Full-scale pilot testing of the Federal Reserve System’s instant payments service – FedNow – is set to launch in September, with the Federal Reserve Banks’ rollout of the FedNow Service now set to occur between May and July of next year, the central bank said Monday.
The Fed said this timetable further defines the previously announced 2023 launch window for the service.
More than 120 organizations are participating in the FedNow pilot program, the Fed noted. September begins the technical testing phase.
The central bank said that the FedNow Service will be accessible to financial institutions of any size, helping broaden the reach of instant payments to communities nationwide.
“Financial institutions participating in the service will be able to provide businesses and consumers with the ability to send and receive instant payments efficiently and securely,” the Fed said in its release Monday. “Payment recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.”
Lael Brainard, the Fed Board’s vice chair, said via webcast before an “early adopters” workshop Monday in Rosemont, Ill., that financial institutions, core service providers, software companies, and application developers should be working now to put in place the resources needed to support instant payments.
“This means upgrading back-office processes, evaluating accounting procedures to accommodate a seven-business-day week, arranging liquidity providers, deploying a new customer-facing application, and promoting instant payments for key use cases to customers,” the Fed vice chair said.
“As the service providers featured at this event will demonstrate in the coming days, parts of the industry have already seized on the opportunity to build new services and capabilities that support instant payments,” she continued. “These efforts will increase competition in the market for end-user services and promote innovation – key benefits from providing the FedNow Service as a neutral platform, accessible to financial institutions of all sizes nationwide.”
“Progress on Fast Payments for All: An Update on FedNow,” remarks by Fed Vice Chair Lael Brainard at FedNow Early Adopter Workshop, Rosemont, Illinois (via webcast)