- US Federal Reserve to launch FedNow service in July.
- Instant payment services to be available to individuals and businesses around the clock.
The US Federal Reserve has revealed that the highly anticipated FedNow Service will commence operations in July. Financial institutions and the U.S. Treasury will be among the first to utilize this new service.
Developed by the Federal Reserve Banks, FedNow aims to provide instant payment services to financial institutions nationwide, irrespective of their size or location, and to operate 24/7 throughout the year.
Greater Flexibility in Money Management and Time-sensitive Payments
By participating in the FedNow Service, businesses and individuals will be able to send and receive instant payments at any given time. Recipients will have immediate access to their funds, providing them with increased flexibility in managing their money and making time-sensitive payments.
In the first week of April, the Federal Reserve will commence the formal certification process for participants, with early adopters participating in customer testing and certification programs. This will be based on feedback from the FedNow Pilot Program, and will prepare participants for live transactions through the system.
Certification includes thorough testing with specific expectations for operational readiness and network experience. In June, the Federal Reserve and certified participants will conduct production validation activities, ensuring readiness for the July launch.
Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive, expressed enthusiasm about the impending launch. He encouraged financial institutions and industry partners to prepare for joining the FedNow Service.
Various early adopters, including financial institutions of all sizes, the largest processors, and the U.S. Treasury, have expressed their intent to begin using the service in July. The Federal Reserve will continue to engage with different financial institutions and service providers to complete the testing and certification program, with plans for the service to be implemented throughout 2023 and beyond.
Expanding the Network for Increased Availability
Montgomery emphasized that the launch is just the beginning, and that expanding the network of participating financial institutions will be crucial to make instant payments more accessible to consumers and businesses nationwide.
The FedNow Service will debut with an extensive set of core clearing and settlement features, as well as value-added functionalities. Future releases will include additional features and enhancements to support safety, resilience, and innovation in the industry as the FedNow network expands in the coming years.
Tom Barkin, president of the Federal Reserve Bank of Richmond and FedNow Program executive sponsor, stated that the FedNow Service embodies a resilient, adaptive, and accessible cutting-edge payment system. He added that the launch signifies a crucial milestone in the journey to provide financial institutions with instant payment solutions that cater to the needs of nearly every aspect of the economy.
Potential Impact on Cryptocurrencies
The launch of the FedNow Service could pose a significant threat to cryptocurrencies like Ripple and XRP. By providing instant payment services to financial institutions and individuals, the FedNow Service may draw attention and investment away from cryptocurrencies.
This could potentially lead to decreased demand and value for cryptocurrencies, as users turn to the faster and more accessible payment solutions offered by the FedNow Service.