[Fed]Now We’re Talking


Jul 24, 2023


Cindy Grazer


Jul 24, 2023


Cindy Grazer


FedNow, the Federal Reserve’s new system for instant payments, finally launched this week. Participants in the launch include 35 banks and credit unions, the U.S. Department of the Treasury's Bureau of the Fiscal Service, and 15 service providers like FIS and Jack Henry.

Initially conceptualized by the Fed in 2013, FedNow allows businesses and consumers to send and receive money 24/7, and early use cases are likely to include instant access to paychecks and invoice payments as well as instant bill pay.

Sounds great, right? While FedNow promises to improve liquidity and reduce friction, a rapid increase in the velocity and volume of digital payments does not come without risk. When payments are processed in a matter of seconds, it is difficult to identify and stop fraudulent transactions. Once fraudulent payments have been completed, it is even more difficult to recover the funds.

Plenty of questions remain. Will risk and compliance procedures keep pace? What will it cost? Will we see widespread adoption? And will Barbie and Ken turn out to be a couple of criminal masterminds behind a massive FedNow attack?

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Portfolio News

Embroker names Ben Jennings as Chief Executive Officer - Prior to this advancement, Jennings spent the past four years serving as Chief Revenue Officer for the company. With nearly three decades of experience, Jennings brings a deep technology background and expertise for scaling, streamlining and expanding value to customers and other key stakeholders. Read more

Flutterwave partners with IATA payment platform to serve the African continent - The partnership will help to facilitate travel to sub-Saharan Africa. With this integration, airlines can process customer payments through cards, bank transfers, mobile money, and other payment modes available on Flutterwave. Read more

Nuvei and Plaid extend their partnership to new regions - Canadian fintech company Nuvei and Plaid have extended their existing global partnership to support a wider range of businesses with accepting bank-based payments for multiple use cases, including recurring payments and payouts, and to serve additional verticals within the eCommerce landscape, such as utilities and B2B. Read more

[Fed]Now We’re Talking

Fed launches long-awaited instant payments service, modernizing system - The "FedNow" service will seek to eliminate the several-day lag it commonly takes cash transfers to settle, bringing the U.S. in line with countries including the UK, India, Brazil, as well as the EU, where similar services have existed for years. Unlike peer-to-peer payments services like Venmo or PayPal, which act as intermediaries between banks, payments made via FedNow will settle directly in central bank accounts. Read more

Financial institutions and service providers welcome launch of FedNow - At the time of Thursday’s launch, 35 banks and credit unions, and the U.S. Department of the Treasury’s Bureau of the Fiscal Service, were ready with instant payment capabilities via FedNow, and 16 service providers were ready to support payment processing for banks and credit unions, the Federal Reserve said on Thursday. Read more

The Fed is rewiring the U.S. payments system - The Federal Reserve has launched its own real-time payments system, called the FedNow Service (FedNow), as of July 20. Though FedNow is years behind tech-based private-sector competitors, it will be a game changer for transactions in the U.S. Read more

Industry News

AI in investment and financial services - For years, the financial services industry has sought to automate its processes, ranging from back-end compliance work to customer service. But the explosion of generative artificial intelligence has opened up both new possibilities, as well as potential challenges, for financial services firms. Read more

India and Singapore link UPI and PayNow in cross-border payments push - The move is a major push to disrupt the cross-border flow of money between the two nations that amounts to more than $1b each year. Eight banks are currently participating in the collaboration, and citizens in each nation can use their local payments systems to send money to those in the foreign land in “real-time.” Read more

Inside the private writings of Caroline Ellison, star witness in the FTX case - Ms. Ellison, a top executive in Sam Bankman-Fried’s business empire, recorded her thoughts on private Google documents that offer new insight into the collapse of the FTX crypto exchange. Read more

More Americans are getting turned down for loans, Fed data shows - The rejection rate for loan applicants jumped to 21.8% in the 12 months through June, the highest level in five years, according to the latest edition of the Fed survey, which shows the combined impact of high interest rates and a cautious turn among the country’s lenders. Read more

Amazon to launch pay-by-palm technology at all Whole Foods stores by year-end - Amazon One is a biometric technology that lets users enter and pay for items at stores by placing a palm over a scanning device. Shoppers first have to connect their palm to a stored credit card. After that, they can pay by simply waving their hand over the kiosk. Read more

