Unlike other instant payment methods, such as PayPal, FedNow is being developed and operated by the Federal Reserve rather than a private company. This means that it will be supervised directly by the institution and will be subject to the same regulations and supervision as other payment systems that are operated by it.
The initial version of the FedNow service is expected to include 28 different services. These services are designed to provide a wide range of capabilities to financial institutions, businesses and individuals who use the service. The Federal Reserve has not yet released a complete list of the services that will be included in the initial version of the FedNow service, but some of the main possible business flows and features that might be available include:
The service will allow individuals and businesses to make and receive real-time payments, which means that the funds will be transferred immediately, and the recipients will be able to access them right away.
Financial institutions will be able to use FedNow to make interbank transfers, which means that they will be able to transfer funds between different banks in real time.
Financial institutions, businesses and individuals will be able to access the service through multiple channels, such as online banking portals, mobile apps and ATMs.
Access to real-time account information:
Financial institutions and businesses will be able to access real-time account information through the FedNow service, which means that they will be able to check account balances and view transaction history in real time.
Authentication and security:
FedNow will include robust authentication and security features to protect against fraud and unauthorized access. This will include multifactor authentication, encryption and digital signature to ensure the authenticity of the transaction.
Payee validation and notification:
The service will offer the possibility to validate the identity of the payee, so the payer can confirm they are sending the money to the right person and notify the payee of the incoming payment.
Batch payments and bulk payments:
Financial institutions and businesses will be able to make batch payments, which means that they will be able to send multiple payments at once, and bulk payments, which means that they will be able to send many payments in a short period of time.
The FedNow service will enable institutions to make international payments in real time, creating a more efficient way for businesses to make payments to foreign countries.