Real-time payments network FedNow announces 110 pilot partners

FedNow, a real-time payments network run by the Federal Reserve, announced 110 new partner institutions for its pilot program, which includes banks and processors.

Why should we care?
FedNow was planned as a way to ensure equitable access to real-time payments for institutions of all sizes. The payments network, which is expected to go live in 2023 or 2024, promises to offer core clearing and settlement functionality, along with uninterrupted 24-hour processing, 7 days a week. The objective is to ensure all consumers have a route to pay their bills quickly, with payments processing in hours instead of days. In addition to the pilot partners, the Fed received more than 80 submissions from organizations that provide payment systems and services for financial institutions and end users or that are interested in implementing instant payments. While FedNow is positioned as a pro-consumer offering, the banking industry has sounded alarm over the prospects for FedNow generating a duplicate solution to the real-time payments network run by The Clearing House, a payments company owned by major banks. They have argued that two real-time payment systems hinder ubiquity and could fragment real-time payments infrastructure. FedNow proponents say the speed of payments through FedNow and its broad availability could amount to a game-changer for consumers who risk hitting overdraft charges or encountering credit consequences from late-arriving payments.