Sometimes referenced as FedNow Instant Payments, the FedNow Service is an instant, credit push payment type that is completely new and independent from other payment networks. FedNow will not replace ACH, wire, or check. Those legacy networks will continue to exist.
Although RTP has some of the same features as FedNow, FedNow is a new and separate service from RTP. When FedNow is launched sometime between May and July 2023, it will not be interoperable with the RTP network. Like the RTP network, it will be optional for financial institutions to participate. That means not all U.S. bank accounts will be accessible through the network.
The FedNow Service Operating Procedures, as well as Operating Circular 8 published on September 21, 2022, set the terms and conditions governing the FedNow Service.
Regulation J, subpart C, governs funds transfers over the FedNow Service and the Uniform Commercial Code
(UCC) 4-A provides the legal framework for acceptance of a payment order and funds availability.
Network participants and service providers that connect to the FedNow Service are also obligated to comply with the requirements of Operating Circular 5 (OC 5).
Information regarding the Service Provider role is in appendix B of Operating Circular 8, and those that wanted it known of their participation and role are listed in the Faster Payments Council web site.
Yes, financial institutions connecting to FedNow directly or through their technology partners set up a profile for their routing number(s) indicating their participation:
See page 11 of the readiness guide for a FedNowSM description of the available participation levels.
Note that financial institutions can participate as “receive only” and with that profile have the optional capability to send “Request for Payment” messages through the network.
Account holders may have already asked through your sales and servicing channels about the availability of a faster or instant payment service, and you may want to collect that on a more formal basis. Client surveys or focus groups in relation to other services or priorities may be useful. A few examples include:
Wespay Advisors can help you here. Our experienced consultants can help you define your Instant Payments strategy.
Additionally, the Faster Payments Council has provided use cases.
The areas to consider for budgeting an expenditure are like other capital expenditures and most likely require vendor due diligence.
Client interface for receiving information on inbound payments or, if initiating, channel(s) for generating instructions and reporting.