To foster the adoption of the FedNow instant payments system that will launch next month, the Federal Reserve has embarked on a major marketing and education campaign.
That monthslong effort by the central bank is geared toward encouraging financial institutions of all sizes, and especially smaller community banks, to embrace the first new U.S. payments system in four decades. But it’s also now serving to counter conspiracy theories deriding the instant payments system as a government power grab.
In an echo of other outlandish attacks on the federal government in recent years, one TikTok personality who has 16,000 followers posted a video this month asserting that FedNow is part of a central bank digital currency program aimed at enslaving Americans.
In fact, there is no direct relationship between the central bank’s new real-time payments system and its separate consideration of a potential central bank digital currency (the Fed has made no statement on whether it will even pursue a CBDC).
The Fed’s efforts to plug the coming FedNow system have included email notices to interested audiences, webinar appearances for its officials and a website devoted to providing regular updates on the program, among other moves. It’s also posted answers to frequently asked questions, including those aimed at debunking a connection between FedNow and a CBDC.
While the Fed has said the new system will go live next month, it hasn’t said exactly what date that will be. Indeed, in an online appearance last week, Dan Gonzalez, the Fed’s vice president of customer relations for financial services, said that was a tightly-held secret for the moment. The moderator of that webinar kicked off a panel discussion by noting “questions and confusion” related to FedNow.
Despite the hype for the launch of FedNow next month, company executives and consultants who have been involved with the project, expect the Fed to turn on the switch late in July, with the initial roll-out including only a handful of players for the start. It will be the first U.S. payments system launch since the start of automated payments, known as ACH, in the 1970s.
It’s likely the Fed will begin the program in a way that provides for slower build-up in the first few months, said Craig Ramsey, head of real-time payments at payments services provider ACI Worldwide, who has been involved in his company’s participation in a FedNow pilot program. “I think we'll go through a couple of months of fairly quiet activity before perhaps seeing a little bit more fanfare,” he said in an interview this month.
Industry consultant Peter Tapling, who serves on the industry trade group Faster Payments Council, is among those who expect FedNow won’t go live until late next month, though he notes that it’s simulating usage already in a dummy sort of state. “The capability is live but it’s not moving money,” he said.
ACI is among a handful of companies that have been touting their involvement in the program in recent months. It’s also one of the few that has been through a certification program that allows it to be considered one of the early adopters of the real-time system. Like some other companies, it has participated in such systems in other countries as well.
Financial services software peer Finastra also announced this month that it had completed the FedNow certification program. For its part, the Fed hasn’t said which companies were involved in the certification process, though it did say early on that some 100 companies and organizations would be involved in preparing to launch the system.
