The Federal Reserve (Fed) revealed it will launch its new instant payment service in mid-2023, sometime between May and July. The instant payments service will be called 'FedNow', which was first announced in 2020.
Financial institutions of any size will have access to the new payment system. Both customers and businesses will benefit from lower costs and near-instant payments.
source: fednow
Esther George, the president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the FedNow program was pleased with the progress of FedNow:
"Today, with the FedNow launch date in sight, we are pleased with the collaboration and dedication our pilot participants have brought to advance modern payments in America."
Over 120 companies have joined the pilot of the Fed's payment system including banks. Some of the payment processors that are in the pilot are Form3, ModusBox Inc., ECS Fin Inc. and Alacriti Payments LLC.
BNY Mellon, FIS, Opus and VSoft are included in the pilot.
All participating parties in the FedNow pilot program will go through a certification process. It is done to ensure all companies have met the operational requirements of the payment service prior to its launch.
During the testing phase, the Fed will reach financial companies and service providers that were not in the pilot but were interested in using the service.
FedNow Pricing
There is a monthly $25 service fee per routing transit number (RTN).
As opposed to traditional credit cards, the transaction fee that is paid by the sender per transaction is $0.045, which includes returns.
A $0.01 is charged for a request for payment (RFP) message that is paid by the requestor, which includes requests for new payments and refunds.
The initital credit transfer transaction value limit is set to be $500,000 (max). The default limit is $100,000, institutions may raise or lower the limit.
Credit transfer limits will be monitored by the central bank and may be adjusted in accordance.
