U.S. Federal Reserve Launches Long-Awaited FedNOW Instant Payments Service, Modernizing System
The United States Federal Reserve announces that its new system for instant payments, the FedNow® Service, is now live
The Federal Reserve on Thursday announced that its new system for instant payments, the FedNow® Service, is now live. Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” said Federal Reserve Chair Jerome H. Powell. “Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.”
To start, 35 early-adopting banks and credit unions, as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service, are ready with instant payments capabilities via the FedNow Service. In addition, 16 service providers are ready to support payment processing for banks and credit unions.
When fully available, instant payments will provide substantial benefits for consumers and businesses, such as when rapid access to funds is useful, or when just-in-time payments help manage cash flows in bank accounts. For example, individuals can instantly receive their paychecks and use them the same day, and small businesses can more efficiently manage cash flows without processing delays. Over the coming years, customers of banks and credit unions that sign up for the service should be able to use their financial institution’s mobile app, website, and other interfaces to send instant payments quickly and securely.
As an interbank payment system, the FedNow Service operates alongside other longstanding Federal Reserve payment services such as Fedwire and FedACH.
And Now The Bad News!
The Federal Reserve FedNow system is a new instant payment service that will allow banks to send and receive payments instantly. This is a major convenience for consumers and businesses, but it also creates new opportunities for scammers.
Here are some ways that scammers could take advantage of the FedNow system:
- Phishing scams. Scammers could send emails or text messages that appear to be from a legitimate bank, claiming that the recipient has received a payment through FedNow. The email or text message may contain a link that, when clicked, will take the recipient to a fake website that looks like the bank’s website. Once the recipient enters their banking information on the fake website, the scammer will steal it.
- Spoofing. Scammers could spoof the phone number or email address of a legitimate bank in order to make it look like they are contacting the recipient from the bank. Once the recipient answers the phone or clicks on the link in the email, the scammer will try to trick them into giving up their personal information.
- Malware. Scammers could create malware that, when installed on a victim’s computer, will steal their banking information. This malware could be spread through phishing emails, fake websites, or other means.
Here are some specific ways that scammers could use the FedNow system:
- They could send fake invoices or payments. Scammers could send emails or text messages that appear to be from a legitimate business, claiming that the recipient owes them money or that they have received a payment. The email or text message may contain a link that, when clicked, will take the recipient to a fake website that looks like the business’s website. Once the recipient enters their banking information on the fake website, the scammer will steal it.
- They could create fake websites that look like legitimate bank websites. Scammers could create fake websites that look like the websites of legitimate banks. These websites could be used to steal people’s banking information or to trick people into making fraudulent transfers.
- They could use the FedNow system to make fraudulent transfers. Scammers could use the FedNow system to make fraudulent transfers between bank accounts. This could be done by using stolen banking information or by using malware to take control of someone’s bank account.
It’s important to note that the FedNow system is designed to be secure. However, no payment system is completely immune to fraud. That’s why it’s important to be aware of the risks and to take steps to protect yourself.
Tips To Prevent FedNow Scams
Here are some tips to protect yourself from FedNow scams:
- Be suspicious of any email or text message that asks for your banking information. Legitimate banks will never ask you to provide your banking information over email or text messages.
- Only use the FedNow system through a legitimate bank or financial institution.
- Never give out your banking information over the phone or in an email.
- Be suspicious of any email or text message that asks you to confirm or update your banking information.
- Keep your computer’s security software up to date.
- Be aware of the signs of a phishing scam.
- Never click on links in emails or text messages from people you don’t know. If you’re not sure if an email or text message is legitimate, go directly to the bank’s website by typing the URL into your browser.
- Keep your computer’s security software up to date. This will help to protect you from malware.
- Be aware of the signs of a phishing scam. These signs include:
- The email or text message is poorly written or contains grammatical errors.
- The email or text message is urgent and asks you to act immediately.
- The email or text message asks you to provide personal information, such as your Social Security number or bank account number.
Note: The Federal Reserve will never contact the public via unsolicited phone calls or emails asking for money or any other type of personal information.
If you think you’ve been the victim of a FedNow scam, report it to your bank immediately, along with local and Federal law enforcement.
By reporting FedNow scams and abuse, you can help to protect others from becoming victims.