Fed To Launch Instant Payments Service" FedNow" In July -

Fed To Launch Instant Payments Service” FedNow” In July

Updated: 16 March 2023

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On Wednesday, the United States Federal Reserve said it would launch its “FedNow” payments service in July. However, in the first week of April, the Fed will commence the certification of participants for the service launch. Some early adopters will complete a customer testing and certification program to prepare for sending live transactions via the system.

What- Federal Reserve to launch FedNow program in July
Why- the FedNow aims to reduce the milestone in payment between United States financial institutions
What Next- the Federal Reserve and the certified participants will conduct product validation activities in June to confirm readiness for the launch in July

@federalreserve @frbservices announce July launch for the FedNow Service: https://t.co/a7kPqxkS7Q

— Federal Reserve (@federalreserve) March 15, 2023

Notably, the instant payment network will settle payments very quickly. It can also enable transactions between consumers, merchants and banks. The service does not depend on blockchain technology. Announced in 2019, FedNow will facilitate real-time gross and round-the-clock settlement. This is by channeling commercial bank money from a sender to its recipient through a Fed credit account. Notably, FedNow has some features in place, including risk management. However, the announcement stipulated that more features would be added to enhance safety, resilience, and innovation as the network expands and time goes by.

The Fed’s aim with the program

Nonetheless, the announcement revealed that a growing network of financial institutions would be essential. They will be for increasing the availability of instant payments for consumers and businesses globally.

However, the president of the Federal Reserve bank of Richmond and FedNow Program executive sponsor has asserted that:

“With the FedNow service, the Fed is creating a leading-edge payments system that is resilient, adaptive, and accessible. The launch reflects an important step in the journey to enable financial institutions to serve customer needs for instant payments to support our economy better.”

The first vice president of the Federal Reserve Bank of Boston and FedNow program executive, Ken Montgomery, said:

“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.”

However, the FedNow program does not rely on blockchain technology. At the same time, the Federal Reserve is well known for its cautious view of stablecoins. The Fed Chair, Jerome Powell, previously suggested that stablecoins have the potential to integrate with traditional banks.