FedNow, an instant payment service for banks, will launch mid-year 2023. Last August 29, the U.S. Federal Reserve Banks announced the estimated release date for FedNow, targeting the timeframe from May-July. The FedNow Service was developed to enable consumers and businesses to send and receive payments instantly, giving full fund access and greater flexibility to manage their funds and make time-sensitive payments.
“The benefits of instant payments are increasingly important to consumers and businesses, and the ability to provide this service will be critical for financial institutions to remain competitive,” Ken Montgomery, VP of Federal Reserve Bank of Boston and FedNow Service program executive.
The Federal Reserve has been providing payment services consistently alongside its private-sector providers. As they’re making it available to all financial institutions, FedNow promotes resilience through redundancy by providing choices in the market for customers to be able to clear and settle instant payments. Service providers of the financial institutions can use the service as a startup, providing innovative services to the customers.
“The shift to real-time payment infrastructure requires a focused effort but the shift is inevitable. The time is now for all key stakeholders—financial institutions, core service providers, software companies, and application developers—to devote the resources necessary to support instant payments.” Lael Brainard Fed Vice Chair stated
According to Fed Governor, Michelle Bowman, FedNow will opt to give more but the same benefits as a Federal Issued Digital Dollar and act as an alternative for CBDC. The service will help involve upgrading back-office processes, evaluating and arranging liquidity providers, while putting in place new technology to interface with customers.
The Federal Reserve is starting to give early access to interested non-pilot financial institutions and service providers. The service is currently in the pilot phase. Participants’ certification process must be completed to ensure readiness and are fully operational. There are more than 120 organizations participating in the Pilot Program, which will start this month of September.
Editor’s Note: This article by The Mega Maxi is not a financial advise.