The Federal Reserve said the FedNow instant payment service will be ready to launch between May and July of 2023. With the FedNow Service, businesses and individuals will be able to send and receive instant payments conveniently, and recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.
FedNow Helping to Facilitate Real-Time Payments
Currently, more than 120 organizations are participating in the FedNow Pilot Program. These include U.S. Bank, Exchange Bank, and several payment processors and solution providers, including Alacriti Payments LLC, ECS Fin Inc., Form3, and ModusBox, Inc.
The FedNow service enables instant fund transfers between two bank accounts, even on bank holidays, weekends, or outside of business hours. FedNow differs from Real-Time Payments (RTP) and other instant payment services in that it will serve all federal reserve banks through the FedLine network- offering payment and information services to over 10,000 financial institutions. In addition, FedNow offers:
- Institutions that choose to receive only will be able to receive payments from other financial institutions to meet liquidity needs, return payments received and send — but not receive — RfPs.
- Institutions that opt into liquidity management transfers will have the ability to complete high-dollar-limit credit transfers with other financial institutions at scheduled times, even when the Fedwire Funds Service is unavailable.
- Institutions that choose to participate in settlement services will gain support for correspondent/respondent relationships; more specifically, FedNow transactions for financial institutions that use correspondents will settle in the correspondent’s master account.
“We have been working hard to deliver on time, but ultimately the number of American businesses and households that are able to access instant payments will depend on financial services providers making the necessary investments to upgrade our payments infrastructure. Together, we can ensure that all Americans have access to a modern and reliable instant payment system”, said Lael Brainard, the Federal Reserve’s Vice Chair.
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. Payment recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.
Get the latest headlines from Small Business Trends. Follow us on Google News.