Last week the Federal Reserve announced that they’re on track for a 2023 launch of their FedNowSM Service. Since then, I have been getting asked the same questions from both prospects and customers: What should I do? How does this change the faster payments game? What does it mean to me? Luckily enough, I am an opinionated person who’s been around the faster payments market for more than a decade, so I can impart a few nuggets of useful information to inform your next steps.
First, the update is great news for our market. Competition is good, and options are even better. The more choices we have, the better the services we can create for our customers. For that reason, I am extremely excited by the Fed’s announcement. Full disclosure, we have been talking with the Fed in recent months about the FedNow ecosystem, and we will be participating in their pilot program in the coming months. This is yet another example of our participation in various industry groups involved in payments modernization. Sharing our expertise is important—we also joined the U.S. Faster Payments Council in the summer of 2020.
So what does this mean if you’re in the process of selecting a faster payments path for your institution? The announcement may seem like a big old yield sign as you approach the intersection, but in reality, it really shouldn’t have an impact on your decision process. The use cases and client problems we are trying to solve are agnostic to the clearing and settlement networks themselves. There are plenty of good reasons to connect to a specific network for clearing and settlement, whether it’s TCH’s RTP, Visa Direct, or the upcoming FedNow. However, the biggest priority to consider is what problem you’re trying to solve for your customers or stakeholders. Next is what options are available today in the market, and then whether these options provide you with the flexibility to adapt as the market moves forward.
That last point is an important one to keep in mind as you look at your plans for faster payments and payments transformation. Because as the announcement last week points out, the only thing we know for sure is that the market will continue to accelerate and change.
