FedNow Service zero-dollar request-for-payment practice detailed as launch date nears

A new market practice – zero-dollar request for payment (RFP) – has been defined to support the launch slated next month of the Federal Reserve’s instant-payments FedNow Service, according to a blog post Thursday on the Federal Reserve Banks’ FedNow instant payments site.

“This practice allows billers and their financial institutions to assess an end customer’s ability to receive and act on RFPs, prior to sending an actual request for bill payment,” according to the post. “As a pre-validation step, it will help eliminate uncertainty, reduce the number of rejected RFPs and improve overall customer experience.”

To recap, the Federal Reserve Banks have developed the FedNow Service as an instant payments service for depository institutions in the United States, enabling individuals and businesses to send instant payments through their depository institution accounts. The aim is to maintain uninterrupted 24x7x365 processing with security features to support payment integrity and data security.

The service will have a 24-hour business day each day of the week, including weekends and holidays, the Fed noted. End-of-day balances will be reported on Federal Reserve accounting records for each participating depository institution on each FedNow Service business day. Access to intraday credit will be provided to participants in the FedNow Service during its business day under the same terms and conditions as for other Federal Reserve services, it said.

The FedNow Service reportedly will also provide a liquidity management tool to support instant payment services.

The first release of the FedNow Service will include optional features, including fraud prevention tools, the ability to join initially as a receive-only participant, RFP capability (as explained in Thursday’s post), and tools to support participants in their handling of payment inquiries. (These tools and more are detailed on the Reserve Banks’ FedNow site, FedNow Explorer.)

Pricing for the FedNow service was released in November. Discounts will be applied for new service customers in 2023 to promote adoption, the Fed said. Those discounts include a waiver of the $25 monthly service fee ($300 annual value) and discounting the $0.045 customer credit transfer fee on the first 2,500 customer credit transfers per month (up to $1,350 annual value).

Other FedNow Service fees for 2023 include:

  • $1.00 liquidity management transfer fee
  • $0.01 RFP fee
  • $0.045 return customer credit transfer fee

Fees for the FedNow Service will begin upon general availability of the service, the Fed said.

Federal Reserve Bank Services website, FedNow section

FedNow Explorer, news section

FedNow® Service announces ‘zero-dollar request for payment’ market practice (blog post)

FedNow Service fees for 2023