Survivors of future natural disasters like last week’s devastating Hurricane Helene, could soon be able to receive Federal Emergency Management Agency funds instantly through the FedNow payments rail.

The Biden administration announced it will provide $10 million in flexible, upfront funding to survivors through its presidential discretionary funds, according to Federal Emergency Management Agency (FEMA) in an Oct. 2 release.

With the growing adoption of instant payments rails, the Bureau of the Fiscal Service, or Treasury Department, is “working collaboratively with FEMA and the Federal Reserve” to make instant payments after a natural disaster a reality, a spokesperson for the Bureau of the Fiscal Service, told Bank Automation News.

Historically, FEMA payments were primarily distributed through Automated Clearing House transfers, direct deposits or paper checks, Kristin Robertson, director of account management at fintech Finastra, told BAN.  

ACH transfers typically took one to three business days to process, while paper checks could take seven to 10 business days or longer, depending on mail and processing times, she said. 

“These delays, especially during high-volume emergency situations, often slowed the speed at which affected parties received critical financial aid,” Robertson said. “The traditional payment system lacked real-time capabilities, causing longer wait times for individuals in need.” 

When FedNow is in place at FEMA, those funds can be disbursed almost instantly.  

“FedNow can also be more cost-efficient than processing and mailing checks, given there is no need to deal with printing or postage,” Robertson said.  

According to the Federal Reserve, FedNow has 972 financial institutions on its network including:  

• $3.4 trillion JPMorgan; 

• $1.6 trillion Citi;  

• $65 million Carolina Federal Credit Union;  

• $1.4 billion First Florida Credit Union;  

• $2 billion Georgia United Credit Union; and  

• $370 million Southern Bank of Tennessee. 

However, not all FIs have fully onboarded with FedNow yet. Many are capable of receiving funds but not sending them, Robertson said, and are “effectively dipping a toe in the water.” 

 “While we are likely to see more institutions embrace the send functionality in this second year of FedNow and beyond, this initial hesitation could inhibit how many institutions are able to disburse funds via the payment rail during this crisis.” 

Editor’s Note: This story has been updated to reflect that FedNow is working with FEMA to make instant payments available. They are not currently available.