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First, as for timing, FedNow is slated to become available to
Insider’sreport all FIs by mid-year 2023, "specifically targeting production
rollout of the service in the May to July timeframe," the Fed

on payments said in an email.
When asked how long it will take for all financial
institutions to connect to FedNow, the Fed said, "While
the Federal Reserve has not released anticipated adoption
volume numbers, the FedNow Service has been developed
to meet industry and market demand for instant payments
and will be scalable to support growth over time. We have
strong adoption targets at launch, and are actively working
2023 will be big year with financial institutions, service providers and others
in the industry to ensure industry readiness and drive
for instant payments volume on the network."

Initially, the Fed expects account-to-account transfers and
By Patti Murphy consumer-to-business bill payments to be the most common
use cases for FedNow. That's where RTP is seeing the most
ProScribes Inc. activity, notably transfers initiated using Venmo and Zelle,
said Rusiru Gunasena, TCH senior vice president.
nstant payments are palpable. The Clearing House
launched its real-time, instant payments network, The Fed did not rule out other types of consumer-to-
RTP, five years ago. This year the Federal Reserve business applications. It developed a request for payment
I is set to launch a competing network, FedNow, function that could be used to support instant bill payments.
that will be able to support near instantaneous payments "Because the service is designed to be flexible and support
24/7/365. industry innovation, it could lead to additional use cases
in the merchant space in the future," the Fed wrote. For
TCH and the Fed have long been competitors in the example, the U.S. Faster Payments Council, a public-
payments space. Both support networks that provide private sector group that has been guiding development of
clearing and settlement services for ACH, check and wire FedNow, created a QR code interface "for faster and instant
transfer payments. Here's the difference: TCH is owned and payment transactions."
operated by a consortium of banks; the Fed is a government
entity required by law to provide payment services to all Sionic, an Atlanta-based payments company has already
federally insured financial institutions, at market prices. done this—developing a mobile payment app that uses QR
codes and existing POS devices to support bank-to-bank
That means when FedNow launches—scheduled to occur payments, processed over RTP. It has plans to pilot with
between May and July—nearly 11,000 federally insured U.S. Bank in the first quarter of 2023.
financial institutions will have access to instant payments
capabilities, with transactions settled in real-time against Card payments are not doomed
each FI's master account at its local Federal Reserve Bank.
Some worry that real-time payments will cannibalize card
payments. Those concerns were heightened by news reports
"The benefits of instant payments are increasingly that JPMorgan Chase was all-in on instant payments and
important to consumers and businesses, and the ability to scrapping its card business. The bank ranks as the largest
provide this service will be critical for financial institutions merchant acquirer in the United States, processing 31
to remain competitive," said Ken Montgomery, the Federal billion card payments totaling $1.7 trillion in 2021.
Reserve Bank of Boston first vice president who has been
overseeing the FedNow program. He added that "financial A JPMorgan Chase spokesman refuted suggestions the
institutions will be able to use the FedNow service as bank's merchant acquiring business was on the block,
a springboard to provide innovative solutions to their noting that the bank remains committed to card payments.
customers."
The planned pay-by-bank service would be offered through
Word from the Fed the wholesale banking division and marketed as a bill-
payment solution for treasury management customers, he
Recently, while researching a feature article about the real stated. Of course, this could eat into debit card payments,
time payments market for The Green Sheet (see issue 22:12:02), as well ACH debit activity.
I posed several questions to the Fed. The responses did not
come in time to be included in that article, but I thought But here's the thing: JPMorgan Chase is a mega-bank,
several warranted sharing. and as is the case in many large enterprises, projects get
mired in bureaucracy. One financial technology executive

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