FedNow: the numbers one-year on

• To coincide with the one-year anniversary of FedNow this July, FXC Intelligence is looking at the progress of the US Federal Reserve’s instant payments rail in a new report.
• As of the end of June, more than 800 financial institutions across the US have adopted FedNow. This is up significantly when compared to the 35 participating institutions when FedNow first launched, however it is still some way off its goal to onboard up to around 8,000 institutions in the US.
• The cross-border potential of FedNow remains elusive, as Daniel Webber, CEO and Founder of FXC Intelligence, discussed with decision makers at Point Zero Forum earlier this week.

This July marks the one-year anniversary of FedNow, the US Federal Reserve’s instant payments rail. Today, FXC Intelligence, the market-leading provider of payments data and intelligence, looks at the progress made by FedNow in a new report.

As of the end of June, more than 800 financial institutions across the US have adopted FedNow, marking a significant increase from the 35 participating institutions that FedNow launched with in July 2023. 

Separately, the number of financial institutions that are serving as settlements and liquidity providers to the FedNow service has also increased from 26 at launch to 34 at the end of June, as has the number certified service providers – from 17 to 32 since launch.

Analysis of FedNow’s list of onboarded institutions shows consistent growth month-on-month, with pace picking up over the last few months – in March it overtook The Clearing House’s Real Time Payments system in terms of institutions adopted.

Notably, the list shown by FedNow only includes institutions that have completed testing and certification for the services. Should adoption carry on at the current rate, it is likely that this list will have expanded to more than 1,000 banks in the coming months.

Despite this significant progress, it is still a long way off its goal to onboard around 8,000 institutions in the US, with the service competing for relevance amongst several other major legacy payment rails in the US. 

Experts also highlight that only 40% of institutions have signed up to send payments, with many going receive-only as an initial foray into adoption, so there is still some way to go to achieve the intended network effect.

Google search trend data highlights a decline in the relative rate of searches for the term “FedNow” since July last year, which indicates that interest in the topic has waned since the initial hype around the system’s launch. Analysis of transcripts for earnings calls across the top 10 banks in the US by market capitalization shows almost no mention of FedNow, instant payments or real-time payments, indicating the topic is not at the top of priorities for banks. 

As it stands, FedNow is finding its feet within the US domestic payments space, although there have been several launches of cross-border linkages between instant payments in other regions in the world. 

The world’s financial regulators, policymakers and industry leaders descended on Zurich this week to collaborate on the advancement of global financial systems at Point Zero Forum. Daniel Webber, CEO and Founder of FXC Intelligence, spoke to its audience about the state of cross-border payments, including the potential impact of real-time payments on the industry. 

Following the conference, Daniel Webber said:

“Undoubtedly, US businesses and consumers would reap many benefits from an instant-payments led future, with services like FedNow enhancing the overall efficiency and speed of payments. Whilst the service has grown significantly over the past year, it is clear that it has some way to go until it reaches its goals and realizes the full potential of the network.

“I discussed the potential trajectory of real-time payments in the US and globally with decision-makers earlier this week at Point Zero Forum. As it stands, FedNow will remain domestic focused. With an eye to the future however, FedNow could become an integral part of the international payments ecosystem.”

To read the report in full click here.