On July 20, the Federal Reserve’s new system for instant payments, the FedNow Service, went live. Much like Zelle, this new tool will allow banks and other financial institutions to instantly transfer money for their customers, 24/7, 365 days a year.

Instant payment is a method of exchanging money and processing payments, allowing for almost immediate transfer of money.

The Federal Reserve real-time payments service has been under development for nearly four years, Digital Transactions reported.

Here are three things to know.

1. U.S catches up to the rest of the world

FedNow is the regulator’s first effort to offer a nationwide network for instant payments, a service that other countries have developed over the past decade. The United Kingdom, India, Brazil, as well as the European Union, have had similar services for years.

2. How FedNow works

It is launching with 41 banks and 15 service providers certified to use the service, including community banks and large lenders like JPMorgan Chase, Bank of New York Mellon, and US Bancorp, Reuters reported. More banks will be added throughout the year.

The new service is different than peer-to-peer payment services like Venmo or PayPal, which act as intermediaries between banks, Reuters reported. FedNow payments will be settled directly in central bank accounts.

The Fed already operates a real-time payments system called FedWire, which is for large-scale, mainly corporate payments.

FedNow be free for consumers.

3. FedNow details

“FedNow will start with a max of $500,000, but participating banks will be able to choose between allowing FedNow payments up to the Fed’s $500,000 maximum and setting a lower limit for payments they send, such as $100,000,” Bob Stark, the global head of market strategy for Kyriba and a long-time commentator on treasury and payment innovations, told Treasury and Risk.

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