Block Inc (ASX: SQ2) shares are in the green today, after closing lower on Thursday and Friday last week.
Shares in the global buy now, pay later (BNPL) stock, which acquired Afterpay in January 2022, closed Friday trading for $112.64. Block shares are currently changing hands for $113.64, up 0.89%.
That suggests investors aren’t overly concerned that a new instant payment system, just rolled out by the US Federal Reserve, will take a bite out of Block shares.
What system is the US Federal Reserve rolling out?
On Thursday, the world’s most influential central bank announced its new system for instant payments, the FedNow Service, had gone live. To date, 35 banks and credit unions have already signed on.
FedNow enables participating banks and credit unions to almost instantly transfer money 24 hours a day, 365 days a year.
This is a big improvement from the several days it traditionally takes to send or receive money via your bank account. Never mind on holidays.
And it’s the nature of this instant service that has some analysts suggesting FedNow could throw up some headwinds for BNPL stocks, like Block shares.
Commenting on the rollout of the new instant payment system, Fed chair Jerome Powell said:
The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient.
Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheque, or a company to instantly access funds when an invoice is paid.
In an indication of the Fed’s massive reach, the central bank said it’s now working with the more than 9,000 banks and credit unions across the US to support the rollout.
But the Fed made it clear the new service was not related to creating a digital currency.
And potentially helping dispel fears over a negative impact on Block shares, the central bank noted it wasn’t seeking to replace “any form of payment”.
“The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash,” the bank stated.
How have Block shares been tracking?
Block shares have enjoyed a strong rebound in 2023, up 23% since the opening bell on 3 January.
