The FedNow Service has revealed its 120+ participant roster as well as a more “narrowed time frame”, which is now 2023, for its initial launch. It has also revealed message specifications based on the criteria as set out by the International Organization for Standardization, (ISO).
The FedNow ISO 20022 requirements will determine the formats and message flows that this service will use when it formally launches in 2023.
Collaborations With Industry Participants
In order to optimize compatibility with two of the U.S. instant payment services, the Federal Reserve has partnered with The Clearing House. Moreover, the FedNow message flows as well as the guidelines for implementation have been vetted by the experts at the FedNow Community ISO 20022 Working Group in addition to other industry players within the FedNow Community. This includes some participants from BNY Mellon.
Mike Bellacosa, global head of payments and transaction services at BNY Mellon, had this to say:
“We were pleased to assist the Federal Reserve in developing messaging specifications that will best serve the banking industry’s needs for instant payments adoption and its long-term evolution. “We were able to share insights from BNY Mellon’s experience as an instant payments pioneer with the Fed and other working group members, and look forward to continued collaboration with the Federal Reserve as members of its FedNow pilot program.”
Another organization who had an active role in the FedNow ISO 20022 working group was Fiserv. Fiserv offers financial services and payment technology worldwide. It also assists financial institutions to connect to payment infrastructures.
What Is The ISO 20022 Standard?
The ISO 20022 standard is a globally accepted messaging structure that facilitates rich data exchanges. It also provides “end-to-end straight-through” processing of payments. It also offers compatibility with other payment systems.
Messages that will be backed by in the first launch of the FedNow Service will feature customer credit transfer, interbank liquidity transfer, request for payment, administrative and account reporting messages.
By releasing these message specifications, financial institutions and payment providers can have systems and solutions ready to support FedNow’s instant payments.
In order to gain access to the FedNow ISO 20022 message requirements and implementations guide, the Federal Reserve is using the MyStandards® platform. The platform features standard management tools for payment service providers and financial institutions that are planning to integrate their systems with the FedNow Service.
Message specifications can be found in the Federal Reserve Financial Services portal (offsite) under FedNow. Users will only need to create an account with MyStandards. This can easily be created on the SWIFT website.
It was announced that in the second quarter, the Federal Reserve will be providing educational opportunities to the industry in order to facilitate the execution of the ISO standard for the FedNow Service. Those who wish to stay informed can simply join the FedNow Community or sign up to receive their email updates.
The Federal Reserve’s Goal
The Federal Reserve is keen on remaining faithful to the ISO 20022 standard as it believes to be a solid foundation that will facilitate future growth. It also believes that by doing so, financial institutions will greatly benefit from their initial investments in technology. This would lead to greater cost savings and mitigating challenges when it involves releasing new products for payment system participants.