The Federal Reserve has launched its real-time gross settlement system, FedNow, with the help of Volante Technologies, a fintech firm that partners with Ripple.
The new service aims to modernize the U.S. payment system and enable instant transactions across the country.
The Federal Reserve, the central bank of the United States, has officially introduced its real-time gross settlement (RTGS) system, FedNow, which allows banks to send and receive payments instantly.
The service is currently limited to domestic transactions only as a precautionary measure to ensure a smooth and error-free live environment.
The introduction of FedNow marks a significant milestone in the nation’s payment system modernization.
The new technology enables faster and more efficient payment processing for individuals and businesses. It also contributes to the enhancement of liquidity, settlement, and financial inclusion.
A FedNow Partner and Ripple Customer
One of the key contributors to the development and testing of FedNow is Volante Technologies, a fintech firm specializing in cloud-based payments and financial communications.
Volante is also a partner of Ripple, the blockchain company behind the XRP cryptocurrency and the RippleNet payment network.
Volante has been working with the Federal Reserve since 2017 to provide its VolPay solution for FedNow.
VolPay is a cloud-native platform that simplifies and accelerates payment integration, processing, orchestration, and messaging. Additionally, it supports various payment standards and protocols, such as ISO 20022, SWIFT, RTP, and FedWire.
Volante is one of the 110 organizations from the FedNow Community that participated in the pilot program for FedNow.
The FedNow Community consists of financial institutions, service providers, trade associations, and other stakeholders that provide feedback and support for the FedNow service.
A Potential Beneficiary of FedNow
Ripple has partnered with over 300 financial institutions around the world, including banks, payment providers, remittance companies, and digital asset exchanges.
Ripple could potentially benefit from FedNow in several ways:
- Volante, a FedNow partner, uses Ripple’s technology for XRP settlement
- FedNow aligns with Ripple’s vision of an Internet of Value, where money can move as fast and seamlessly as information.
- FedNow could increase the demand and liquidity for XRP as a bridge currency for cross-border payments and the need for pre-funded accounts and correspondent banking relationships.
FedNow is expected to be fully operational by 2024. It will compete with other RTGS systems in the U.S., such as The Clearing House’s RTP network, which went live in 2017.
It will also face competition from other blockchain-based payment solutions, such as Stellar’s USDC stablecoin and Circle’s USDC-2 protocol.
