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FedNow: Six months of the Fed’s instant payments system
The Federal Reserve’s real-time payments system, the FedNow Service, launched in July with 35 participating institutions. As of December, the number of participants has grown to more than 300 financial institutions – including several credit unions. Here are some recent updates to be aware of:
Fed acknowledges ‘historic’ launch year: As 2023 comes to a close, the FedNow Service has provided an update on where the instant payments network stands nearly six-months after launch. The participating institutions reflect a diverse range of banks and credit unions, ranging in size from under $500 million to over $3 trillion in assets.
“These are still early days for the FedNow Service, and we are pleased with the robust level of adoption over the first few months as we transition from launch phase to standard operations,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive. “We commend the growing number of financial institutions, service providers and other organizations in the payment ecosystem that are embracing the vast potential of this modern, instant payments system.”
In addition, as demand for instant payments grows, so does the proliferation of new use cases that can leverage them. During the most recent FedNow Service Town Hall webinar, financial institutions and service providers presented innovative examples of leveraging the platform to offer new solutions, solve existing end-user pain points, and improve customer satisfaction.
What early adopters have to say: A recent American Banker article dives into how credit unions are utilizing the instant payments network, with some participating credit unions saying it will be a “differentiator in attracting both consumer and commercial members.”
In the article, Kinecta Federal Credit Union President and CEO Keith Sultemeier – a NAFCU Board member and member of the America’s Credit Unions Transition Board – noted the credit union has not experienced any issues or member concerns.
As an early adopter of the FedNow Service, Sultemeier says Kinecta has an edge over its competitors. “Digital transformation is key for financial institutions to be able to provide members with convenient, on-the-go banking options, and instant payments is a part of that transformation,” added Sultemeier.
For more information on instant payments, visit FedNowExplorer.org. The Fed has several resources available for financial institutions and service providers on the FedNow Service.
NAFCU has long supported the Fed’s involvement as an operator of a new, real-time payments rail. The association hosted a panel discussion on how credit unions are using the service at its 2023 Congressional Caucus and has webinars available on-demand. NAFCU will continue to advocate for the development of robust risk management tools, safeguards, and end-user features to promote FedNow adoption