FedNow, the instant payment service of the Central Bank of the United States will be launched in July. The announcement about the launch was made by the Federal Reserve.
Fednow was announced earlier in 2019.
The official Twitter handle of the Federal Reserve tweeted the launch news. The FedNow program will be a key act for the central government as it is under the direct control of the Federal Reserve Bank.
Currently, the leader in this field is the RTP network by the Clearing House, which holds more than 90 percent of the DDAs (Demand Deposit Accounts) of the U.S. Although it is under the control of giant private-sector banks.
Ken Montgomery, the Executive of the FedNow program said that the authorities were excited about the forthcoming FedNow launch that would enable every financial institution from the smallest to the largest and from all corners of the nation to offer a modern payment solution.
Montgomery urged the financial institutions and its industry partners to move full steam ahead with the preparations to join the FedNow service as soon it gets launched. He added that starting preparations as early as now would be more helpful as the launch date of the program was just around the corner.
Ken Montgomery is also the first vice president of the Federal Reserve Bank of Boston.
FedNow would be similar to a bank run by social media. It is also said to be the Fed’s own version of SEN (Silver Exchange Network), SigNet. The SEN was a significant banking payment platform aiding the crypto companies in the U.S. and was shuttered down after the collapse of Silvergate Bank, which was in order triggered by the fall of FTX, the cryptocurrency exchange.
The FedNow Pilot Program announced that the early adopters of the program would complete a customer testing and certification program to prepare it for sending live transactions through the system. The FedNow Service would not be using blockchain tech.
Tom Barkin, the Executive Sponsor of the FedNow Program said commented that the Federal Service was on a mission to create a leading-edge payments system that would be resilient, adaptive, and accessible with FedNow Service.
Barkin continued that the launch would be a reflection of an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of the U.S. economy.
Tom Barkin also serves as the President of the Federal Reserve Bank of Richmond.
About the new service platform of the Federal Reserve. Read further to know what we know about the FedNow Program and its features.
What Is FedNow Service?
FedNow on its first release will be a baseline functionality that would support market needs for a range of use cases. This will include services such as general use case information and opportunities, account-to-account (A2A) use case, and bill pay use case.
The first version will further include
Core clearing and settlement capabilities that will support a range of transaction types.
The features would act to support flexible adoption, including support for correspondents and service providers. There will be an option to enroll as a receive-only participant.
Value-added features of the program will include requests for payment capability and tools to support participants to handle reconcilement, payment exceptions, and particular exceptions.
FedNow Features
Features that will enhance the experience for financial institutions:
Option to broadcast participant availability to support the transition to 24x7x365 operations, the ability to have access to balance information on weekends, and a user interface to support data needs.
Features that will support payment integrity and data security:
To help financial institutions combat fraud, and tools to aid, the ones to support transaction value limit and reporting features.
Also Read:- Alex Rodriguez Ready To Secure Majority Ownership Of Minnesota Timberwolves
The payment flow will start from the sender as step 1 of the process. The next step will be the sender’s financial institution. This financial institution will proceed to submit the payment message to the FedNow Service.
The message will be validated by the FedNow Service by running a program to verify whether the message meets the message format specifications.
Now, FedNow forwards the contents of the payment message to the receiver’s financial institution to get confirmation that the latter intends to accept the message of payment.
The transaction takes place and reaches the receiver.
Comments From Federal Chair and Vice Chair
Lael Brainard, the Vice Chair of the Federal Reserve had earlier stated that it could take above five years to put in place the requisite security features and the design features if a central bank digital currency gets launched.
Jerome Powell, the Chair of the Federal Reserve, said that the institution was at a stage to make any real decisions. He added that what it was doing was a kind of an early stage experimentation to find out whether it would work out or not.
Read More:- What Is Bd, The Amphibian-Killing Fungus Rapidly Spreading In Africa
