The US central bank has said it hopes to make its round-the-clock, instant payments system operational “as soon as practicably possible.”

Dubbed FedNow, the new service will provide households and businesses with instant access to payments, for wages, government benefits or sales, without waiting days for checks to clear, the Fed said.

Yesterday, the Fed released a 50-page notice with details about FedNow’s features, data security protocols and when the service will be available following its launch.

FedNow will only be available to institutions eligible to hold an account at one of the Fed’s regional banks. But ineligible entities may be able to act as service providers or agents for participants in the service, the Fed said.

“Uninterrupted 24x7x365 processing”

The central bank said FedNow will be designed to maintain “uninterrupted 24x7x365 processing” with security features to support data integrity and data security. Access to intraday credit will also be provided to participants in FedNow.

The service will be launched in phases, starting with “core clearing and settlement features” that will help support market needs and help banks transition to a 24-hour payment system.

Based on additional stakeholder engagement, additional features will be added over time, the Fed said.

Big banks Vs small banks: contrasting views

The plan has been prised by smaller banks, which for years, they have been aggressively pushing for the Fed to build such a system.

Big banks, which have already built their own private infrastructure, lobbied hard against the Fed’s creation of FedNow.

In 2017, The Clearing House, a consortium of large banks, created its own real-time payments system. But smaller banks have resisted signing up, waiting to see if the Fed would offer a comparable service.

The fed said its system will operate alongside the private real-time payments system.

Fed Governor Lael Brainard said the Fed-run service will provide necessary competition, help ensure banks of all sizes have access to instant payment services, and improve the overall safety of the financial system.

In congressional testimony late last year, Fed chairman Jerome Powell expressed hope that the program could be launched before a 2024 target date.