Federal Reserve

FedNow is not a business — it is a priced service of the US central bank, and modeling it any other way misreads the sector. The Federal Reserve operates the real-time gross settlement system 24/7/365 and charges participating depository institutions per-item and participation fees that the Fed itself sets, under a long-standing mandate to recover the costs of its payment services over time rather than maximize margin. There is no equity, no funding history, and no customer acquisition in the commercial sense: every eligible US depository institution is a potential participant, and the service passed 1,300 live institutions within roughly two years of its 2023 launch. The economic significance is what it does to everyone else's model. FedNow gives community banks and credit unions instant-payment capability without routing through the privately operated RTP network or building bilateral infrastructure, which compresses the pricing power of intermediaries above it. ISO 20022-native messaging and cloud-native architecture make it the substrate for bank products — instant payroll, bill pay, account-to-account transfers — where the banks, not the Fed, monetize the end customer. Read it as public infrastructure priced at cost that resets the floor for what instant settlement should cost in the United States.