As commerce continues to accelerate around the globe, the speed at which businesses and individuals transact and settle transactions must keep pace. Real-time payments facilitate and accommodate doing business in an always on, real-time world. So when the opportunity arose for BNY Mellon to participate in the Federal Reserve’s new instant payment infrastructure, the FedNow® Service, we quickly and confidently made the decision to participate.
As a pioneer in banking for nearly 240 years, it has always been our bank’s priority to extend to clients the reach and capabilities that can be realized through financial services innovation. In our view, the goal of providing individuals and businesses of varying sizes across the United States with instant payment settlement (24x7x365) into their bank accounts is mission critical and in alignment with the direction of the future of the global financial markets.
The U.S. launched its first real time payment rail, The Clearing House’s (TCH) Real-Time Payments® (RTP) network, in 2017 which now reaches 340+ banks and continues to steadily grow. Many of the businesses and consumers that bank with RTP have seen the benefits of instant payments, but for a payment system to add significant value there needs to be industry-wide adoption of a real-time or instant payment system. The introduction of FedNow as a new payment rail for instant payments will undoubtedly usher more financial institutions into a new chapter of innovation and expand accessibility for a broader customer base.
The effort to stand up FedNow is a true testament of commitment by both the Federal Reserve and all participant institutions to move our real-time payments networks forward and accommodate various use cases, such as those below, in need of instant payment options.
Outside of these consumer and business use cases, the sometimes-costly money movement associated with investment accounts (funding and withdrawing funds) is another pain point instant real-time payment rails could help the financial services industry solve for.
BNY Mellon’s deep industry experience and knowledge in this space positioned us as a leading collaborator with the Federal Reserve and other early adopter financial institutions and service providers who also see limitless opportunities for real-time funds movement in the payments ecosystem. To participate in the FedNow Service, BNY Mellon completed a multi-step customer testing and certification program in the months leading up to launch. For BNY Mellon clients and their customers, FedNow represents true value when it comes to the payment experience. As of July 20, 2023, BNY Mellon is providing our U.S. clients with the full suite of FedNow functionality, including request for payment, send and receive.
The FedNow Service is seamlessly integrated into BNY Mellon’s Real-Time Payments product, which already clears transactions through TCH’s RTP network. This not only allows clients to take advantage of the transparency and precision associated with instant payments, but also eliminates a need for most of our clients to choose the specific network their payment is being sent through, while still providing more options and opportunities in the marketplace.
As a leading financial institution accustomed to making history in our industry, we’re proud to yet again be part of a historic moment with the inauguration of FedNow, a service that brings with it a promise to help promote a level playing field for all who need access to instant payments.