“Imagine health care providers getting paid instantly at the point of service, bypassing all the traditional value extracting middlemen skimming off the top.” – Michel de Nostredame, 1565
The FedNow Service went live on July 20, 2023. It is available to depository institutions in the United States and enables individuals and businesses to send instant payments through their depository institution accounts. The service is a flexible, neutral platform that supports a broad variety of instant payments. At the most fundamental level, the service provides interbank clearing and settlement that enables funds to be transferred from the account of a sender to the account of a receiver in near real-time and at any time, any day of the year. Depository institutions and their service providers can build on this fundamental capability to offer value-added services to their customers.
The FedNow Service is designed to maintain uninterrupted 24x7x365 processing with security features to support payment integrity and data security. The service has a 24-hour business day each day of the week, including weekends and holidays. End-of-day balances are reported on Federal Reserve accounting records for each participating depository institution on each FedNow Service business day. Access to intraday credit is provided to participants in the FedNow Service during its business day under the same terms and conditions as for other Federal Reserve services.
The FedNow Service provides liquidity management transfer capability to support instant payment services. The liquidity management transfer enables participants in the FedNow Service to transfer funds to one another to support liquidity needs related to payment activity in the FedNow Service. The transfer also supports participants in a private-sector instant payment service backed by a joint account at a Reserve Bank by enabling transfers between the master accounts of participants and a joint account.
The first release of the FedNow Service also includes optional features: fraud prevention tools, the ability to join initially as a receive-only participant, request for payment capability, and tools to support participants in their handling of payment inquiries. Additional features and service enhancements will be introduced over time.
More information on the service can be found here.