FedNow Unveils Market Practices to Promote Instant Payment Feature

The Federal Reserve has unveiled market practices aimed at promoting the standardized implementation of the request for payment (RFP) feature of the FedNow® Service.

The market practices were developed by a diverse industry work group convened by the Federal Reserve, which included representatives from various sectors, the Federal Reserve said in a Tuesday (Sept. 26) press release. The recommendations put forth by this group aim to establish standard and effective RFP implementation across the industry for a consistent customer experience.

To drive the adoption of RFP solutions, the work group’s recommendations primarily focus on standardizing customer enrollment and end-to-end experiences, according to the press release. By doing so, they aim to create the scale for RFP to become a widely used payment feature. These guidelines will also foster consistency, encouraging more banks and credit unions to participate.

While the market practices primarily concentrate on consumer-to-business (C2B) bill payments, some of the practices developed for this use case may also apply to other RFP scenarios, the release said. The Federal Reserve believes that this collective effort will benefit the entire payments ecosystem. Over 90 organizations, including FinTechs, banks and merchants, participated in the work group.

The market practices provided by the Federal Reserve offer detailed, tactical guidance that financial institutions and service providers can apply when offering RFP to customers, per the release. Billers, merchants and other industry participants will also find these practices relevant, considering the growing uptake of instant payments.

Key highlights of the recommendations include guidance on enrolling and enabling billers and customers to send and receive RFPs, specific criteria for presenting clear RFP messages, and options for passing useful data back to the biller, according to the press release. These practices aim to streamline the bill payments process, ensuring seamless and convenient experiences for consumers.

In response to industry feedback, the Federal Reserve has also updated the FedNow® Service Operating Procedures to provide context related to RFP warranties, the release said. These updates clarify the meaning of legitimate purpose in relation to RFPs, offer guidance on the scope of warranties, outline financial institution obligations for monitoring customer RFP use and investigating anomalous activity, and establish procedures for initiating claims related to alleged breaches of RFP warranties.

RFP will be one of the key features of the FedNow Service, the Federal Reserve said in December 2022. It will allow financial institutions and service providers to build bill pay solutions that are more convenient for both businesses and consumers.