Visa, Mastercard hit with antitrust suit over credit card fees - Block claims that Visa and Mastercard conspired to fix inflated “interchange” fees and maintain market power, according to a suit filed July 14 in the US District Court for the Eastern District of New York. Read more

SEC’s Gensler warns AI risks financial stability - On a more micro level, companies need to be aware of how their use of AI may implicate securities rules, he said. Whether it is used for financial fraud, juicing corporate returns or steering investors toward specific products, the SEC will be on the lookout, Gensler said. Read more

Senators to propose ban on U.S. lawmakers, executive branch members owning stock - The bill from Sens. Kirsten Gillibrand (D., N.Y.) and Josh Hawley (R., Mo.) would permit the president, vice president, lawmakers, Capitol Hill aides and employees of the executive branch to own mutual funds and broad industry and index funds. But it would prohibit them from owning stocks in individual companies, even in blind trusts. Read more

Fintech lenders tighten lending standards, bolstering debt financing - As the end of pandemic stimulus and rising inflation led delinquency rates to normalize, investors shunned the fintech asset-backed security (ABS) market late last year. Fintech companies like Upstart, Affirm, and OneMain Financial now say they are boosting credit quality, and these efforts appear to be wooing back some ABS investors. Read more

Apple’s ‘goodwill credit’ for Apple Savings customers could cost it $200m - Last month, it was reported that some Apple Card Savings account holders experienced issues moving money out of their Apple savings account to an external bank account. In an effort to placate disgruntled customers, Apple announced this week that it would offer a $100 “goodwill credit” to affected account holders. Read more

The pickleball craze won’t decimate big insurers - UnitedHealth signals insurers can weather the increase in procedures for more-active seniors. They posted better-than-expected earnings and raised the bottom end of its outlook for the rest of the year, despite higher medical costs related to an increase in procedures among seniors. Read more

Select Financings

Anduin - San Francisco based relationship platform for private market investors raised $15.6m in Series B funding led by 8VC. Read more

Bowery Valuation - New York based tech-enabled commercial real estate appraisal firm raised $16.3m in Series B extension funding led by Goldman Sachs Asset Management. Read more

Bureau - San Francisco based identity verification platform raised $4.5m in Series A extension funding led by GMO Venture Partners. Read more

Certificial - North Carolina based provider of business insurance monitoring technology raised $15m in new funding led by Nyca. Read more

Cognaize - New York based AI-powered intelligent document processing startup raised $18m in Series A funding led by Argonautic Ventures. Read more

Collectly - California based patient financial engagement company raised $29m in Series A funding led by Sapphire Ventures. Read more

Cosmic Wire - Miami based startup offering infrastructure products for web3 raised $30m in Seed funding led by Solana. Read more

Cymbal - California based provider of blockchain analysis tools raised $18.5m in new funding led by Patron. Read more

Ethena - Portugal based crypto startup developing a stablecoin secured by ethereum derivatives raised $6m in Seed funding led by Dragonfly. Read more

Exactera - New York based provider of tax compliance solutions raised $33m in new funding led by Insight Partners. Read more

Flash - Egypt based cashless payments company raised $6m in Seed funding led by Addition. Read more

Karat Financial - Palo Alto based financial services platform for creators raised $40m in Series B funding led by SignalFire. Read more

MyCover.ai - Nigeria based open insurance API developer raised $1.25m in pre-Seed funding led by Ventures Platform. Read more

Portrait Analytics - Boston based startup offering a generative AI platform for investment research and thesis creation raised $7m in Seed funding led by Unusual Ventures. Read more

Pox Labs - New York based developer of zero-knowledge proof protocols raised $25m in Series A funding led by Polychain Capital. Read more

Radiant Capital - Cross-chain lending and borrowing protocol raised $10m in new funding led by Binance Labs. Read more

RISC Zero - Seattle based developer of general purpose zero-knowledge technology raised $40m in Series A funding led by Blockchain Capital. Read more

Runway - Los Angeles based strategic financial planning and management platform raised $27.5m in Series A funding led by Initialized Capital. Read more

Sylvera - London based climate intelligence startup focused on carbon credit accounting raised $57m in Series B funding led by Balderton. Read more

Thunes - Singapore based B2B payments infrastructure platform raised $12m in Series C extension funding led by Visa. Read more

Tractable - London based startup using computer vision to assess property and car damage raised $65m in Series E funding led by SoftBank Vision Fund II. Read more


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