NEW Financial System in USA Goes Live - Instant Paychecks & Instant Refunds | FedNow

the Federal Reserve has now launched a new payment system here in the U.S it's called fed now so they've been testing this out since 2019 and they just went live yesterday on Thursday July 20th in today's video I'm going to let you know all about the fednow system the good news and the bad news for you and a few of the dangers that we're hoping to avoid so let's get started so the Federal Reserve has now modernized our payment system here in the U.S with our current system the system that we're trying to get off of when you are a business so whenever someone sends money it takes days for that money to settle and clear on the back end so if you think that's venmo is instance for you it may appear to be instance however on the back end it's not venmo is just they're simply just fronting you the money so the whole financial system it basically just got a big upgrade fed now is an instant payment service that is backed by the Federal Reserve and it's live so settlements and clearing will now be in real time this means that you can send and receive money within seconds 24 7 every day any day so you can you can literally just send money at 1am to a family member and so you send that 1am and they're going to receive it in seconds and it's going to be available to them immediately and we're talking every day Sundays holidays it doesn't matter 24 7 real-time payments so let me tell you what this means for you it means so there's there's a lot of examples I'm just going to give you a few of the bigger ones so it means that your paychecks will be instant so no more of that lag time so I'm talking about okay your pay period it ends on Friday but you're not going to get paid your direct deposit until Wednesday so no no more of that the pay period ends on Friday you're going to get paid that same day another game changer is instant refunds so I just got into the situation myself and it was very unpleasant for me so I'm sure that this has happened to some people here so basically what happened is that the vendor charged me an incorrect amount they they did something wrong maybe that didn't happen to you maybe you're just waiting on a refund but for whatever reason but it's annoying because you have to keep I mean I kept checking my app you know did I get refunded no I kept checking did I get refunded no but then okay I knew that I would get an email notification once the refund process but still I would keep checking my app anyways did I get refunded no and I just kept checking because I didn't want it to fall through the cracks you know but still it's a Time waster and it's a buzz kill every time you see that it didn't process and I had to wait for so many days for them to fix their mistake and then it finally got resolved on my credit card but it it needed that time to process to settle but that's not going to happen anymore because with a real-time system there's there's not going to be any more of that nonsense because the refunds will be instance on the FED now system and just so you know this would be huge because this is just one example Walmart says that 45 of their calls received at their call centers are people simply asking Where's My Refund and I'm sure that Walmart is not the only one now it also means that small businesses will be paid instantly so no more of that waiting for 24 hours to 72 hours to get the payments processed so when you get paid by a customer when you get paid by a client we're talking about debit card credit card by a check the funds will be available in your bank accounts immediately another thing is that you can pay your bills online and you can do it on the due dates and not get charged a late fee so for example you you've probably seen this with some of the vendors with some of the financial institutions sometimes they say that the due date is the 15th right but if you want to make a payments timely on the 15th and some of the institutions will say that okay you have to initiate the payments a day prior on the 14th for it to count as received on the 15th so that's not going to happen anymore so as you can tell this is going to be a game changer in a lot of areas so let me ask you do you know why that they're implementing this the reason why is because our current system is so outdated it is archaic so these changes that I just mentioned to you isn't about time that they fix these issues same day payday instant refunds basically no lag time so if you think about it it's like welcome to the 21st century right so I want you to know that this whole real-time payment system it already exists in England in China in India in many other countries so we're actually late to the game and it's about time however you're not going to see these changes take effect immediately and I'll tell you why banks credit unions and financial institutions they need to opt in to the FED now system the new system it launched on Thursday 57 big Banks and firms they've already opted in including JPMorgan Chase Wells Fargo Bank of New York Mellon U.S Bank Corp among others but in my opinion this is a no-brainer they're all going to be hopping on board very soon so it's like asking a financial institution do you want high-speed internet or do you want to stick with dial-up service it's just a matter of time now I have to warn you about this because this is