Fed’s New Payments Network Will Provide Boon to Fintechs, Plaid CEO Says

Paige Smith, Bloomberg News

(Bloomberg) -- The Federal Reserve’s new payments system will serve as a catalyst for financial-technology companies, which can use the network to send payments more quickly, said Plaid Inc. Chief Executive Officer Zach Perret.

Last week’s introduction of FedNow will serve as a “large accelerant” for the sector, aiding processes such as paying employees, sending money to friends digitally or transferring funds from online brokerages to bank accounts, Perret said Thursday in a Bloomberg Television interview. Such actions currently take about three days, but could be done instantly with FedNow, he said.

“We expect it to increase consumer choice, increase competition, increase optionality for people out there,” said Perret, whose closely held company connects fintechs to bank accounts. “The big question in my mind is actually how fast banks are going to adopt it.”

Read More: Fed Debuts New Payment Network to Speed Up US Money Movement

About 35 banks and credit unions are ready to support payments on FedNow. Certain uses, like payroll transfers, will help encourage the acceptance of FedNow, but wider mainstream adoption could take some time, Perret said.

“The reality is,” he said, “it will take years.”