How financial institutions can get the most out of FedNow℠

With the FedNow_SM Service launch right around the corner, financial institutions (FIs) need to be prepared to take advantage of the opportunities it offers. FedNow is a real-time payment service backed by The Federal Reserve System (The Federal Reserve), but is otherwise similar in most respects to Real-Time Payments (RTP®) network from The Clearing House. Both services enable U.S. financial institutions of any size to provide safe and efficient instant payment services to account holders.

Like RTP, FedNow will be an instant, one-direction push payment system. It’s a finalized payment—meaning that once the money is sent, the transaction is complete and final. (Parties that initiate payments can request the return of funds, but the recipient does not have to do so.)

At launch, FedNow will have a transaction limit of $500,000, compared to RTP’s current limit of $1 million. Most transactions will not come close to those limits, but they will need to be factored in for the largest payments.

The new real-time payment rail offers FIs several possible revenue-enhancing use cases. For that reason, FIs should learn the FedNow basics.

 

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