Tuesday, January 26, 2021
Esther George, president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the Federal Reserve's payments improvement initiatives, noted that 110 pilot program participants met the Fed's objective of representing diverse facets of the payments ecosystem.
"We're gratified by the industry's tremendous interest and willingness to devote time and energy to help us develop the FedNow Service," George said. "As a result, we've adjusted to accommodate more participants than we originally planned."
The Federal Reserve received more than 80 submissions from payment systems and service providers interested in making instant payments accessible to B2B and B2C customers. The widespread interest inspired Federal Reserve Banks to create an "ecosystem participant" program launching later this year to support end-to-end testing of FedNow Service, Federal Reserve representatives stated, adding that they hope the additional effort will further drive adoption and innovation of end-user in the space.
Ken Montgomery, first vice president and COO of the Federal Reserve Bank of Boston and FedNow program executive, expressed confidence in the FedNow program, which is reflected by the groundswell of support it has received in public and private sectors.
"Our strong track record and commitment to industry engagement continues with this pilot program, which represents an inclusive and collaborative approach to delivering instant payments to American consumers and businesses," Montgomery said in a statement.
Abhishek Veeraghanta, vice president of marketing and product management at VSoft, thanked the Federal Reserve for accepting his company's application to the FedNow Pilot Program, stating VSoft is excited to support the Fed with this next phase of development.
"This is the first time the Federal Reserve has rolled out a new payment channel since ACH was developed over 40 years ago, Veeraghanta said. "As VSoft works with our financial institution partners to pilot FedNow, we hope to provide feedback and support end-to-end testing of what may become one of the most valuable transaction networks in the world."
Noting that VSoft has a history of leading payments innovation globally, Veeraghanta said that instant, real time payment networks are becoming the norm across the world, and the impact of that change is starting to extend to the company's U.S. operations. This sparked the launch of Bread, a faster payments solution, designed to bring faster payment options to U.S. clients, he added.
While the VSoft product suite, including digital banking and core banking, lends itself to faster transactions, Veeraghanta expects the FedNow pilot to enable the company to expand its suite of future-ready products and services for financial institutions.
Booshan Rengachari, founder and chief executive officer at Finzly, looks forward to participating in the FedNow Pilot Program. Noting that FedNow will allow businesses and individuals to send and receive payments 24x7x365, he said the program marks a turning point in making real-time payments a reality.
"We created our Payment Hub specifically to help financial institutions prepare and go to market faster with newer RTP networks and address the challenges of offering single payment API for multiple payment networks without having to run disparate payment systems from multiple vendors," Rengachari said. "We welcome the opportunity to be a part of this historical pilot program and help shape the service's features and functionality."
Rengachari additionally noted that Finzly won "Best Enterprise Payment Solution" at Finovate 2020. The company's recently enhanced Payment Hub supports multiple payment networks, including newer RTP networks and the FedNow Service. The interoperable, cloud-based solution uses open APIs to centralize consumer and business payment processing, monitoring, reporting and compliance, he stated.
When fully launched, the FedNow Service will facilitate nationwide reach of instant payment services by financial institutions in near real time, around the clock, every day of the year. Participating institutions, businesses and individuals will be able to send and receive instant payments conveniently and recipients will have full access to funds within seconds, FedNow program managers stated.
Access to funds will be provided through the Federal Reserve's FedLine network, which currently serves more than 10,000 financial institutions directly and through agents. Additional information is available at FRBservices.org.
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