Cash is not going away

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Terrible news may make people click on the video, but it can also reduce their financial ability.


key point

  • FedNow is a new service that allows you to instantly transfer money from one bank account to another.
  • Rumors and conspiracy theories about TikTok may sell ads, but they are completely false.
  • FedNow will benefit us all, according to people familiar with the matter.

Do you know what to sell? Fear and blood. The first term I learned early in my journalism career was, “If it bleeds, it leads.” In other words, if there was a particularly horrific event to report, we would drop all the happy “dogs save boys” s story.

Nothing has really changed since the early printing presses (just kidding; I actually started shortly after the printing press was invented). There will always be someone trying to scare you into clicking on a story or watching a TikTok video. The more clicks, the more ad sales. The more ad sales, the more revenue.

It’s a vicious circle.

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Their version of the truth is scary

A recent example is a TikTok video sent by a friend. It features three captivating 20-year-old (or 30-year-old) characters about how FedNow—a new Fed program due next year—will change life as we know it.

The very serious young lady who spread the terrible news went on to say that FedNow is a way for the federal government to understand how you spend your money. In fact, she claims that if you spend your money on “the wrong thing”, such as fossil fuels, the government will shut down your access to money.

At first, the men sitting to her right seemed a little disinterested, but as her enthusiasm grew, so did their interest. Within minutes, both gentlemen joined the conspiracy theory. Here are some of the things they told the audience that would happen:

  • FedNow will “get rid of the middleman,” eliminating payment apps like CashNow, PayPal and Venmo.
  • The service will do away with cash, forcing Americans to use a new digital currency.
  • FedNow will keep people from getting money unless they follow the government’s program and use the app.
  • The service will track and monitor how Americans spend their money.
  • FedNow will be the government’s own digital currency.

None of them are right – not even close

Again, trauma sales. The more TikTok creators scare people, the more those people turn to them for advice. I would like to think that they are the real conspiracy theorists because that is preferable to the alternative: they are deliberately taking advantage of people by spreading false information.

truth matters

For every bit of hysterical (but under-researched) information, here’s what the new FedNow service means for you:

  • Apps like CashNow, PayPal, and Venmo aren’t going away. Teri Williams, president and chief operating officer of OneUnited, the largest black-owned bank in the United States, has the answer. “The first thing they need to know is CashNow, PayPal and other apps aren’t going anywhere. Those services might actually use FedNow and be able to move money faster than they used to. It’s a win-win.”
  • FedNow is not a digital currency, and cash will not flow out. The FedNow service is just one way for the Federal Reserve to update how quickly money is being moved from one bank to another. In the past, we wrote checks. The people or companies we write these checks have to wait for them to go through the postal system, into the recipient’s bank account, and wait two days or more until they clear it. More modern ACH payments may even take days to clear. With FedNow, payments can be made, credited to accounts, and cleared instantly.
  • FedNow service is not an application. According to Williams, “It’s not an app. It’s not a digital currency. It’s a way to quickly transfer money between bank accounts.”
  • FedNow is not a way for the government to track your spending. If the government is interested in tracking you down, they’ve had a way of doing it for decades. As Williams says, “It’s important to manage your money in a way that doesn’t require confidentiality. Whether it’s Venmo, CashApp, or anything else, you leave an electronic footprint.”

bottom line

One thing that humans avoid like the plague is change. Change can feel unpredictable and scary—even for the good. According to the banks that signed up to FedNow’s service, this change is good for all of us. Business owners will no longer have to wait for payments to clear. Homeowners can pay their electricity bills and know their accounts are up to date. It’s all about getting the Fed into the 21st century and making it easier for all of us to do business as usual.

The moral of the story is twofold: The FedNow service is an example of the Federal Reserve trying to keep up with the times by offering instant service. Another moral of the story? For the love of all things good, please don’t get your messages from random people on TikTok.

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