Skip to main content

A look back on FedNowSM Service progress in 2020 — and what’s ahead in 2021

In a year of unprecedented change, FedNow Program Executive Ken Montgomery reflects on the progress the Federal Reserve has made on the FedNow Service, our upcoming instant payments infrastructure, and previews program milestones to come in 2021.

“It was the best of times, it was the worst of times...” isn’t just the famous opening line from Charles Dickens’ Tale of Two Cities. It also strikes me as a fairly accurate description of 2020.

While 2020 “bests” will vary, a bright spot for the Federal Reserve during this challenging pandemic year is the progress we’ve made on developing the FedNow Service. I’m proud of what we’ve accomplished to date, both on industry collaboration and developments behind the scenes.

We began the year by running fast to continue building our business team and working toward foundational decisions about the FedNow Service’s features, design and implementation timeline. We’re making good strides on development, and we’re pleased to report the pandemic has not impeded our progress.

Industry feedback has been vital as we plan the FedNow Service — and it gained momentum as we launched the FedNow Community, which now has 1,080 members from more than 700 organizations. Due to the pandemic, we’re collaborating with each other via virtual events and channels. These include webinars, town halls, roundtable sessions, conference calls, focus groups, working groups, polls and our website.

As we benefited from these industry insights and work by our FedNow team, Federal Reserve Board Governor Lael Brainard, Kansas City Fed President Esther George and I announced the FedNow Service’s initial features and functionality in a livestreamed webinar. We explained that in order to expedite bringing the FedNow Service to market, our service’s initial launch will include core clearing and settlement functionality and key value-added features, such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions. We’ll augment and enhance features in subsequent releases.

We also have established the FedNow ISO® 20022 Working Group of diverse industry stakeholders and experts to obtain feedback on our proposed message specifications and workflows. Their invaluable input is being used to inform and refine the FedNow ISO 20022 message specifications. These are the set of payment message data fields for both value and non-value messages that will enable participants to offer efficient end-to-end instant payment services through the FedNow Service. Our goal is to meet the industry’s needs and align with the standard to the best extent possible to achieve both efficiency and effectiveness.

In addition, the FedNow Reconcilement Working Group has begun identifying data, tools and service features to help ensure financial institutions can incorporate FedNow transactions into their master account reconciliation procedures with the Federal Reserve. Similarly, we’re working with correspondents to ensure we can meet their data and reconcilement needs. A big technology project takes a village, and we’re very thankful for the volunteers in both work groups for their expertise, insights, time and great work.

Our FedNow pilot program is designed to obtain input from members of the FedNow Community, including financial institutions, service providers and payment processors that partner with financial institutions. Our pilot announcement was met with outstanding interest. We’re committed to ensuring the program fully represents the wide variety of institutions and service providers, connection types and settlement arrangements. We’ve received more than 200 expressions of interest in pilot program participation to date. We’ll call upon the entire pilot group or subgroups with specific expertise to participate in service testing and other activities.

In addition, our goal is to drive toward compatible message standards and implementation guidance between the FedNow Service and RTP®. Using the widely accepted ISO 20022 standard for the FedNow Service will help support innovation and greater end-to-end efficiency in instant payments — and it will serve as a building block for interoperability.

So with 2020 close to wrapping up, and a lot of good progress under our belts, you may be wondering what’s ahead for the FedNow Service. Below is an early glimpse, with many more details to come as we kick off the New Year:

  • Pilot advisory phase: In February, we plan to kick off the pilot program’s advisory phase. Pilot participants will help us ensure service design meets user needs; inform the roadmap, industry readiness approaches and overall development strategy; and participate in feedback sessions on service features and functionality.
  • Additional FedNow Community engagement: We’ll continue our roundtable discussions with key segments, such as bankers’ banks, corporate credit unions and core payments processors. In addition, we will form new FedNow Community working groups to address topics we’ve discussed with the industry, such as account-to-account payments, correspondent banking, fraud prevention and our liquidity management tool.
  • ISO 20022 specs: Also in the first quarter, we intend to publish ISO 20022 message flows and detailed message specifications for release 1 of the FedNow Service. These specifications are based on internationally accepted best practices, a review of other payment systems’ specifications and input from the working group and FedNow Community.
  • Program milestones: We’re committed to being transparent about our progress and providing periodic updates throughout the year as we achieve key milestones in the delivery of the FedNow Service.

Let me end with my hope that we all have a healthier — but equally productive — 2021.

Action Item:

If you haven’t already done so, join the FedNow Community (Off-site) to participate in the service’s development and receive regular updates.


“ISO” is a registered service mark of the International Organization for Standardization.

“RTP” is a registered trademark of The Clearing House Payments Company LLC.