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Federal Reserve Preps July Release Of New Digital Payments System

March 20, 2023

The Fed’s long-awaited digital payments system, which will enable instant settlements, is set to launch in July. 

America’s payment system is antiquated. In a world where information moves at the speed of light, money moves at a snail’s pace. Not only do payments through the U.S. banking system require lengthy settlement times, but they also require hefty fees paid out to unnecessary middlemen. Today, hundreds of trillions of dollars move through three primary channels in the U.S. financial system each year. These include credit and debit card networks, mobile payments, wire transfers, and the ACH (automated clearing house.)The advent of Bitcoin more than a decade ago, with its near-instant settlements that require no third-party verification, exposed America’s outdated legacy payment system as inadequate and cumbersome.In this dawning digital age, businesses and consumers are increasingly demanding faster payment services with the ability to send and receive money at the click of a button or swipe of a screen. And they want to be able to do this 24/7, 365 days per year. In fact, three in four businesses and two in three consumers think it’s important that their bank or credit union offer faster payments, according to a 2020 Federal Reserve survey.This growing demand for instant payments has led both businesses and consumers to seek out faster and cheaper payment solutions by using mobile payments and digital wallets. More people seeking smarter ways of moving money has become increasingly detrimental to the demand for bloated and inefficient solutions offered by the traditional banking system.Enter FedNow, which is the Federal Reserve’s new digital payments system that promises to slash the time and cost associated with moving money. This new service, which the Fed plans to launch in July, is designed to enable financial institutions and other types of businesses to deliver instant payment solutions for their customers.The FedNow service will help make the U.S. financial system more competitive and will serve many of the functions offered by a central bank digital currency (CBDC). Put simply, America is just a few months away from real-time payments. While this is great news for businesses and consumers who want quicker and cheaper financial transactions, it is also great news for Bitcoin investors as it serves to validate their entire investment thesis. As more Americans become accustomed to cheap and instant settlements and digital wallets, the more they will come to see the many benefits that Bitcoin offers over the U.S. dollar. Takeaway: We’re still in the early days of instant digital payments. And, in my opinion, Bitcoin (not Fedcoin) offers the perfect way for early adopters to ride the wave of this rising megatrend. Got Bitcoin?

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