a serious issue for you and for financial institutions so please be aware of this if you are a victim of fraud which fed now and real-time payments you generally cannot get It reversed or reimbursed so for example if you're a victim of fraud or unauthorized transactions on your credit card then generally your credit card company is going to take care of that for you you're not going to be liable but that's not going to be the case with fednow so you can think of it like a wire transfer or you could think of it like Zell what's done is done the Consumer Financial Protection Bureau is trying to find a way to reimburse victims of fraud in a way that makes sense to all Financial parties but that's they're just in talks nothing May develop if ever therefore this leads to another issue that goes hand in hand with fraud so with what I just told you with the threats of fraudulent transactions that cannot be reversed I mean that sounds scary and it is a serious threat therefore banks credit unions and financial institutions will have to upgrade their technology and their cyber security that means that more Investments is required and more money I mean there's more money is going to have to be spent on monitoring this situation 24 7. all this is not cheap and some institutions are saying let's pass on these additional costs to the consumers which is you and me so it could be Bank fees it could be hidden fees it could be surcharges however they want to you know call it or hide it okay now listen to this one because this one can get intense so another issue is the threats of faster Bank runs so these days with apps in online banking you can have a bank run in a day or two right but with a real-time payment system it's going to take it to another level it's going to get extreme so you have to remember that this whole system it's now 24 7. so imagine a bank run happening on Sunday morning at 2 A.M everybody is withdrawing their money and they can't it's a real-time payment system you wake up and your bank is just terminated it's closed it's closed for Good before you even get a chance to wake up and read your social media or read your messages now I want to tell you how this ties in well the ramifications on other Financial Service firms and institutions fed now is not replacing PayPal venmo or cash app at least anytime soon that's because again not all banks and credit unions are going to hop on board immediately the transition will take some time some analysts are saying that the transition could take two to three years others say that it might take 10 years for the old system to be obsolete and it's going to be the same thing with credit cards some analysts are saying that consumers and businesses will prefer to use fed now over credit cards and that would affect the credit card industry so in 2022 credit card companies collected 85 billion in processing fees so I want you to know that the arguments about how this is going to affect credit card companies and it makes sense if you just think about it because if you're a business you don't want to accept credit card payments if you don't have to that's not the preferred method of payments as a business owner if I could get paid by a credit card or by a check then I would rather take the check because I don't have to pay the credit card processing fee so the problem with a check is that obviously it takes time to clear it takes 24 to 72 hours to clear and have access to my money but if a check would give me instant access to my money then that would be a game changer and that would not be good for credit card companies but you can make the argument that they already have that they have Zell Zell exists however not all banks are a part of Zell and fed now it would actually make it easier and more convenient than Zell so yes this would this is going to be disruptive now I have to mention crypto the fentanyl system does not mean that the Federal Reserve will introduce a cryptocurrency so you can think of fed now as an upgrade to the current Network however some people are voicing the concern that fed now is crowding out private sector competition so we're talking about fintech companies and even crypto and this will pave the way for a Fed coin that's in arguments okay so that's the FED now system it's live it's being rolled out it's just a question of how long it'll take for the majority of banks credit unions and financial institutions to opt in and be rolling out the service well it's continuing the same service it's just faster there's no lag time but let's see what gets built upon the fednow system that's the big question so please let me know your opinion in the in the comments down below I look forward to reading your comments Please Subscribe I thank you for the support I wish you a very nice day take care

Channel: ClearValue Tax

Views: 518,447

Keywords: FedNow, Federal Reserve, economy, economics, stock market news, stock market, stocks, recession, recession 2023, inflation, inflation 2023, stagflation, stagflation 2023, bitcoin, btc, bitcoin news, crypto, crypto news, Fed, prepping, prepping 2023, graham stephan, meet kevin, Fednow service, fed payment system, banks, paypal, pypl, venmo, cashapp, IRS, JPM, JP Morgan, Wells Fargo, financial, personal finance, investing, investing 101, economic news, Fed Coin

Id: P8NjJ3YlbX0

Length: 10min 45sec (645 seconds)

Published: Fri Jul 21 2023