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(Kitco News) - The Federal Reserve has announced that 57 companies have completed the formal testing and certification process for FedNow, clearing them to begin using the new instant payment system once it launches later in July.
FedNow was developed by the Federal Reserve Banks as a nationwide instant payment service that operates around the clock, every day of the year. According to the press release, with FedNow “businesses and individuals will be able to send and receive instant payments at any time of day, and recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.”
Early adopter organizations are primarily composed of financial institutions that facilitate the sending and receiving of transactions and service providers that support transaction activity, they said.
A total of 41 financial institutions on the list are participating as senders, receivers and/or correspondents supporting settlements, including JPMorgan, BNY Mellon, Wells Fargo, US Bancorp, and Peoples Bank. 15 institutions that provide processing services on behalf of participants have also been selected, including Finastra, Open Payment Network, and FPS Gold. A full list of participants can be found here.
The early adopters are now performing final trial runs on the service in collaboration with the U.S. Department of the Treasury to confirm their readiness to support live transactions over the new system, the release said.
“We are on track for the FedNow Service launch, with a strong cohort of financial institutions and service providers of all sizes in the process of completing the final round of readiness testing,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive. “With go-live nearing, financial institutions and their industry partners should be confident in moving forward with plans to join the network of organizations participating in the FedNow Service.”
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As FedNow rolls out and gains adoption, more financial institutions are expected to adopt and build on the new system so that they can offer instant payment services to their customers.
Montgomery said that as a platform for innovation, the FedNow Service is intended to support multiple use cases, such as account-to-account transfer, requests for payment, bill payments, and many others.
The Federal Reserve plans to work with and onboard new financial institutions later in 2023 after the initial launch, once the system has been tested in a live environment. Ultimately, the central bank wants all of the United States’ 10,000 financial institutions plugged into the FedNow system.
FedNow is set to launch later in July, but the exact date has yet to be announced.
