What market needs are being addressed by these new features?   

Account activity thresholds strengthen risk mitigation for financial institutions by allowing FedNow participants to customize parameters for “send” transactions across customer segments, from new customers to established businesses or retail clients. The increased transaction limit is another way the FedNow Service is staying responsive to industry feedback. It’s important to remain agile, and we know the increased transaction limit will allow participants to support higher-value use cases moving forward.   

What instant payment use cases can benefit from the increased transaction limit? 

As noted, we expect financial institutions configured to send on the FedNow Service to utilize up to the maximum $1 million transaction limit to send higher-value credit transfers. Examples of this include business-to-business supplier payments, real estate transactions and payroll account funding. The default transaction limit remains at $100,000. The service is flexible, as each financial institution has its own unique business needs. Financial institutions can choose to set their own transaction limits between $1 and $1 million within their individual user profile.  

How does the account activity threshold work when it comes to strengthening risk mitigation?   

Account activity thresholds empower financial institutions to manage risk in real time with consideration for specific customer needs. An established business customer with high volume might have a very different risk profile compared to a new account opening. Financial institutions can establish criteria that automatically reject transactions once a threshold is triggered.  

Do credit unions need to do anything to take advantage of the new features? If so, where should they start?   

When it comes to the transaction limit, a financial institution can manage its individual transaction limit by updating it within their FedNow user profile. Transaction limits can be adjusted at the Routing Transit Number (RTN) level within the user profile by a supervisor or manager role within the FedNow Service. To set up the new account activity threshold feature, financial institutions can start by designating an administrative RTN and enroll some or all the RTNs in their organization for the fraud mitigation tools. Participants enabled to send will work with their FedNow onboarding manager and service provider, if applicable, to configure criteria instructing the FedNow Service to reject credit transfers from RTNs that exceed a participant-defined threshold. Up to 25 unique parameters can be established. Through these defined ISO^® 20022 message codes, “send” transactions on the FedNow network are monitored in real time in accordance with the pre-defined value and velocity parameters, giving financial institutions an extra layer of risk mitigation in addition to their established controls.  

What would you say to organizations that may be on the fence about adopting instant payments? 

Currently, there are about 1,400 financial institutions on the FedNow Service. A recent survey released by Federal Reserve Financial Services shows that demand is strong — most businesses (66%) said they were likely to use instant payments if offered by their primary financial institution, and businesses using instant payments reported 10% greater satisfaction with their primary financial institution than businesses that do not. Instant payments enable businesses to gain better control of cash flow management, streamline reconciliation processes, gain confidence in funds availability through instant, irrevocable transactions and improve the overall efficiency of corporate payments. Consumers can benefit from getting paid faster, paying others faster and enjoying the comfort of immediate funds availability. I heard a quote from another customer a few days ago: “Before too long, ‘pending payments’ will be a thing of the past.” This can be a huge advantage for financial institutions and their customers who are rapidly coming to expect instant payments.  

How does the Federal Reserve plan to continue working with the industry to support its needs?  

In my opinion, one of the great things about the FedNow Service is the high level of support and engagement Federal Reserve Financial Services offers to the industry and our customers. The concept of the FedNow Service originated with input from the industry and continues to evolve through collaboration with various workgroups, financial institutions, service providers and the broader payment ecosystem. Feedback from the industry has been invaluable, and Federal Reserve Financial Services will remain agile and responsive to new and changing customer needs as instant payments mature.  For anyone interested in learning more about the FedNow Service, I would encourage you to visit FedNow Explorer for the latest information and updates on the service.