June 03, 2021

Fed issues proposed rule related to FedNow Service

Federal ReserveThe Federal Reserve Tuesday issued a proposed rule to govern funds transfers over its FedNow Service that would establish a new, comprehensive set of rules and set out legal rights and obligations of the Reserve Banks and FedNow Service participants.

After announcing participants in the FedNow Service's pilot program, the Federal Reserve in February released its updated launch timing, indicating the Fed's real-time payments system will be ready in 2023. NAFCU has previously shared with the Fed ways in which credit unions and their members would benefit from affordable faster payments capabilities and has encouraged an accelerated launch

The initial launch is set to include core clearing and settlement functionality, with other features such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements, and certain exceptions. The Fed will continue to review the service and augment and enhance features in subsequent releases as needed.

As the pilot program gets underway, participants are set to engage in three phases: Advisory, testing, and closed-loop production.

Comments on the proposal are due within 60 days after publication in the Federal Register. NAFCU will review the proposal and continue to provide credit unions with the latest updates on the FedNow Service’s progress and launch timeline via NAFCU Today.