It’s Official: FedNow Launches With 35 Banks And Credit Unions Signed up For Instant Pay

The Federal Reserve’s instant-payment service, FedNow, is officially live with 35 banks and credit unions participating, the nation’s banking regulator announced early Thursday. The launch, which culminates four years of work since the Fed first announced its intention to build a real-time payments rail, comes as the payments industry moves toward closing the traditional gap between the initiation of a payment and its settlement into business and consumer accounts.

The commercial launch of FedNow is just the start, observers say. More financial institutions and service providers are expected to join the network over time. The Fed is “flipping a switch, and will scale [FedNow] up as appropriate,” says Steve Mott, principal at payments-advisory firm BetterBuyDesign.

Early participants in the system represent a mix of money-center banks like JPMorgan Chase and BNY Mellon and smaller financial institutions such as Star One Credit Union and Bridge Community Bank. Technology companies supporting the network include major processors such as FIS Inc., Fiserv Inc., and Jack Henry & Associates, according to the Fed’s announcement.

Expected applications for FedNow when the service becomes “fully available,” according to the Fed’s announcement, could include instant access to wages and more efficient management of cash flows for small businesses. The Fed also foresees the ability to use the service via mobile apps and Web sites provided by financial institutions.

“It will take a while for the network to scale up,” says Mott, who has long worked on advising financial institutions and other players on real-time payments. “They’re being careful,” he adds, referring to the Fed. “What we’d like to do is get the innovations rolling.”

Among these “innovations,” he says, could be a request-for-payment capability, which would enable a user to make a real-time payment by authorizing a merchant to initiate a debit to the user’s account. The Clearing House Payments Co.’s Real Time Payment network, which launched in 2017, offers this capability now, Elena Whisler, chief client officer at the New York City-based company, tells Digital Transactions News.

That’s one service that will emerge on FedNow, as well, Mott predicts. Now that the network is live, “the Fed has all sorts of considerations to work through,” he says.