Can’t Stop, Won’t Stop. Faster Payments Momentum Continues

Despite challenges brought forth by the COVID-19 pandemic, the nation’s faster payments initiative is still pushing forward in 2020.

The Faster Payments Council recently held its virtual Fall Member Meeting to share critical, emerging information and engage in dialogue supporting faster payments progress.

Ken Montgomery, first vice president and chief operating officer of the Federal Reserve Bank of Boston, and leader of the FedNow℠ Service, served as the FPC’s opening speaker. During his session “Next Steps for Nationwide Instant Payments: the FedNow Service,” Montgomery shared various industry trends and provided an update on FedNow – including an overview of the phased development plan. On track for its 2023-2024 target launch date, work on the instant payments solution continues, with several notable developments in recent months.

Following the Fed’s latest announcement, there was substantial discussion around the initial features and functionality of FedNow, Montgomery said. Among the many capabilities the service is expected to offer are:

• ISO 20022 message standard 
• Transaction value limit (with option for participating financial institutions to establish lower transaction value limits)
• Reject payment by account number
• Request for payment
• Liquidity Management Tool (LMT)
• Seven-day accounting

Montgomery also identified key areas of focus within the new system, including:

• Accessibility
• Interoperability
• Reconciliation and reporting
• Safety and security

To help drive further progress, the Federal Reserve FedNow Team has established Community Working Groups – short-term teams convened to focus on specific FedNow development tasks or challenges. Among the latest is the FedNow Reconcilement Working Group, which seeks to “collaborate with the payments industry to identify desired data, tools and service features to ensure financial institutions can reconcile with the Fed and their customers for FedNow transactions.”

Dialogue and collaboration served central roles during the FPC Member Meeting. Roundtable sessions generated ideas for faster payments use cases and interoperability next steps. Work Group breakouts were held to further advance the projects and work efforts of the six FPC Work Groups.

In early August, the FPC released a new white paper, Examining Faster Payments Fraud Prevention. Developed by the Fraud Information Sharing Work Group, this industry resource “examines current fraud themes and trends, and approaches for mitigating these risks in a faster payments environment.”

The Education & Awareness Work Group (EAWG) recently published a new Members-only resource: Faster Payments Glossary of Terms. EAWG team members, combed through over 2,000 industry definitions to compile this list of 180+ well-defined, highly relevant faster payments terms.

The COVID-19 pandemic is increasing consumer demand for faster payments, so when it comes to advancing current industry initiatives, there’s no rest for the weary. Together, these efforts represent a collective commitment to keeping the nation’s faster payments movement pushing forward.

Faster payments are the future. And preparing your credit union starts today. Stay connected to the latest news and developments from the Federal Reserve and the U.S. Faster Payments Council.

Glenn Wheeler is the director of item processing at Catalyst Corporate Federal Credit Union, where he oversees item processing operations, including share draft, deposit and return item processing, for member credit unions. Glenn is actively involved in the payments industry, currently serving on four Faster Payments Council Work Groups. He also is a member of the FedNow Development Community and a member on the FedNow Reconciliation Work Group.