Fed to Launch Instant Payments System ‘FedNow’ in July

Lavina Daryanani
Source: Freepik

On Wednesday, March 15, the U.S. Federal Reserve unveiled details about its native ‘FedNow’ instant payments system. The service will launch with a “robust set of core clearing and settlement functionality and value-added features.” Additional features and enhancements will be integrated with future releases to continue checking the safety, resiliency, and innovation boxes. The central bank announced that the FedNow service will start operating in July later this year.

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According to the press release, the Fed will begin the “formal certification of participants” in the first week of April. Notably, early adopters will complete a “customer testing and certification program” in order to enable transactions via the system. In June, the Fed and certified participants will conduct production validation activities. This will be done to confirm the “readiness” for the final launch in July.

As far as the certification is concerned, it will encapsulate a “comprehensive testing curriculum” with “defined expectations for operational readiness and network experience.” The press release outlined that many early adopters have already declared their intention to start using the service in July. In fact, they include a diverse mix of financial institutions of all sizes, the largest processors, and the U.S. Treasury.

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FedNow’s launch is an “important milestone”

Ken Montgomery, the first Vice President of the Federal Reserve Bank of Boston, and FedNow program executive said,

“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.”

Furthermore, he urged financial institutions and their industry partners to “move full steam ahead” with preparations to join the FedNow Service. Montgomery also went on to indicate the availability of the service, is only the beginning. According to him, growing the network of participating financial institutions will be the key for it to thrive.

Commenting on the “leading-edge payments system,” Tom Barkin, President of the Federal Reserve Bank of Richmond and FedNow Program Executive Sponsor said,

“The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy.”

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