The Federal Reserve Board announced details of the FedNow Service, a new 24x7x365 interbank settlement service with clearing functionality to support instant payments in the United States.
The features and functionality described in the accompanying Federal Register notice represent a key milestone in the FedNow Service’s development and are based on input received from the public in response to the Fed’s 2019 request for comment.
“The rapid expenditure of COVID emergency relief payments highlighted the critical importance of having a resilient instant payments infrastructure with nationwide reach, especially for households and small businesses with cash flow constraints,” Fed Gov. Lael Brainard said in a release. “Since we initiated FedNow one year ago, we have been hitting our project milestones, and today I am pleased to announce the Federal Reserve Board has approved the core features and functionality based on extensive input from stakeholders.”
The target launch date for the service remains 2023 or 2024, with a more specific time frame to be announced after additional work is completed.
The Federal Reserve said it now will take a phased approach to service implementation.
The first release of the FedNow Service will provide core clearing and settlement features that will support market needs and help banks manage the transition to a 24x7x365 service. Based on ongoing stakeholder engagement, additional features and service enhancements will be introduced over time.
The Federal Reserve said it has a long-standing role in providing payment and settlement services to promote an accessible, safe, and efficient U.S. payment system. The FedNow Service, alongside similar services provided by the private sector, will modernize the U.S. payment system and bring the benefits of instant payments broadly to communities across the country.