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FedNow Service to Launch in 2023

Archived Industry News:FedNow Service to Launch in 2023

Last Updated: 2/5/2021 11:17 AM

FedNow Service to Launch in 2023

The Federal Reserve said this week that the FedNow service — the Fed's instant payment offering — will be ready to launch in 2023. The Fed previously indicated that the service would be ready sometime in 2023 or 2024.

The initial launch will include core clearing and settlement functionality, as well as other features such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions.

“We are working hard to respond to the industry’s call for urgency and growing demand for the service, which is evident in the widespread response to our call for pilot participants,” said the Boston Fed’s Kenneth Montgomery. “As part of our commitment to transparency, we will continue to provide updates and further narrow our launch window as we achieve additional program milestones.”

Last week, the Federal Reserve announced that 110 organizations are participating in its FedNow Pilot Program. That includes several banks that are based in Iowa. The pilot program will support development, testing and adoption of the FedNow Service, as well as encourage development of services and use cases that leverage FedNow functionality. Participating financial institutions and processors will:

  • Help shape the product's features and functions;
  • Provide input into the overall user experience;
  • Ensure readiness for testing; and
  • Be the first to experience the FedNow Service before its general availability.

In the initial advisory phase, participant input will help to further define the service and adoption roadmap, industry readiness approaches and overall instant payments strategy.

Bridge Community Bank, based in Mount Vernon, is one of the Iowa banks participating in the pilot program. CEO Bob Steen said he is proud to give community banks a voice in the process. “Our goal at the beginning, and to this day, is to do everything we can to keep the community bank industry relevant in payments — the absolutely most critical component of every community bank franchise,” Steen said.

Five other Iowa banks are involved in the pilot program, including American State Bank, based in Sioux Center; Heritage Bank, based in Marion; Mediapolis Savings Bank, based in Mediapolis; Quad City Bank & Trust, based in Bettendorf; and Westside State Bank, based in Westside.

Read the 2023 launch announcement.

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