As FedNow Prepares for Launch, Bankers’ Banks Enlist Help for Real-Time Payments

With the launch of the Federal Reserve’s FedNow real-time payment service expected by mid-year, payments players are lining up clients to take advantage of the service. The latest is Pidgin Inc., a startup payments platform specializing in supporting financial institutions. The Atlanta-based company early Tuesday announced that Community Bankers’ Bank will use its service to enable bank customers to send money directly from their accounts to accounts at other banks in CBB’s network.

The new service, which handles payments to both personal and merchant accounts, will support the nearly 150 client banks within Midlothian, Va.-based CBB’s system. For real-time service, Pidgin links to The Clearing House Payments Co.’s Real Time Payments network and expects to plug into FedNow. It says can also manage faster payments via the automated clearing house’s same-day service.

Real-time payments arrive at CBB as banks are sorting out how and when they will support faster payments. “As faster payments continue to build momentum—especially as we near the upcoming launch of FedNow—the time is now for financial institutions to build a roadmap for success and provide faster payments capabilities to their customers,” Abhishek Veeraghanta, Pidgin’s founder and chief executive, said in a statement.

For its part, CBB’s strategy is to enable faster payments, and in particular real-time transfers, soon enough to remain competitive as FedNow approaches and other financial institutions adopt the service. “We recognize that faster payments are the clear next step in our service offerings,” said Gary Shook, CBB’s president and chief executive, in a statement connected to the announcement of Pidgin’s service. CBB, a state-chartered Fed member bankers’ bank, is owned by community banks in the Fifth Federal Reserve District and nearby states.

While nonbank companies have emerged to support faster-payments capability, Pidgin bills itself as a provider of transfers that stay within financial institutions instead of being processed through holding accounts managed by fintechs. The company said in July that another client, The Bankers Bank, would offer its service to more than 250 banks in Oklahoma, Texas, and New Mexico. This announcement followed the company’s debut in March as a faster-payments service provider.

The Fed announced last summer it expects to launch FedNow between May and July 2023. It has been working on the service since it introduced the idea of a Fed-supported real-time payments network in 2019.