FedNow Pushes FEMA Disaster Aid From Days to Seconds

In the wake of natural disasters, the speed of financial recovery is often as critical as the initial emergency response. Historically, victims of hurricanes, wildfires, and floods have had to wait days or weeks for insurance payouts or federal aid to arrive via traditional methods like paper checks or wire transfers.

Real-time payments are emerging as indispensable tools for disaster relief, allowing insurers, federal agencies, and humanitarian organizations to deliver life-saving funds to those in need within seconds.

As David Etling, senior vice president and general manager at InComm Payments, emphasized in a recent interview with PYMNTS, “Time is of the essence for people impacted by disasters. They need funds quickly, but more importantly, they need to be able to use funds in a way that best supports their recovery.”

Organizations Leverage Real-Time Tools

Federal agencies, most notably the Federal Emergency Management Agency (FEMA), have begun to pivot away from legacy payment rails. In 2025, the Federal Reserve announced that the first FEMA disaster relief funds were disbursed through the FedNow® Service. This shift allows agencies to move large sums, with transaction limits recently increased to $10 million, directly to states, municipalities and households within seconds.

This transition is part of a $175 billion federal overhaul, which mandated that the U.S. government cease issuing paper checks for all disbursements by Sept. 30, 2025.

The move could prove popular with consumers: PYMNTS Intelligence research done in collaboration with Ingo Payments found that 90% of customers would prefer to receive disbursements instantly if offered the choice.

In the private and nonprofit sectors, organizations are leveraging blockchain technology and smart payment platforms to enhance relief efforts while maintaining strict oversight. A partnership between InComm Payments and SKUx, for example, has produced a platform that distributes real-time, branded digital payments with item-level controls that can limit where a payment is used down to the specific product.

Etling explained that solutions like these can “allow disbursement recipients to use funds only on approved essentials such as water, food, lodging and gas, while automatically restricting other types of purchases.”

Such precision helps prevent the scams and frauds that have plagued previous federal aid programs, which were estimated to reach $162 billion in 2024.

Benefits for Consumers

For consumers, the primary benefit of real-time payments is unprecedented speed and certainty. Etling pointed out that “Digital payments deliver funds quickly without sacrificing transparency.”

Unlike paper checks, which are time-consuming to cut and mail, digital push payments reach a beneficiary’s bank account or mobile wallet in seconds, all the time. This immediate access allows recipients to add funds to a mobile wallet for use at physical stores or online to get the supplies they need.

These tools also promote greater financial inclusion. “Digital disbursements support stronger financial inclusion by ensuring a lack of a bank account does not prevent someone from getting the relief they need in a timely manner,” Etling noted.

This is a major improvement over legacy methods like checks, which often require recipients to have a bank account or use expensive check-cashing services.

Competitive Edge for Insurers

As the frequency and severity of natural disasters increase — with FEMA’s 2026 relief budget proposed at over $31 billion — consumers are becoming more sensitive to how quickly their financial partners can react. There is growing evidence that real-time payout capabilities serve as a significant differentiator for financial institutions and insurers.

While some financial institutions have been slow to adopt these systems due to the cost of upgrading legacy infrastructure, they may be underestimating consumer demand. PYMNTS Intelligence research indicates that 90% of financial institutions believe that customers would benefit from instant payments, yet only 65% believe customers would actually adopt them. Not providing these options could drive these customers into the arms of competitors, however.

In the insurance sector specifically, the ability to settle claims for fire or flood damage in real time is a critical service. While customers may not switch institutions solely for a single feature, the presence of real-time capabilities is increasingly viewed as a hallmark of a reliable modern insurer, according to PYMNTS Intelligence.

Future of Faster Relief

Real-time payments are quickly moving from a FinTech novelty to become a cornerstone of modern disaster resilience. By leveraging networks like FedNow, insurers and federal agencies can replace the anxiety of waiting for aid with the security of instant funds.

Etling noted that the path forward requires “continuing collaboration” through coalitions like Payments As A Lifeline to educate agencies and consumers alike. By ensuring recipients know how to access, receive and spend digital disbursements, organizations can make these methods an indefensible option for relief efforts.