Since the FedNow® Service launched in July, there’s been a lot of excitement about this new payment infrastructure. Do you know all the facts? Read on to learn what the FedNow Service is and isn’t, and what you can expect from the service in the months and years ahead.
The network of financial institutions participating in the FedNow Service will grow over time.
Content Sponsored By:
The Federal Reserve’s goal and expectation is that the FedNow Service will achieve broad reach over time, much like its Fedwire® Funds Service and FedACH® Services. A variety of participating financial institutions are currently live on the service, including those serving as settlement and liquidity providers. TheFedNow Service will continue to partner with the industry and payments ecosystem to grow the network of participating financial institutions, with the goal of broadly reaching American consumers and businesses to help them take advantage of the benefits of instant payments.
Not all instant payments are alike. The FedNow Service provides benefits not widely available with other faster payment services.
Many of the faster and mobile payment services in the market today are consumer-facing products used to send and receive payments. Funds sometimes clear immediately, but the timing of interbank settlement between the financial institutions involved depends on the underlying rail used. In contrast, the FedNow Service operates on the back end to clear and settle all payment transactions immediately on a transaction-by-transaction basis, reducing credit risk for financial institutions. Joining the FedNow Service also may allow financial institutions to innovate and enable new use cases for their members.
The FedNow Service has fraud management capabilities and security features to help financial institutions protect against threats.
Fraud is not new or unique to payments, but the speed and irrevocability of instant payments can produce unique challenges. As more financial institutions prepare to adopt the FedNow Service, it’s important they evaluate and extend their own layered approach to fraud management and consider steps to further protect themselves and their members. The FedNow Service launched with features such as transaction limits and negative lists to support financial institutions with their own fraud mitigation efforts. Fraud tools available to participants are expected to expand over time as adoption grows and fraud threats change.
The FedNow Service is not a consumer-facing app.
The FedNow Service does not provide an end-user interface or application that financial institutions can use with their own members. The FedNow Service is a payment infrastructure that financial institutions can leverage to build and offer their own instant payment solutions to their members.
Credit Union Rock Stars are outstanding credit union professionals and directors from a wide range of disciplines who inspire and innovate to advance the missions of their credit unions. The 25 members of the 11th class of Rock Stars were selected for their exceptional creativity, innovation, and passion.
