Soon after the Federal Reserve announced it would launch a real time payments network and committed to a target date of 2023 to 2024, influencers sought to move that date up. Legislators participating in House Committee on Financial Services conversations about real time payments nearly threatened to legislate a more rapid deployment of FedNow. Banks, primarily community banks, also asked the Fed to speed things up.
I don’t know that rushing a payment infrastructure that should have reliability and security as core competencies is really the approach to take. It was a relief to hear this week in PaymentsSource that the Fed is going to take the time it needs to build the infrastructure and will follow a measured and staged approach to rolling out all of the intended FedNow features:
“… the Fed has adopted an “incremental” strategy “to bring FedNow to market.” The agency is planning to release the product in stages, with an initial offering coming in 2023 and 2024, followed by additional refinements and services down the road.
“We want to take the time to get it right,” said Kenneth Montgomery, the first vice president of the Federal Reserve Bank of Boston who is overseeing FedNow. “As we continue to refine business requirements, hear from the industry about what they’re looking for, our objective will be to have subsequent releases after that initial release of FedNow.”
Montgomery said that while the Fed is “moving forward at a rather ambitious pace” to develop its payments network, he stuck to the agency’s initial 2023-24 launch target, despite comments over the fall from Fed Chairman Jerome Powell suggesting that the network may be ahead of schedule.
“Quality and time to market are our top priorities as we’re planning this out, and we’ve been pretty consistent that our objective is to launch FedNow sometime in 2023, or 2024,” Montgomery said.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group