FedNow, the Federal Reserve’s planned new round-the-clock instant payments service, is shooting to debut in 2023, the agency said Tuesday – one year earlier than the launch date announced two years ago.
In a release, Esther George, president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the FedNow program, said “significant strides” over the last several months toward program milestones had been reached. “Based on the FedNow team’s progress, we are pleased to share this updated timeline so the industry can continue to prepare for the adoption of FedNow,” George said in the release
In August, the Fed estimated that the service had a “target launch date” of 2023 or 2024 for initial operations, repeating the target date from a year earlier. The service is designed as an instant payments system that will include anti-fraud tools, make it possible to transfer excess reserves between institutions’ reserve accounts when needed to cover outflows, and provide “baseline functionality” to support market needs and banks in transitioning to the round-the-clock service.
In the release Tuesday, the Fed reiterated past comments that the agency is taking a phased approach to launching the service. The initial launch, set for two years from now, will include core clearing and settlement functionality and key value-added features, such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions, the Fed said.
“The Federal Reserve intends to augment and enhance features in subsequent releases to continue to meet industry needs,” the agency said in the release. “General availability of the FedNow Service will occur after extensive testing by more than 110 participants in the FedNow Pilot Program to ensure the service is market-ready.”