New: FedNow instant bank transfers

Banks’ Newest Fed Headache: Nonstop Instant Payments

Analysts warn that FedNow could upend business models


Eric Wallerstein, The Wall Street Journal, July 9, 2023

The Federal Reserve expects to launch a new system this month aiming to make payments in the U.S. banking system available immediately, around the clock. Although it is a boon to consumers and many businesses, some analysts warn that FedNow could destabilize banks’ reliance on customer cash, fanning the flames of deposit flight that became the bane of several regional banks this spring.

Under an existing system called ACH (automated clearinghouse), transactions typically take several days to settle. That can be frustrating for those waiting to receive their funds but often benefits banks that use the money in the interim. …

FedNow will help lower transaction costs, diversify payment risks in the banking sector and level the playing field between small banks and big banks… [end quote]

The loss of income to the bank from “float” and the risk of instant departure of deposits will put pressure on banks to increase capital.

Banks have flexibility in implementing FedNow, including limiting transaction sizes, controlling transfer volumes in different periods and restricting access for certain clients. My local bank restricts transfers to $5,000. If I want to transfer more I have to phone the bank and talk to a supervisor. This would be difficult during a financial crisis.

Check with your bank(s) to find out their policies. And keep each account within FDIC insurance limits.



FedNow will help lower transaction costs, diversify payment risks in the banking sector and level the playing field between small banks and big banks…

It’s almost as if the financial illuminati were mechanics coming across a diesel truck on the side of the highway with a runaway engine spewing black smoke and revving ever higher and concluding that the best way to save the engine is to reduce friction in the engine with a more efficient oil pump.

Sure, eliminating the friction helps for SOME period of time when the engine is over-revving but it doesn’t correct the core problem. Too much fuel is entering an engine that doesn’t need it.

There is way too much concentration of assets in the TBTFs and near-TBTFs because they have repeatedly consolidated to hide and defer the recognition of failures during crises and because they are chasing demands from ever larger multinational corporations with payrolls and treasuries that can’t fit in what used to be a “normal” big (but not TBTF) bank.



Continue reading your article with
a WSJ subscription

No Way Josey!

The Float! Warren Buffett loves The Float! Free money to play with! What’s not to like? It was looking for The Float or its equivalent that landed me on selling options, not quite as good as The Float but close.

The Captain


The banks in Singapore do this. If I transfer between between banks will usually happen with a few seconds, I think the typical limit is up to 50k but you can set it lower.


Fast Payment Systems ( FPS) or Real Time Payment ( RTP) are well established in markets like India (UPI) , Singapore ( PayNow) and some other and are also now beginning to used for cross border payments bypassing SWIFT for retail and small biz cases. The fees are about 1/4 or 1/5 less then normal as both bank charges and FX spread are compressed and its less then 1 minute 99.5% the time. And they work almost 24X 7 almost like crypto markets

Bank of International Settlements ( BIS) has a NEXUS project that is fleshing this out.
RTP schemes increasingly enable Account 2 Account A2A payments from persons to businesses (P2B). Global A2A transaction value surpassed $525 billion in 2022 and is projected to grow at 13% CAGR through 2026

RTP are almost universal and supported by all banks in the country and domestic transfers are almost free. They do compete with credit cards . Unlike Zelle or Venmo these are available for all banks and other payment organizations and accepted by almost all merchants