The service launched in July with 35 participants, and is expected to continue growing in 2024, the central bank said in a Thursday (Dec. 14) news release.
“These are still early days for the FedNow Service, and we are pleased with the robust level of adoption over the first few months as we transition from launch phase to standard operations,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive.
“We commend the growing number of financial institutions, service providers and other organizations in the payment ecosystem that are embracing the vast potential of this modern, instant payments system.”
As PYMNTS wrote last month, FedNow is part of a larger trend of countries embracing real-time payments (RTP) over the last decade, along with systems like the Faster Payments Service (FPS) in the United Kingdom, the Unified Payments Interface (UPI) in India, Pix in Brazil and The Clearing House’s RTP® network in the United States.
“These systems have altered the financial landscape by facilitating both immediate peer-to-peer (P2P) transfers and real-time settlements in the business-to-business (B2B),” that report said, noting also that the volume of real-time payments is set to quadruple by 2027.
And as this demand grows, the Fed said Thursday, so too does the number of new innovations to meet this need. The release notes that this week saw the Dec. 13 FedNow Service Town Hall webinar, where “financial institutions and service providers presented innovative examples of leveraging the platform to offer new solutions, solve existing end-user pain points and improve customer satisfaction.”
Among them was the FinTech Plaid, which showcased its use of the FedNow Service through its partner financial institution to make instant payouts for investments, payroll, loan disbursements and insurance claims.
At the time, there were more than 200 FIs using the system, and Sheril pointed out that The Clearing House’s RTP network has had roughly 300 to 400 FIs on its platforms since it launched six years ago.
“The fact that there are more than 200 [banks on FedNow] is a good sign,” she said, and the number of banks indicating a wish to use the service is a positive development as well.