FedNow® Service ends 2023 on a strong note with more than 300 participating financial institutions on board
December 14, 2023
CHICAGO — The Federal Reserve announced today that FedNow Service participation continues to show strong growth and diversity heading into the new year, with 331 institutions, headquartered in 45 states and ranging in size from under $500 million to over $3 trillion in assets, now sending or receiving on the network.
The FedNow Service launched 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 proliferation of new use cases that can leverage them. 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 its 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 to reduce payment failures and decrease fraud. With traditional payment methods, microdeposits often take days to settle, causing delays in 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 Treasury recently collaborated with their Human Resources agency to participate in its workplace giving campaign, successfully disbursing payments to charitable organizations instantly with the FedNow Service.
Other promising instant payment use cases cited by FedNow participants included leveraging instant payments for account-to-account transfers to friends and family, earned wage access, auto purchases, business payments and more.
About the FedNow Service
The Federal Reserve Banks developed the FedNow Service to facilitate nationwide reach of instant payment services by financial institutions — regardless of size or geographic location — around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments at any time of day, and recipients have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments. Access is provided through the Federal Reserve’s FedLine® network, which serves more than 9,000 financial institutions directly or through their agents. For more information, visit FedNowExplorer.org (Off-site).