The Federal Reserve recently announced that the FedNow Service, its real-time payment system, will begin operating in July. In preparation for launch, the Federal Reserve will begin certifying participants in the first week of April, with early adopters completing a customer testing and certification program.
Certification will involve a comprehensive testing curriculum to ensure operational readiness and network experience, with the Federal Reserve and certified participants conducting production validation activities in June.
We couldn’t be more excited about the forthcoming FedNow launch, which will enable every participating financial institution, the smallest to the largest and from all corners of the country, to offer a modern instant payment solution.
Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive
Early adopters already declared intent to use FedNow
Many early adopters, including a diverse mix of financial institutions of all sizes, the largest processors, and the U.S. Treasury, have already declared their intent to begin using the service in July.
However, the Federal Reserve continues to engage a range of financial institutions and service providers to complete the testing and certification program and implement the service throughout 2023 and beyond.
According to Montgomery, the availability of the service is only the beginning of the process, and expanding the network of financial institutions that are participating will be critical to boosting the availability of rapid payments for individuals and companies all around the nation.
FedNow’s core functionality and value-added features
The FedNow Service will launch with a robust set of core clearing and settlement functionality and value-added features. More features and enhancements will be added in future releases to support safety, resiliency, and innovation in the industry as the FedNow network expands in the coming years.
Tom Barkin, president of the Federal Reserve Bank of Richmond and executive sponsor of the FedNow Program, said that the Federal Reserve is in the process of developing a cutting-edge payments system that is accessible, robust, and adaptable via the use of the FedNow Service.
He went on to say that the launch is a significant step forward in the road to assist financial institutions in meeting the requirements of their customers for quick payments so that they may better support practically every facet of our economy.
The FedNow Service will facilitate the nationwide reach of instant payment services by financial institutions, regardless of size or geographic location, around the clock, every day of the year.
According to the Federal Reserve, businesses and individuals will soon be able to send and receive instant payments at any time of the day through financial institutions that participate in the FedNow Service.
Recipients will have immediate access to the full amount of funds that have been transferred to them. Access will be provided through the Federal Reserve’s FedLine® network, which serves more than 10,000 financial institutions directly or through their agents.
As the Federal Reserve continues to develop the FedNow Service, it will be interesting to see how it will shape the future of payments and how consumers and businesses will respond to the ability to make instant payments around the clock, every day of the year.
