The FedNow Service will commence operations this coming July, according to a statement by the US Federal Reserve.
FedNow is an effort to facilitate instant payment services by financial institutions 24/7/365. Currently, most transactions provided by legacy financial institutions can take days.
Both businesses and individuals will be able to access the FedNow Service at financial firms utilizing the service.
Access will be provided through the Federal Reserve’s FedLine network, which serves over 10,000 financial institutions directly or through their agents.
This June, the Federal Reserve and certified participants will conduct validation tests to confirm readiness for the July launch.
Ken Montgomery, first VP of the Federal Reserve Bank of Boston and FedNow program executive, said all financial institutions, from the smallest to largest, will able to use the service. He urged financial institutions to move “full steam ahead” with preparations for the service.
The Fed noted that more features may be added to the service over time.
Tom Barkin, president of the Federal Reserve Bank of Richmond and FedNow Program executive sponsor described the launch as an important milestone in providing a service to support their customers.
While the Fed continues to research the potential of a central bank digital currency (CBDC) and the benefits of distributed ledger technology, what is missing from FedNow is any mention of blockchain technology. The FedNow Service is tech agnostic and looking at specific features instead of focusing on hot technology. If successful, FedNow could diminish interest in blockchain for public entities.