Six months after launch, the FedNow Service started 2024 on a strong note, with 400 institutions participating as senders or receivers on the network. The institutions reflect a diverse range of banks and credit unions, headquartered in 45 states and ranging in size from under $500 million to more than $3 trillion in assets.
The FedNow Service has seen significant adoption since launching in July with 35 participating institutions. The Federal Reserve Banks expect strong network growth to continue in 2024, bringing accessibility to the FedNow Service through the long-standing connections that the Federal Reserve has with thousands of financial institutions across the country.
“These are still early days for the FedNow Service, and we are pleased with the robust level of adoption over the first few months as we transition from launch phase to standard operations,” said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive. “We commend the growing number of financial institutions, service providers and other organizations in the payment ecosystem that are embracing the vast potential of this modern instant payments system.”
As demand for instant payments grows, so does the number of new use cases. At a Dec. 13 FedNow Service Town Hall webinar, financial institutions and service providers presented innovative examples of leveraging the platform to offer new solutions, solve existing end-user pain points and improve customer satisfaction.
California-based fintech Plaid highlighted its use of the FedNow Service through a partner financial institution to facilitate instant payouts for investments, payroll, loan disbursements and insurance claims, as well as instant microdeposits — small-volume transactions designed to validate bank accounts, reduce payment failures and decrease fraud. With traditional payment methods, microdeposits often take days to settle, delaying account verification for consumers.
In another use case demonstration, the Commonwealth of Virginia’s Treasury Department highlighted its work identifying meaningful instant payments and receivables use cases for its constituents, external vendors and municipalities. Virginia’s Treasury Department recently collaborated with its human resources agency to participate in a workplace giving campaign, successfully disbursing payments to charitable organizations instantly with the FedNow Service.
Other promising instant payment use cases cited by FedNow Service participants included account-to-account transfers to friends and family, earned wage access, auto purchases and business payments.
Learn more
Join the FedNow Community (Off-site) for ongoing news and updates related to the FedNow Service. Financial institutions can also contact their Federal Reserve relationship manager to discuss initial steps for adopting the FedNow Service.
