A Federal Reserve official said the agency's new real-time payments system FedNow is slated to launch as early as May 2023.
FedNow has been in development for around a decade and is supposed to allow banks to send payments to each other in real-time, thus allowing bank customers to send real-time payments to each other as well.
The system, which will operate 24 hours a day, seven days a week, is expected to be less expensive than wire transfer or debit card transaction fees.
But while FedNow has been in development, other banks and the cryptocurrency industry have been looking for other alternatives for real-time payments.
The banking industry owns Zelle, a service that allows people to send real-time payments. Other applications allowing real-time payments, like Venmo, Cash App and PayPal, are widely used by individuals.
Fed Vice Chair Lael Brainard said Monday to a FedNow early adopter workshop in Rosemont, Illinois, that she predicts the system to go live between May and July 2023.
The Fed had previously been vague about when it expected FedNow to launch.
"Having the capacity to manage money in real time could help households avoid costly late payment fees or free up working capital for small businesses to finance growth," Brainard said.
"Indeed, during the pandemic, we witnessed how essential rapid access to funds can be, as many households started spending emergency relief payments on the day they were received," she continued.
The Associated Press contributed to this report.