Speech by Vice President Brainard on FedNow

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I’m excited to join the FedNow Early Adopter Workshop.1 As the technical testing phase of the FedNow℠ service kicks off in mid-September, I want to especially thank early adopters for the significant investments they are making to prepare for the day the FedNow service goes live this year. next. Together with our partners, we will be ready to launch the FedNow service between May and July 2023, bringing this innovative foundational instant payment infrastructure to financial institutions of all sizes across America. We’ve worked hard to deliver on time, but ultimately the number of American businesses and households that can access instant payments will depend on which financial service providers make the necessary investments to upgrade our payments infrastructure. Together, we can ensure that all Americans have access to a modern and reliable instant payment system.

The payment system is an essential part of the American infrastructure that affects everyone. Americans rely on the payments system all day to make purchases, pay bills, and get paid, never having to consider the complex infrastructure that operates under the hood. American households and businesses want and deserve payment transactions that work seamlessly, reliably, and efficiently.

Fostering a secure, efficient, and widely accessible payments infrastructure has been central to the Fed’s mission from the very beginning. Federal Reserve Banks across the country have provided payment and settlement services alongside the private sector for more than 100 years. During this period, we have repeatedly innovated and invested in collaboration with the private sector to transform the payment system, using the latest technologies to better meet the needs of businesses and households.2 Now, after extensive industry engagement and planning, the Federal Reserve is on track to provide FedNow service by May through July 2023.

The FedNow service will transform the way everyday payments are made across the economy, bringing substantial gains to households and businesses through the ability to send instant payments anytime, any day, and the funds being immediately available to recipients to make other payments or manage cash flow effectively. The immediate availability of funds could be especially important for households managing their paycheck finances or small businesses with cash flow constraints. Having the ability to manage money in real time could help households avoid costly late payment fees or free up working capital for small businesses to fund their growth. Indeed, during the pandemic, we have seen how critical quick access to funds can be, as many households began spending emergency relief payments the day they were received.3

To deliver on the promise of a payments system for the future, the Federal Reserve has made a substantial commitment to the FedNow platform, which has benefited from innovative technologies and approaches proven by global technology companies that are vital to the today’s digital economy. Our cloud-first design, unique among central bank instant payment services, positions us for the future by enabling not only the throughput and scalability required for high-volume retail transactions, but also wide geographic points. resilience to ensure continuous service. The cloud-first design offers other key technology components such as self-healing processes and automation, which add to operational resilience. And our development processes are agile, allowing us to deliver new features to financial institutions of all sizes faster, as they are ready to adopt based on their priorities.

We have also invested heavily in stakeholder engagement to ensure service adoption readiness through efforts such as the Pilot Program, the FedNow Explorer Resource, the FedNow Community, the Service Provider Showcase, and the FedNow Early Adopter workshop.4 To advance the national reach goal of Instant Payments, we have worked closely with the private sector Instant Payment Service RTP on message specifications to ensure alignment in support of interoperability of the routing.

Just as the Federal Reserve has made a substantial commitment to our new Instant Payments infrastructure, we call on industry stakeholders to do the same. Moving to a real-time payment infrastructure requires focused effort, but change is inevitable. Now is the time for all key stakeholders—financial institutions, core service providers, software vendors, and app developers—to dedicate the resources needed to support instant payments. This means upgrading back-office processes, evaluating accounting procedures to adapt to a seven-day week, organizing liquidity providers, rolling out a new customer-facing application and promoting instant payments for emergency cases. key usage to customers. As the service providers featured at this event will demonstrate in the coming days, parts of the industry have already seized the opportunity to create new services and capabilities that support instant payments. These efforts will increase competition in the market for end-user services and foster innovation – key benefits of providing the FedNow service as a neutral platform, accessible to financial institutions of all sizes nationwide.

I would like to personally thank our first users. The input you provided was instrumental to our team as we designed and built the service, and the time and energy you devoted to this effort is important to a successful launch. I would like to invite other banks and core service providers to join your commitment to preparing for the adoption of FedNow service. This time next year, I hope we can all have a great sense of accomplishment in our common effort to transform America’s payment system for the digital age.


1. I am grateful to Kirstin Wells of the Federal Reserve Board for her assistance in preparing this text. The opinions expressed here are my own and do not necessarily reflect those of the Federal Reserve Board or the Federal Open Market Committee. Return to text

2. Lael Brainard, “Supporting Fast Payments for All” (speech at the Fed Payments Improvement Community Forum, Chicago, October 3, 2018); Esther George, “From Then to FedNow: Payments Innovation and the Federal Reserve (PDF),” Policy Perspectives (Kansas City: Federal Reserve Bank of Kansas City, December 18, 2020). Return to text

3. Lael Brainard, “The Future of Retail Payments in the United States” (remarks at FedNow Service webinar, Washington, DC, via webcast, August 6, 2020). Return to text

4. Information on FedNow service stakeholder outreach and other resources can be found at this link: https://www.frbservices.org/financial-services/fednow. Return to text


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