During the FedNow Community kickoff webinar on June 24, the Federal Reserve announced that it will establish a series of working groups to support the development of the FedNow Service. The FedNow ISO 20022 Working Group will be the first of the series to kick off this July and will obtain feedback from a diverse group of industry stakeholders to inform and refine the FedNow ISO 20022 message specifications. The final specifications, which define the set of data fields that participants in the service will need to support, are targeted for final publication no later than first quarter 2021.
The ISO 20022 standard and our progress to date
ISO 20022 is an internationally accepted messaging format that payment systems are increasingly adopting around the world. The FedNow Service is committed to being fully ISO 20022-compliant, which is expected to yield operational benefits for participants by facilitating rich data exchanges, enabling efficient straight-through processing and facilitating interoperability with other payment systems. Additionally, the message standard is expected to be cost-efficient for participants to adopt and maintain, especially if they are members of other payment systems using the standard.
FedNow development, including work related to the message format, remains on track. The FedNow team has developed draft message flows and specifications for release 1, which are based on internationally accepted best practices, a review of other payment systems’ specifications and significant internal analysis. The Federal Reserve recognizes the critical importance of sharing ISO specifications as soon as possible to support industry adoption and development.
Objective of FedNow ISO 20022 Working Group
The objective of the FedNow ISO 20022 Working Group is to review the draft FedNow ISO 20022 specifications to validate the payment message data fields for both value and non-value messages and to confirm that the messages contain the information necessary to support financial institution processes. Based on input from the working group, the FedNow team will consider and adopt revisions, with the goal of publishing the first version of the ISO specifications for messages to be supported at launch no later than first quarter 2021.
The Federal Reserve will engage with a diverse group of stakeholders to finalize a set of specifications that will benefit participants of all sizes and profiles. The working group is composed of representatives with significant payments expertise from institutions including:
- Small and mid-sized financial institutions
- Large financial institutions, including participants in The Clearing House’s RTP® network
- Software providers that will be critical in connecting FedNow participants of all sizes
While the near-term focus of the working group will be the “release 1” specifications for the FedNow system, the Federal Reserve will continue to engage with the working group to ensure that any future changes and modifications continue to align with the needs and expectations of the industry.
The Federal Reserve will keep the broader FedNow Community apprised of progress on ISO work, and we will seek to provide the opportunity for interested institutions to see a draft of the refined ISO specifications late in 2020 to solicit additional feedback. The FedNow Community is open to individuals who are interested in committing time and expertise to contribute to the success of the FedNow Service. Interested individuals should submit the FedNow Community participant profile form, detailing relevant experience, expertise and their organization’s role in instant payments. Over the course of developing the FedNow Service, the Federal Reserve will call upon the broader community, either the entire membership or specific members with needed expertise, to provide insights via focus groups, working groups, conference calls, virtual meetings, surveys and other channels.
Look out for further communications in third quarter 2020 regarding the progress of the FedNow ISO 20022 Working Group.
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