In preparation for the launch of its FedNow instant payments program in 2023, the Federal Reserve announced Monday it has begun the testing phase for the program, including the onboarding of participating organizations. More than 120 organizations, including Square Financial Services Inc., an industrial-bank subsidiary of Block Inc., and Q2 Holdings Inc., a provider of digital banking and lending solutions, are participating in the pilot. Participants in the testing phase satisfied criteria surrounding instant-payments readiness and expressed a desire to participate in early testing, the Federal Reserve says.
The Federal Reserve announced the FedNow pilot, which includes three phases: advisory, testing and closed-loop production, in October 2020.
Participating organizations in the test phase will continue onboarding in the coming months and establish connectivity and performing technical and operational tasks that will lay the groundwork for full-scale, end-to-end testing later this year, according to the Federal Reserve. The pilot will end when performance-based criteria are achieved, says the Federal Reserve, which adds it remains confident that FedNow will launch in 2023.
“The FedNow Service pilot participants, including financial institutions of all sizes, processors, and correspondents, have been working hard at every step of this journey,” Nick Stanescu, senior vice president and business executive of the FedNow Service, says in a prepared statement. “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.”
The Federal Reserve is developing FedNow as a way to enable financial institutions to facilitate real-time payments for businesses and individuals, regardless of the institution’s size or geographic location. Access to FedNow will be provided through the Federal Reserve’s FedLine network, which serves more than 10,000 financial institutions directly or through their agents.
Earlier this year, the Federal Reserve released a schedule of FedNow fees in addition to an online FedNow Provider Showcase to connect financial institutions and businesses looking to adopt FedNow with service providers offering instant payments solutions.
In 2021, the Federal Reserve announced that the launch of FedNow had been moved up to 2023, a full year ahead of its original launch date.