The FedNow® Service launched in late July. Now what? It’s essential to educate yourself and continue building your credit union’s strategic plan regarding its role in faster payments. Here are six key steps to consider:
1. Gain knowledge about this industry-changing event:
The Federal Reserve’s FedNow Service is a safe and efficient instant payment service that offers financial institutions the ability to send and receive credit transfers and messaging for their businesses and consumers in real time. It provides credit unions and banks an instant payment capability, allowing funds to be transferred between financial institutions 24/7/365.
2. Decide how faster payments fit in your strategic plan:
The FedNow Service is designed to support faster payments, allowing for quicker and more convenient transactions compared to traditional payment methods. While no two strategies look the same, it is important to consider some consistent elements that need to be addressed. Initially, it is important to review member expectations and evaluate the current economic landscape when deciding how faster payments fit in your strategic plan. Lastly, it comes down to exploring how your credit union’s strategic payments plan responds to the environment and meets your member needs.
3. Establish a timeline for adopting/implementing:
While speaking at Catalyst’s 2022 Forum, Dan Gonzalez, Vice President and Director, National Accounts for Federal Reserve Financial Services, said, “The most important step a credit union can take now is to start the conversation internally and with their trusted service providers.” Catalyst can be your trusted partner.
Gonzalez added, “When the market moves toward adoption of the FedNow Service, having a plan in place is imperative.” Your credit union should be building instant payments into its strategic plan and educating your members and stakeholders.
4. Determine if you will send, receive or both:
There is no requirement to both send and receive FedNow transactions. A financial institution may choose to participate as receive-only as a reasonable first step into instant payments. And, yes, the FedNow Service will continue to be enhanced with additional features and functionality over time.
5. Contact Catalyst to establish a connection with your core data processor:
A benefit of the FedNow Service through Catalyst is an open API that has been developed to provide connectivity to core providers as well as online and mobile payments platforms. As a certified, early adopter of the FedNow Service, Catalyst can help your credit union onboard this exciting, new service.
6. Add Catalyst as your trusted partner:
The first step to get started is to engage with a trusted partner with a smart solution. That’s where Catalyst comes in. The FedNow Service is a game-changer for the payments industry. The end-to-end connection to the service will be available through Catalyst. And, coming soon, an interactive new site for all things faster payments is on its way! From the latest industry updates to videos and educational resources, Catalyst is launching its Digital Payments Experience to answer your most pressing real-time payments questions. Decipher need-to-know information from trusted experts, uncover key considerations surrounding core integration and more.
Stay updated with the latest news from the Federal Reserve, faster payments industry and Catalyst Corporate. Let us help you fast-track your faster payments journey – get in the queue, talk to an expert and sign up for the digital experience today.
Glenn directs Catalyst Corporate’s FedNow Service and RTP Network initiatives for credit unions. He is actively involved in the payments industry, currently serving on work groups for the U.S. Faster Payments Council, including chairing the Education and Awareness Workgroup. Glenn's background includes 40 years’ experience in financial services and speaking at numerous payments industry events.
Sign up to the receive Cornerstone Resources blog notifications.