Central banks lay a crucial role in shaping the future of payments and their infrastructure. For the Federal Reserve, the focus has now shifted to exploring real-time payments. A pilot program is underway, and FedNow will launch in full in 2023.
FedNow Is Coming Together
One would expect the Federal Reserve to be one of the global leaders in exploring real-time payments. That is not the case today for various reasons. Instead, other countries and regions have beaten the US to the punch and noted substantial success in enabling faster settlement. The Federal Reserve is only now coming around to this topic and has kicked off a pilot program to make further inroads.
A select few organizations and institutions have been onboarded to the FedNow solution. Moreover, participants have successfully sent test messages over the network, confirming everything works as intended. The current plan is to gradually onboard more companies and participants to test the network’s resilience. FedNow needs to establish connectivity to every partner, which will take a bit of tinkering.
FedNow Service SVP Business Executive Nick Stanecsu comments:
“Though much work remains, this progress sets the stage for thousands of financial institutions to be up and running with instant payments in the near future, including those that work with third-party payment providers.”
Additionally, FedNow pilot participants will perform technical and operational tasks regarding real-time payments in the next few months. That process paves the way for full-scale and end-to-end testing later in 2022. It is uncertain when that will be exactly, as things are always subject to change when testing new technologies. New members will include Square and Q2, who recently joined the pilot program.