Plaid CEO Says FedNow Will Trigger The Growth Of The US Fintech Industry
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A new payment system launched by the Federal Reserve known as FedNow was launched last week. This service targets banks and credit unions, allowing them to transfer money instantly at any time. According to the CEO of Plaid, Zach Perret, the service will boost the growth of the fintech sector in the US.
Plaid CEO says FedNow will boost the growth of the US fintech sector
The FedNow service was launched on Thursday last week. The interbank payment system seeks to present a wide range of benefits to American businesses and consumers, such as making funds readily available and supporting cash flow management.
While speaking at an interview with Bloomberg Television, Perret said that FedNow would be used as a large accelerant for the sector, and it will be used to support a wide range of processes such as paying employees, sending money to friends on digital platforms, and transferring funds from online brokerage firms to bank accounts.
Perret has also said that completing such processes usually took around three days, but these could now be completed easily through the FedNow platform. He also noted that the benefits presented by this solution depended on the speed at which banks adopted this solution.
“We expect it to increase consumer choice, increase competition, increase optionality for people out there. The big question in my mind is actually how fast banks are going to adopt it,” Perret said.
Around 35 banks and credit unions will support the payments services being offered on the FedNow platform. According to Perret, the service will handle a wide range of uses, such as payroll transfers, which will encourage the acceptance of the FedNow platform. He noted that the mainstream adoption of the FedNow service could take time.
The launch of FedNow
The US government launched the FedNow Service last week. The service is a major boost for banks that choose to sign up because it will allow customers to have immediate access to funds within a short time.
The US has been considering this service despite other countries already going live with similar services. One of the factors that might influence the adoption of the service is the rate at which customers quickly adopt it.
Adam Shapiro, a partner at Klaros Group, said that the Federal Reserve charges around 4 cents for each transaction done on FedNow. However, he said that banks were free to charge customers any fee they wanted for the use of this service. Therefore, business customers decide what platform to use if FedNow is deemed more expensive than the existing systems already in place.
