KANSAS CITY, MO – DBC Payment Advisors, LLC was announced as a participant in the Federal Reserve’s Request for Payment (RFP) Work Group to establish industry considerations for a consistent end-customer experience related to RFP capabilities offered by the FedNow Service. DBC Payment Advisors will help formalize other practices or standards that may be useful to encourage broad adoption of RFP functionality across the industry.
Businesses and consumers today expect everything in an instant. This includes making and receiving payments or transferring funds between accounts. Service providers that offer payment-related services to financial institutions can help them leverage the FedNow Service to meet their customer’s demands. By integrating new instant payment services into your offerings, your organization can:
What is the FedNow Service?
The Federal Reserve’s FedNow Service is an instant payments infrastructure that will allow participating financial institutions to build services that enable their customers to instantly send and receive money around the clock, every day of the year. Financial institutions will connect to the FedNow Service through their service providers or directly via FedLine® Solutions.
The Benefits of Instant Payments are Clear
By enabling financial institutions to offer instant payments, service providers can help modernize the U.S. payments system and support the many benefits and opportunities they provide.
- Financial institutions can attract and retain customers, grow revenue, reduce costs through increased efficiency and reduce interbank settlement risk.
- Consumers can instantly send and receive money with confidence, improve their ability to manage finances and reduce the risk of late fees.
- Businesses can better manage cash flow, improve the efficiency of corporate payments, streamline reconciliation processes, and pay suppliers for products and services in an instant.
It Takes an Ecosystem
All organizations in the payments ecosystem — financial institutions, service providers, fintechs and other payment solution providers — can use the FedNow Service platform to develop new payment solutions that bring the speed, flexibility and convenience of instant payments to the market.
Financial institution service providers play a key role. Some that offer payment processing services and electronic connectivity to the Federal Reserve Banks can connect to the FedNow Service on behalf of their clients. Other providers can develop online and mobile banking interfaces to support financial institutions participating in the service.
Service providers can work with their own in-house teams and technology or in collaboration with others in the ecosystem to unlock new leading-edge services.
Instant Payment Use Cases
When it launches in 2023, the FedNow Service will provide baseline functionality that supports a range of use cases, including account-to-account transfers and bill pay. Subsequent releases will support even more use cases.
The following list of use cases highlights the opportunities your organization can support — either at the launch of the FedNow Service or in the future — by providing instant payment services to financial institutions. In each of these examples, funds will transfer instantly, and end users will have immediate access to their money.
- Me-to-me: Individuals can move money between accounts at different financial institutions (i.e., from a checking account to a brokerage account).
- Bill payments: Individuals and businesses can pay bills such as loans and utilities, and feel confident their payment is posted to the biller’s account immediately.
- Prepaid cards: Individuals can fund reloadable cards without the wait.
- Mobile wallet funding/defunding: Individuals can fund or cash out accounts.
- Corporate cash pooling: Corporations can consolidate funds into a single account for payroll or other purposes.
- Paying individuals for services: Consumers can pay for a variety of on-demand services, such as babysitting or dog walking.
- Pay family and friends: Family and friends can send money to each other.
- E-invoicing: Businesses can send e-invoices and requests for payment with the remittance information they need when their customer remits the requested payment.
- Immediate payroll: Businesses can initiate payroll immediately rather than having to schedule and fund it in advance. And gig workers can instantly cash out their earnings.
- One-time payments: Organizations can make non-recurring disbursements such as insurance payouts, rebate claims, tax refunds, disaster relief or other time-sensitive payments to businesses and individuals.
- Government and municipal payments: Businesses and individuals can instantly pay their taxes or other payments to government or municipal entities.
Start Preparing Today
The FedNow Service will be here before you know it. Now is the time to get ready for it. Your organization can start by:
- Initiating conversations with your financial institution clients to educate them on instant payments, share your plans for supporting the FedNow Service and understand their strategies for instant payments.
- Asking the financial institutions you serve what opportunities they would like to explore when it comes to instant payments.
- Accessing the FedNow Service’s ISO® 20022 message specifications using the MyStandards® platform.
- Joining the FedNow Community at FedNowExplorer.org to collaborate with other industry stakeholders and the Federal Reserve on the development of the FedNow Service.