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(Kitco News) - The Federal Reserve has officially announced that the launch of its FedNow service will take place in July following the formal certification of participants for the service, which is scheduled to begin in the first week of April.
FedNow was developed in an effort to create a platform capable of providing instant payment services to financial institutions nationwide, 24/7/365. Participation by financial institutions enables businesses and individuals to send and receive instant payments at any time of day, giving recipients full access to funds immediately, allowing for greater flexibility in money management.
Early adopters will be required to complete a customer testing and certification program that was developed from feedback received during the FedNow pilot program. The certification process will help prepare participants to begin sending live transactions through the system.
The certification process includes “a comprehensive testing curriculum with defined expectations for operational readiness and network experience,” the announcement said.
In June, prior to the official launch of FedNow, the Federal Reserve and all certified participants will “conduct production validation activities to confirm their readiness for the July launch.”
“We couldn't be more excited about the forthcoming FedNow launch, which will enable every participating financial institution, the smallest to the largest and from all corners of the country, to offer a modern instant payment solution,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive. “With the launch drawing near, we urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service.”
Numerous parties, “including a diverse mix of financial institutions of all sizes, the largest processors, and the U.S. Treasury,” have already signaled their intent to start using the service in July, according to the Fed.
The central bank has now embarked on an adoption tour in a bid to get as many financial institutions and service providers to complete the testing and certification program and implement the service.
Montgomery indicated that growing the network of participating providers is key to increasing the availability of instant payment for consumers and businesses across the country.
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| A digital dollar would allow Americans to directly open up an account at the Fed |
At launch, the FedNow Service will include a “robust set of core clearing and settlement functionality and value-added features,” the announcement said. Additional features and enhancements will be added in the future as the FedNow network expands and adoption ramps up.
“With the FedNow Service, the Federal Reserve is creating a leading-edge payments system that is resilient, adaptive, and accessible,” said Tom Barkin, president of the Federal Reserve Bank of Richmond and FedNow Program executive sponsor. “The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy.”
The Federal Reserve opted to develop FedNow as an alternative to a digital dollar or dollar-backed stablecoin. On Wednesday, blockchain operator Tassat announced that it will serve as a business-to-business onramp for FedNow through a client-facing application programming interface (API). Both the company’s interbank and intrabank services will provide FedNow access.
