By Roy Urrico
On June 29, 2023, the Federal Reserve announced 57 early adopter organizations completed formal testing and certification in advance of the FedNow Service’s planned late July launch. The early adopters comprise 41 financial institutions, including 13 credit unions, participating as senders, receivers and/or correspondents supporting settlement; 15 service providers processing on behalf of participants; and the U.S. Department of the Treasury.
“We are on track for the FedNow Service launch, with a strong cohort of financial institutions and service providers of all sizes in the process of completing the final round of readiness testing,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive. “With go-live nearing, financial institutions and their industry partners should be confident in moving forward with plans to join the network of organizations participating in the FedNow Service.”
What is FedNow?
In January 2021, the Federal Reserve announced that some 120 organizations began participating in the FedNow Pilot Program. Supporting development, testing and adoption of the FedNow Service, the program as also encouraged development of services and use cases that leverage FedNow functionality.
This past March, the Federal Reserve publicized availability of its FedNow Service, the long-awaited instant payment system, for all participating financial institutions starting in July 2023. The system will allow bill payments, money transfers such as paychecks and government disbursements, as well as other consumer activities, to move more rapidly and at lower cost, according to the program’s goals. The Federal Reserve plans to provide FedNow Service access through its FedLine network, which presently serves more than 10,000 financial institutions.
Over time, financial institutions expect to adopt and build on the FedNow Service with the intent of offering new instant payments services to their customers. Montgomery noted that as a platform for innovation, the FedNow Service expects to support multiple use cases, such as account to account transfer, request for payment, bill pay and many others.
In addition to preparing early adopters for the July launch, the Federal Reserve continues to engage a range of financial institutions and service providers to complete the testing and certification program and implement the service throughout 2023 and beyond. Certification encompasses a comprehensive testing curriculum with defined expectations for operational readiness and network experience.
Service Providers Announce FedNow Readiness
In May, Monett, Mo.-based financial technology company Jack Henry announced its readiness to support the launch of the FedNow Service. Jack Henry said it actively participated in the development of network; and more than 20 of its clients participated in the supporting pilot and early adopter program.
“Today’s convenience-driven consumers and businesses expect to move money in the moment of need so real-time payments have evolved into competitive necessities,” said Tede Forman, president of Jack Henry Payment Solutions. “Based on the high and growing demand for instant payments, and the fact that more than half of all U.S. Demand deposit accounts (DDAs) are now connected to a faster payments network, banks and credit unions simply can’t compete without offering real-time payments and meaningful use cases. We made a strategic commitment to help our clients modernize their payment strategies and platforms with the real-time payments solution or solutions that enable them to remain at the center of the payment experience and to ultimately reduce payments friction and financial fragmentation.”
Added Scott Young, vice president of payments operations for HawaiiUSA Federal Credit Union, in the Jack Henry announcement, “Over two years ago, we were elated to be chosen as one of the 120 organizations in the FedNow pilot program. We decided to be part of the program because we wanted to have input on how the instant payments rail was going to operate and ensure that the needs of financial institutions in Hawaii were being considered. FedNow will level the playing field and help us compete with the large financial institutions on the mainland.”
In June 2023, global fintech provider U.K.-based Finastra, which also has U.S. headquarters in Lake Mary, Fla., announced it completed testing and certification for the FedNow Service. Finastra plans to integrate the instant payments service into its Payments To Go solution in July 2023 and later add it to its Global PAYplus solution.
“It has always been important to Finastra that we empower financial institutions to stay ahead of market developments as consumers and businesses now expect instant payments to the norm. The FedNow Service enables new avenues for elevated customer experiences and unlocks revenue-generating opportunities critical to the success of institutions across the country,” said Barry Rodrigues, executive vice president of Finastra’s Payments Business Unit. “With our many years of experience innovating in the instant payments space across the globe, we are pleased to be a FedNow certified provider and look forward to equipping our customers with this new tool.”
Also in June 2023, Juniper Payments, a PSCU company and a cloud-based non-bank third-party provider of inter-bank transaction and reporting systems in the U.S., announced it completed testing and certification for the FedNow Service.
To achieve certification, Juniper Payments, completed a comprehensive testing curriculum, including fulfilling a checklist of requirements to confirm ability to transmit and process ISO 20022 messages, and attested to their preparation to meet the requirements to successfully operate in a 24/7/365 instant payments environment.
“We are immensely proud to be certified as a pioneer on FedNow, which marks a significant leap forward in our mission to offer cutting-edge, seamless payment solutions,” said Jon Budd, CEO, Juniper Payments. “This certification affirms our continued pursuit of innovation and commitment to better serve financial institutions in the rapidly evolving digital payments landscape.”
Organizations That Have Completed Certification in the FedNow Service
Credit Unions
• Alloya Corporate Federal Credit Union
• Catalyst Corporate Federal Credit Union
• Consumers Cooperative Credit Union
• Corporate America Credit Union
• Corporate One Federal Credit Union
• Eastern Corporate Federal Credit Union
• HawaiiUSA Federal Credit Union
• Michigan Schools & Government Credit Union
• Millennium Corporate Credit Union
• Pima Federal Credit Union
• Star One Credit Union
• Veridian Credit Union
• Vizo Financial Corporate Credit Union
Other Organizations
• 1st Bank Yuma
• 1st Source Bank
• Adyen
• Atlantic Community Bankers Bank
• Avidia Bank
• Bankers' Bank of the West
• BNY Mellon
• Bridge Community Bank
• Bryant Bank
• Buffalo Federal Bank
• Community Bankers' Bank
• First Internet Bank of Indiana
• Global Innovations Bank
• JPMorgan Chase
• Malaga Bank
• Mediapolis Savings Bank
• Nicolet National Bank
• North American Banking Company
• PCBB
• Peoples Bank
• Quad City Bank & Trust
• Salem Five Bank
• The Bankers Bank
• United Bankers' Bank
• U.S. Bank
• U.S. Century Bank
• U.S. Department of the Treasury’s Bureau of the Fiscal Service
• Wells Fargo Bank, N.A.
Service Providers
• ACI Worldwide Corp.
• Alacriti
• Aptys Solutions
• ECS Fin Inc.
• Finastra
• Finzly
• FIS
• Fiserv Solutions, LLC
• FPS GOLD
• Jack Henry
• Juniper Payments, a PSCU Company
• Open Payment Network
• Pidgin, Inc.
• Temenos
• Vertifi Software, LLC