senior vice president for product and strategy at the company that operates the bank’s network. “If the Federal Reserve decides to launch its own network, it’s just delaying the access to faster payments to everybody.”
On its plans of roll down of the new system, the Fed said that the second option will reduce the prices, increases the efficiency, and reduce the vulnerability. The banking system is already facing from non-traditional systems such as Bitcoin, Etherum, and other cryptocurrencies that have changed the face of the transfer.
Libra, the cryptocurrency launched by Facebook is still under scrutiny who has partnered with companies such as Spotify, Uber, etc to provide a sustainable and diversified environment.