New FedNow Service

The FedNow Service is a new instant payment service that the Federal Reserve Banks are developing to enable financial institutions of every size, and in every community across the U.S., to provide safe and efficient instant payment services in real time, around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals will be able to send and receive instant payments conveniently, and recipients will have full access to funds within seconds, giving them greater flexibility to manage their money and make time-sensitive payments. Consistent with the Federal Reserve’s historical role of providing payment services alongside private-sector providers, the FedNow Service will provide choice in the market for clearing and settling instant payments as well as promote resiliency through redundancy. Financial institutions and their service providers will be able to use the service as a springboard to provide innovative instant payment services to customers. We will update this page as we have more information about this new service, which is under development and will continue to evolve.

Implementing the FedNow Service in an efficient and safe manner remains a high priority for the Federal Reserve. The FedNow Service will launch in 2023 and will be deployed in phases so that the initial service can be launched expeditiously with additional features and enhancements released in stages after the initial launch. This phased approach will allow for adjustments and improvements in response to industry needs or changes in technology.

The Federal Reserve has issued a proposed rule that would:

• govern funds transfers over the Federal Reserve’s new 24x7x365 service to support instant payments,
• amend the Federal Reserve’s Regulation J to establish a new subpart C that would set out the legal rights and obligations of the Federal Reserve Banks and FedNow service participants,
• include a requirement that the beneficiary’s bank must make funds available to the beneficiary of a FedNow transfer immediately after the beneficiary’s bank has accepted the payment order over the FedNow service,
• expand and clarify the applicability of Article 4A of the Uniform Commercial Code (“UCC”)—the uniform state law governing funds transfers—to funds transfers made with the FedNow service, 
• allow participating banks to choose to settle payments over the service in the master account of a correspondent bank.

The FedNow services are expected to be available in 2023. Read more here on the Federal Reserve website.