What Is FedNow? The Federal Reserve's Real-Time Payment Service

FedNow is the Federal Reserve's real-time payments service that settles transactions 24 hours a day, 7 days a week, 365 days a year. Launched on July 20, 2023, it allows banks and financial institutions to move money instantly across the Federal Reserve's own accounts, eliminating the delays and counterparty risk of traditional payment methods.

The Service Overview

FedNow operates as a real-time gross settlement (RTGS) system. When you send a payment through FedNow, it settles immediately in central bank money. There's no waiting for batch processing, no waiting for the next business day, and no intermediary bank risk. The transaction completes in approximately 20 seconds.

More than 1,500 financial institutions are participating in FedNow as of early 2026. That number continues to grow. Banks can access the service through the Federal Reserve's own infrastructure, making it a government-operated alternative to private payment networks.

In 2025, FedNow processed roughly 8.4 million transactions worth $853.4 billion. It's still early, but adoption is accelerating as banks build integrations and consumer-facing products around it.

How the Pricing Works

The Federal Reserve designed FedNow to be affordable. Participating institutions get their first 2,500 transactions per month free. After that, the cost is $0.045 per transaction. For low-volume banks, this is negligible. Even for high-volume participants, the math is favorable compared to the cost of managing delayed settlements or counterparty exposures.

There are no monthly subscription fees or connection charges. Banks pay only for the transactions they send. This pricing structure was intentional: the Fed wanted to remove cost barriers to adoption.

The Technical Foundation: ISO 20022

FedNow uses ISO 20022 messaging standards. This is important for integration work. ISO 20022 is more sophisticated than older standards like ACH and allows richer information to flow with each payment. Richer data means fewer failed transactions due to incomplete or mismatched details.

For banks and payment platforms, this means modernizing their backend systems. But it also means fewer customer service calls about payment failures due to formatting issues.

FedNow vs. The Alternatives

To understand FedNow's place in the payments landscape, it helps to compare it to existing systems:

ACH (Automated Clearing House)

ACH is the traditional batch-based system used for payroll and business payments. It processes payments in batches with settlement 1-3 days later. ACH is low-cost but slow. FedNow offers the speed advantage without ACH's batch delays.

The Clearing House RTP Network

The Clearing House, a private entity owned by banks, operates the RTP network for real-time payments. RTP launched in 2017 and is also available 24/7. The key difference: RTP settles between the participating banks themselves, creating some counterparty risk. FedNow settles in central bank money, so there's zero counterparty risk. Both systems coexist; banks can use both.

Wire Transfers

Wire transfers are fast but expensive and require manual oversight. They're also not available nights and weekends. FedNow is cheaper and always available.

The $10 Million Transaction Limit

As of November 12, 2025, FedNow has a single-transaction limit of $10 million. This is a policy choice by the Federal Reserve. Most payments fall well below this limit, but large corporate transactions sometimes exceed it. Those payments still need to use wires or RTP for now.

The Federal Reserve has indicated it will monitor this limit and may adjust it as the system matures and proves stable.

Is FedNow a CBDC?

No. FedNow is often confused with a Central Bank Digital Currency (CBDC). FedNow is payments infrastructure. It moves money that already exists in bank accounts. A CBDC, by contrast, would be a digital form of the dollar itself that could be held directly by individuals. FedNow is a tool banks use. A CBDC would be a new form of money. They are different things.

FedNow and Stablecoins

Some observers argue that FedNow eliminates the need for stablecoins. This logic is incomplete. Stablecoins still offer advantages FedNow doesn't provide:

• Cross-border settlement: FedNow works within the U.S. banking system. Stablecoins work globally on public blockchains with no borders.
• Always-on settlement: FedNow is always available, but you still need a bank account to access it. Stablecoins work on decentralized networks where individuals transact peer-to-peer.
• Programmability: Stablecoins can be programmed into smart contracts. They work with decentralized finance. FedNow is for moving money between bank accounts.

The payments future likely includes both. FedNow improves domestic U.S. payments. Stablecoins address global, programmable, and decentralized payment needs. They fill different gaps.

What This Means for Payment Companies

For stablecoin platforms and payment infrastructure companies, FedNow changes the landscape for on-ramp and off-ramp liquidity. Banks can now move money to each other instantly. That means faster settlement for custody partners, faster funding for platforms, and better capital efficiency across the ecosystem.

It also means payment companies need to track multiple rails. You need to understand RTP, ACH, wires, and FedNow. Each has different speeds, costs, and use cases.

The core lesson: FedNow is important infrastructure, but it's one piece of the payments puzzle. Stablecoins remain valuable for use cases FedNow doesn't address.