The Federal Reserve late Wednesday narrowed the launch window for its FedNow real-time payments network to July of this year.
The move comes seven months after the banking regulator announced it would introduce the service some time between May and July.
Formal certification of system participants will start the first week of next month, according to the Fed’s announcement, with so-called early adopters expected to finish a test program to be ready for transmitting live payments. In June, certified institutions, along with the Fed, will confirm readiness for the launch, the announcement says.
Information on how many institutions are likely to be prepared for the July launch of the real-time payment service was not immediately available, though the announcement indicated “many early adopters” have said they intend to start using FedNow in July. These include institutions of various sizes, as well as large processors and the U.S. Treasury, according to the announcement.
From the start, the service will include “a robust set of core clearing and settlement functionality,” the announcement says, along with unspecified “value-added features.”
With a more definite launch date impending, Fed officials encouraged financial institutions to act soon. “We urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service,” said Ken Montgomery, who is first vice president of the Federal Reserve Bank of Boston and also FedNow program executive, in a statement.
The nation’s banking regulator in 2019 introduced the idea of a Fed-controlled real-time payments system and has been steadily working out the details since. Though backed by the formidable resources of the Fed, the new system will face a market in which major private operators already offer instant transfers, including The Clearing House Payments Co., which introduced its Real Time Payments system in 2017. As of October, some 285 financial institutions were using RTP.
Payment card networks have also long since offered real-time services. Visa Inc. launched its Visa Direct instant-payment service in 2014, followed by rival Mastercard Inc. a year later with a platform called Mastercard Send.
The head start enjoyed by TCH and the card-network systems remains a “challenge” for the Fed, says payments analyst Eric Grover, proprietor of consultancy Intrepid Ventures.
Access to FedNow comes through the FedLine network, which is used by more than 10,000 financial institutions, either directly or through agents, for transaction clearing and data transmission.