With a little over two years in market, the Federal Reserve’s instant payments platform, the FedNow® Service, is now entering what Chief Product and Relationship Officer Shonda Clay calls its next phase: moving to mainstream awareness.
She told PYMNTS in a recent interview that “usage and adoption of instant payments in our country is still pretty nascent,” and the growth potential remains vast.
Clay said the goal from the beginning was to build not just another payment rail, but an entirely new mechanism for modern commerce. “Instant anything is where we see our country heading,” she said. “There’s demand for that in payments too.”
The mission for the FedNow Service, Clay said, reflects what consumers and businesses are already demanding: instant, convenient and trusted transactions. She pointed to research from Federal Reserve Financial Services noting that “sixty-six percent of businesses said they would use instant payments if offered by their financial institution.” She added that those already using it report 10% higher satisfaction with their banks.
That satisfaction, she noted, points to an untapped opportunity for banks to deepen commercial relationships through faster payments. “There’s a partnership there and an opportunity to grow,” Clay said.
One persistent misunderstanding, Clay said, is conflating the FedNow Service with the broader category of faster payments. Unlike the FedNow Service, most of these options do not offer 24/7 year-round clearing and settlement. “We’re really excited about FedNow use cases like buying a car, particularly on weekends,” she said. “FedNow answers a real pain point for dealerships and consumers. Most people buy cars on weekends, so having payments settle instantly makes the transaction smoother and less stressful.”
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By operating 24/7, the FedNow Service eliminates the waiting period between authorization and settlement that can delay the delivery or release of goods. “It’s all about removing friction,” Clay said.
Consumers Are Asking, Too
That same Federal Reserve research found that 78% of consumers who prefer faster payments consider them essential, and that 6 in 10 want their financial institutions to offer instant options. Among Gen Z, Clay added, the importance of faster payments rose 14% year over year, underscoring the generational shift toward immediacy.
Banks that have yet to adopt the FedNow Service, Clay said, may already be feeling the impact. “Customers are asking their financial institutions for instant payments,” she said. “If they don’t have it, they may look elsewhere.”
Debunking the Fraud Myth
Another long-standing myth is that faster payments create faster fraud. Clay pushed back on that assumption. “Fraud is a big topic, but we’ve had very little evidence of fraud on the FedNow network to date,” she said, adding that combating fraud is an ongoing endeavor for the industry, and the FedNow Service has features that help financial institutions with fraud risk management.
Clay also called out new risk mitigation tools like account activity threshold functionality, which allows banks to set customized velocity and value limits by customer type. “It helps financial institutions stay in control and aligns with their own risk tolerance,” she said. “It gives confidence to those that might otherwise hesitate to adopt.”
The effort, she added, reflects a broader approach. “We take fraud very seriously and are advancing the way we think about mitigation. We’re working closely with financial institutions through pilots and continuous feedback,” she told PYMNTS.
Raising the Limits for B2B
The FedNow Service is also dismantling the perception that instant payments are only for consumers. “We’ve increased the FedNow transaction limit to $10 million,” Clay said, up from $1 million. “That change is driven by demand from businesses and supports B2B and commercial use cases like corporate treasury, payroll, real estate transactions and vendor payments,” said Clay.
The higher limit, she said, signals that FedNow infrastructure is scaling to meet enterprise needs. “In the B2B space, the sky’s the limit,” she said.
Another misconception, Clay said, is that banks should only receive instant payments. “We’re even changing the words,” she said. “Instead of ‘receive only,’ we say, ‘receive first.’”
Clay said many institutions start with a receive mode to get comfortable, but the greater benefits come when they send as well. “When they can send and receive, they have control and flexibility,” she said.
Some banks, she added, fear the need for 24/7 staffing, but automation on the FedNow Service helps alleviate that concern for many financial institutions. There’s transparency and automation built in, she said, noting that some FedNow participants report that instant payments actually reduce manual intervention and customer inquiries.
Faster Onboarding, Fewer Barriers
Clay said the FedNow team has also tackled one of the most stubborn myths — that onboarding is cumbersome. “Because we built FedNow from scratch, we built a new onboarding tool too,” she said. “The record time for a financial institution to be onboarded is seven days.”
That speed, she added, is supported by helping financial institutions and their technology providers build, implement and maintain FedNow integrations. “We also created a site to make it easy for developers to access what they need,” she said. “It’s another way we’re helping make participation easier.”
As the third year unfolds for the FedNow Service, Clay said the focus will remain on education, collaboration and scaling use cases, and critically, moving from awareness to action.
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