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FedNow panel touts innovation, safety of instant payments
During Congressional Caucus Wednesday, NAFCU Senior Counsel for Research and Policy Andrew Morris moderated a panel discussion on the FedNow Service with key stakeholders who shared their perspective on the instant payments platform.
Jim Hunsanger, chief risk officer at Michigan State University Federal Credit Union, Cynthia Nelson, president and CEO of EasCorp, and Stephanie Miracle, product director of the FedNow Service, discussed the pilot experience, use cases, and features of FedNow.
Hunsanger described MSU FCU’s positive experience as a pilot participant, noting the interactions with the Fed and opportunity to provide feedback instilled “a lot of confidence in the system.” In addition, Miracle shared that the number of participants since the service launched has roughly doubled, and about one-third of financial institutions participating are small- and mid-sized.
Exploring use cases, Nelson compared FedNow transforming the payments space to Uber’s impact on transportation: “The most interesting use cases are the ones that we haven’t even thought of yet.” She highlighted that the service is providing “the foundation for financial institutions’ payments innovation.”
While the three panelists touted many benefits of instant payments and FedNow, they also acknowledged concerns related to fraud. Nelson stressed that credit unions do a good job of managing risk and fraud, and all panelists described how financial institutions can proactively put policies and procedures in place to educate employees and members to ensure a positive experience with FedNow.
Nelson also called on credit unions to help combat misinformation about FedNow to ensure consumers understand that it is a “reliable, secure, efficient network with operating rules and oversight of the Federal Reserve,” just like other payments channels.
NAFCU has long supported the Fed’s involvement as an operator of a new, real-time payments rail. The association has webinars available on-demand, and will continue to advocate for development of robust risk management tools, safeguards, and end-user features to promote FedNow adoption. The Fed has several resources available for financial institutions and service providers on the FedNow Service.