Finastra has become one of the first vendors in the financial services industry to complete the process of testing and certification for the FedNow – Federal Reserve’s new instant payments service to launch this July
Finastra, a global provider of financial software applications and marketplaces, announced it has completed testing and certification for the FedNow Service, a long-awaited instant payments system from the U.S. Federal Reserve, seen as an alternative to CBDCs and stablecoin payments.
The new service, launching in July 2023, will be initially integrated into Finastra’s Payments To Go SaaS cloud-based payments solution. Eventually, FedNow will also be added to Finastra’s Global PAYplus solution, which gives financial institutions across the US instant payment capabilities on the cloud.
Finastra participated in the FedNow pilot program, that started in September 2022. All the Pilot Program members will complete a certification process to ensure operational and messaging readiness before proceeding to integration with the service.
Finastra’s certified connection to the FedNow Service will enable its partner financial institutions to easily and rapidly initiate instant payments and submit payment requests via an open API.
According to the press release, one of the first financial institutions to use Finastra’s Payments To Go for FedNow services is Texas-based Amarillo National Bank. “We selected Finastra’s Payments To Go solution because we found it to be the right tool to help us enhance our customer experience and advance our innovation strategy,” said Ross Kerns, the bank’s Senior Vice President and CFO.
FedNow is a round-the-clock, real-time gross settlement system, first unveiled by the US Fed in 2019. The main benefits of FedNow include instant payment settlement, oversight by the Federal Reserve Clearing House’s RTP network, and built-in fraud risk management features. The system will funnel commercial bank money from a sender through a Fed credit account to its recipient.
At the initial launch, the real-time payment service will support the account-to-account and consumer-to-business bill pay use cases. However, FedNow is use-case agnostic and will be able to support a wide variety of use cases with innovation by the industry. Thus, additional functionality may come in future phases.
