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The service, dubbed "FedNow," comes following a 2018 request for public comment that found support for a "round-the-clock" real-time payment (RTP) and settlement solution, per a press release.

The Fed's board is now looking for public comment on how FedNow should be designed, and "anticipates" a 2023 or 2024 launch, though a 4-5 year wait could impact FedNow's eventual positioning, since "existing schemes from TCH and EWS (Zelle) will have been operating for several years by then," Craig Ramsey, head of real-time payments at ACI Worldwide, said in commentary sent to Business Insider Intelligence.
Here's what it means: FedNow is being created in part to compete with The Clearing House (TCH), which already works with a number of major banks, and the Fed's system could impact TCH well before it launches.
The Fed expected that TCH's system would be unopposed in the market if it didn't launch its own service, per The Wall Street Journal. As a competitor, the Fed can push prices in the market down.This is especially true as the Fed, by law, aims to break even rather than make a profit. And the Fed's plans could hurt TCH's adoption and volume well before they're finalized: "There may be financial institutions that wait for the Fed," TCH SVP Steve Ledford said, per The WSJ.
The bigger picture: The eventual introduction of FedNow will have a significant impact on a number of payments stakeholders.
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