For example, the current system can create problems for people paid by check at the end of a month, because they must deposit the check into their bank accounts and wait for it to be cleared before they can use that money to pay a utility bill at the start of the next month.
But the big banks' service, called the Clearing House, has been slow to reach smaller banks.
But those perks have yet to extend to every financial institution and business across the country.
The new service, dubbed FedNow, would compete with a private real-time payments system established by a group of large banks in 2017.
Fed Governor Lael Brainard said the Fed-run service would provide necessary competition, help ensure banks of all sizes have access to instant payment services, and improve the overall safety of the financial system.
White House trade adviser Peter Navarro on Monday urged the Fed to cut key rates by another three-quarters of a point to a full point by the end of the year to bring US rates in line with rates elsewhere. That's been one of the arguments for blockchain-based payment systems like Facebook's Libra, which would circumvent the need for third-party payment settlement.
Members of the Trump administration have also criticized Powell's performance as the leader of the Fed (a position he has held since early 2018 after being nominated by the president), blaming him for hurting USA economic growth.
The Retail Industry Leaders Association (RILA) retail trade association is publicly supporting efforts to develop FedNow. These delays cause stress, an over-reliance on credit, and higher fees paid by individuals and merchants.
"Some members of the cryptocurrency community are nonplussed by the Fed's plans to launch its own real-time payment system", wrote Ana Alexandre in Cointelegraph today, citing remarks by BTC buffs like Anthony Pompliano, who tweeted in response: "Bitcoin is already available". It hasn't directly admitted as much, but the fact that it wants to release a payments system to rival SWIFT and allow real-time settlements indicates it has a real concern over crypto's ability to revolutionize how money transactions are conducted.
Brainard said 90 percent of the comments it received supported a Fed system.
The Board is now requesting comment on how the new service might be created to most effectively support the full set of payment system stakeholders and the functioning of the broader USA payment system.