The central bank originally predicted FedNow's launch within five years, but the Fed chairman told House lawmakers that he expects it will happen sooner.
Many small banks remain skeptical of the payments network because it is owned and operated by big banks and they are waiting for the Federal Reserve to launch a rival service.
One Republican lawmaker went so far as to suggest that Congress should try to block the central bank's effort, but Democrats said FedNow will promote competition in real-time payments.
Increased adoption of The Clearing House’s faster payments system could put pressure on community banks and credit unions awaiting the launch of the Fed’s competing service, FedNow.
Community banks and tech companies that are happy the central bank is building a next-generation system are not as pleased with its four- to five-year timeline. But big banks see the slow rollout as an opportunity to expand their own instant payment network.
“It wouldn't be unusual” for the Federal Reserve to work alongside private-sector operators in the creation of a U.S. real-time payments system, its chairman said.
