The Federal Reserve issued a press release announcing its plans for a July debut of FedNow, its service “to facilitate nationwide reach of instant payment services by financial institutions.” As previously discussed here, the FedNow service will provide individuals and businesses the ability to send and receive instant payments through the Federal Reserve’s Fedline® network at any time of day seven days a week. Fedline® currently serves 10,000 financial institutions and their agents. Recipients of payments using FedNow will have immediate full access to funds which will enable greater flexibility and opportunity for immediate use of money sent and received.
In April, the Federal Reserve will begin certifying participants so that when the launch occurs, those institutions will be prepared to send live transactions through the system. In June, the Federal Reserve and those certified participants will engage in production validation activities to prepare for the launch.
Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow executive, said “[w]e 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, With the launch drawing near, we urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service.”
The press release stated the U.S. Treasury and various financial institutions have declared their intent to use FedNow after the launch. While the press release did not identify any specific companies’ involvement in the program, some of the largest payment processors have already announced their readiness to aid the launch of the new system.
In addition to taking specific steps to prepare for the July launch, the Federal Reserve continues to plan further ahead and examine ways to make FedNow successful for years to come. A stated goal of the program is to grow the network of participants to increase its utility for consumers and businesses.
At launch, FedNow will have core clearing and settlement functionality features. The Federal Reserve plans to add more features in the future that will support industry safety, resiliency, and innovation. The Federal Reserve believes the launch of FedNow in July will be the first step of many to “implement the service throughout 2023 and beyond.”