FedNow

The FedNow Service is an instant payment service launched by the Federal Reserve in 2023. It enables bank accounts at participating financial institutions to send and receive funds in near real-time, 24 hours a day, 7 days a week. This contrasts with the Automated Clearing House (ACH) network, which typically involves batch processing and settlement times of 1-3 business days. FedNow is commonly used for:

Urgent Payments: Facilitate time-critical payments that require immediate settlement.

Real-Time Disbursements: Enable businesses to disburse funds to recipients instantly (e.g., insurance claims, payroll).

Improved Cash Flow: Enhance cash flow management by accelerating the movement of funds.

Limits

The Federal Reserve sets a per-transaction dollar limit for FedNow transactions at $500,000 per transaction. While this is the rail-level maximum, Checkbook limits still apply.

Details

When a payment is sent via the FedNow Service, it will appear on the bank statement as a near real-time electronic deposit.

The specific formatting and information displayed can vary slightly depending on your bank, but you’ll generally see some combination of the following:

Amount: The amount of the FedNow payment will be clearly displayed.

Company Information: This field clearly identifies the sender of the FedNow payment, including the name of the individual or business that initiated the transfer. The formatting might be more specific and less abbreviated than standard ACH descriptions.

Date: The date of the funds transfer. Given the real-time nature, your bank statement might even include the specific time the funds were credited to your account, in addition to the date.

Transaction Type: Your bank statement will likely label the transaction distinctly as “FedNow Credit,” “Instant Payment,” or a similar clear identifier to differentiate it from other types of electronic deposits like ACH.

Remittance Information: FedNow supports text-based information within the payment message. Senders have the ability to include more detailed remittance information, invoice numbers, or brief descriptions. This might appear in the description field or in a clearly labeled “Reference”, “Memo”, or “Additional Details” section.