I’d love to join the first FedNow pilot workshop.1 With the technical testing phase of the FedNow℠ service starting in mid-September, I’d like to give a special thanks to early adopters for the significant investment they’ve made in preparation for the day the FedNow service launches next year. together with our partners We will be ready to launch FedNow services between May and July 2023, bringing this innovative core instant payment infrastructure to financial institutions of all sizes across America. We work hard to deliver on time. but in the end The number of American businesses and households that have access to instant payments depends on the financial service provider making the necessary investments to upgrade our payment infrastructure. We can ensure that every American has access to a modern and reliable instant payment system.
Payment systems are an integral part of America’s infrastructure that is accessible to everyone. Americans rely on a daily payment system to buy, pay bills, and get paid—without the need to consider the complex infrastructure that runs under the hood. American households and businesses want and deserve payment transactions that work smoothly, reliable, and efficiently.
Promoting a secure payment infrastructure effective And being widely accessible has been a key part of the Fed’s mission from the outset. The Federal Reserve (Fed) across the country has been providing payments and settlement services with the private sector for over 100 years. We have invented and invested over and over once more. by collaborating with the private sector to transform the payment system using the latest technology to better meet the needs of businesses and households.2 After extensive industry involvement and planning The Federal Reserve is working to provide FedNow services by May-July 2023.
FedNow’s services are changing the way we pay each day across the economy. Bring huge profits to households and businesses through the ability to send instant payments anytime, every day. And the money will be ready for the recipient to pay or handle immediately. efficient cash flow Immediate availability of funds can be particularly important for households that handle their payroll checks or small businesses with cash flow constraints. The ability to manage money in real time can help households avoid costly late payment fees. or increasing working capital for small businesses to support growth. We have seen the need for quick access to funds. This is because many households start using the emergency fund on the day they receive the money.3
In keeping with its promises of a future payment system, the Federal Reserve has made substantial commitments to the FedNow platform, benefiting from innovative technologies and proven approaches by key global technology companies. to today’s digital economy. Cloud-first design which is unique among central bank instant payment services. Position us ready for the future It not only enables the throughput and scalability required for high-volume retail transactions. but also a broad geographic resilience point to provide uninterrupted service. The cloud-centric design enables other key technology components such as self-healing and automation processes. which increases operational flexibility And our development process is streamlined. This allows us to quickly introduce new features to financial institutions of all sizes. Because they are ready to be used according to their priorities.
We also invest heavily in stakeholder engagement to ensure service availability through efforts such as pilot programs, FedNow Explorer resources, the FedNow community, provider listings, and more. and FedNow pilot group workshops4 To achieve the goal of nationwide access for instant payments. We have worked closely with private sector RTP instant payment services on message specifications to ensure they are aligned to support routing interoperability.
Just as the Federal Reserve has made great commitments to our new instant payment infrastructure. We are calling on industry stakeholders to do the same. The transition to real-time payment infrastructure requires a lot of effort. But change is inevitable. It’s time for all the key stakeholders. whether a financial institution main service provider software company and application developers to devote the necessary resources to support instant payments This means upgrading the back-office process. Assessing accounting processes to support seven business days Preparing a liquidity provider Deploying new applications for customer encounters and promoting instant payments for critical use cases to customers. While the service providers participating in this fair will be shown in the coming days. Some of the industry has seized the opportunity to create new services and capabilities that support instant payments. These efforts will increase competition in the market for end-user services and foster innovation—a key benefit of FedNow’s service being a neutral platform. which is accessible to financial institutions of all sizes across the country
I would like to personally thank those who started our adoption. The information you provide is a tool for our team as they design and build the service. And the time and energy you put into this effort is crucial for a successful launch. I would like to call on additional banks and key service providers to join your commitment to prepare for this FedNow service next year. I hope we all have a shared sense of accomplishment in our concerted efforts to transform America’s payment system for the digital age.
1. I am grateful to Kirstin Wells of the Federal Reserve Board for her assistance in preparing this statement. The opinions expressed herein are my own opinions. and does not necessarily reflect the opinions of the Federal Reserve Board or the Federal Open Market Committee. back to text
2. Lael BernardFast payment support for everyone” (Note that Fed Payments Improvement Community Forum, Chicago, October 3, 2018); Esther George “Since then, to FedNow: Payment Innovation and the Federal Reserve (PDF).,” Policy Perspectives (Kansas City: Federal Reserve Bank of Kansas City, December 18, 2020). back to text
3. Lael BernardThe future of retail payments in the US(Address given at the FedNow Service Webinar, Washington, DC, via webcast, August 6, 2020) back to text
4. Information on stakeholder access to the FedNow Service and other resources can be found at this link: https://www.frbservices.org/financial-services/fednow. back to text
