Instant Payments with the FedNow^SM Service

The FedNow Service is a new payment rail from the Federal Reserve that allows individuals and businesses to send and receive instant payments. Visit the FedNow website to learn more.

Learn more about instant payments through the FedNow website:

• https://explore.fednow.org/guided-journey?role=Financial+Institutions
• https://explore.fednow.org/explore-the-city

Yes, Juniper Payments has completed all training and testing necessary through the Federal Reserve and is officially certified to provide access to the FedNow Service.

As a FedNow Pilot, Juniper Payments has:

• Participated in the development, testing and adoption of the FedNow Service.
• Provided thought leadership on the product’s features and functionality, as well as readiness for testing.
• Experienced the FedNow Service prior to its general availability.

In an era of immediate digital connectivity, consumers and businesses have gravitated towards advanced practices that fulfill their expectations for immediacy when making and receiving payments. They want to pay for services, bills and rent on the fly. They also want to have access to funds instantly so that they can use them immediately. Since the U.S. Treasury will soon be utilizing the FedNow Service for payments such as social security payouts, tax refunds and other disbursements, consumers stand to benefit greatly from instant payments.

Businesses want to better manage cash flow to meet payment deadlines for services, rent, inventory and exchange funds between separate financial institution accounts. Deploying instant payments enables them to meet these needs and offers other nearly limitless use cases.

Financial institutions recognize that consumers’ behavior and their expectations for engaging with financial institutions have evolved. Instant payments allow financial institutions to:

• Be on the leading edge of instant payment adoption.
• Strengthen their relationships with accountholders.
• Expand their market reach and service depth.
• Maintain a competitive edge and achieve their strategic goals.

Financial institutions looking to participate in the FedNow Service can do so in the following ways:

• Receive only — A participant will be able to receive payments but will not be able to initiate customer payments except to return payments received. (Note: For financial institutions looking to start their journey with the FedNow Service, we recommend starting with receive only. Receiving instant payments requires less risk than other options, and it enables a first step to payment automation.)
• Send and receive — A participant will be able to send and receive customer payment messages and return customer payment messages.
• Request for payment — A participant will be able to receive requests for payments via the FedNow Service.

The FedNow Service officially opened for transactions in July 2023. Although it may take some time for widespread participation, larger financial institutions are already beginning to deploy the service, which will prove to be an advantage over late adopters. Financial institutions looking to stay ahead of the instant payments curve should consider engaging with the FedNow Service as soon as possible.

Financial institutions considering the FedNow Service should begin discussions with the following key players:

• The Federal Reserve (via your Fed Representative)
• Core processors (as instant payments require 24/7 automation with the core)
• Payment vendors (those who provide access to payment rails, such as Juniper Payments)
• Online and mobile banking providers
• Risk management providers

Like any payment rail, instant payments bring with them new opportunities for fraud. It is up to the deploying financial institution to provide all reasonable efforts to mitigate fraud risk. Guidelines can be reviewed in the Federal Reserve’s Operating Circular 8, available on the FedNow website.

Since there are different levels of participation with FedNow, each has its own risk level.

• Receive Only — Risk level may be considered lower since this will only include credit push transactions into an accountholder’s demand deposit account (DDA).
• Send and Receive — A higher level of risk is associated with sending FedNow payments because they are immediate and irrevocable.
• Request For Payment — Request for payment is considered an even higher level of risk since requests could come from bad players posing as someone the sender may know.

Even though all transactions through the FedNow Service are credit push only, appropriate risk analysis needs to be a part of a financial institution’s mitigation plan.

Juniper Payments is exploring opportunities for deploying real-time risk rating as part of their risk management plan for their clients. There will be more information coming as plans turn into production.

Both RTP and the FedNow Service are payment rails enabling instant payments. RTP is a service through The Clearing House, which is owned by the world’s largest commercial banks. Interestingly, all the owner banks are also participating as FedNow pilots, pursuing both paths to instant payments – RTP and the FedNow Service.

Juniper Payments is an agnostic partner, providing access to all available payment rails. Our clients can choose the best fit(s) for their needs depending on their business strategies and access to as many DDAs as possible.

Juniper’s expertise is providing payment technology for financial institutions, including solutions that drive ACH, wires, check clearing, global payments and correspondent RTP for financial institutions throughout the U.S. Whether originating a transaction, reviewing system reports or managing users, we provide an intuitive application that is easy to operate, deploy and support.

Juniper Payments has 20 years of payments expertise, currently serving more than 3,000 financial institutions daily. Our focus is on the user experience, while our solutions require few technical resources or expertise to implement. We offer seamless integration flexibility and specialize in deploying payment solutions that enable seamless transaction flows from origination to delivery. Our platform is built to easily scale based on our clients’ unique needs and growth goals.

Considering the ecosystem we already provide, it is an obvious step for Juniper Payments to provide expanded instant payment options for our clients so they can successfully serve their customers and compete in a changing environment.

Each payment rail – ACH, wires, credit cards – is governed by a set of rules for how they are originated, presented and settled between financial institutions. These are often complex, requiring knowledgeable staff to manage and deploy. They can also be slow to settle, so funds are not immediately available.

The FedNow Service:

• Has few restrictions on use cases.
• Is simple to originate for branch employees, businesses and consumers.
• Provides immediate funds availability.

The FedNow Service is offered by and governed by the Federal Reserve Bank and is open to all financial institutions that are a part of the Federal Reserve System, whereas P2P platforms are owned and operated by private companies and have their own standards for operation.

With the FedNow Service, money stays deposited within the financial institution’s DDA account. Other applications take money from a financial institution into an outside account that is not protected by insurance.