We need your input! Learn more about what we’re doing and lend your voice to our efforts by joining the Conversations on Instant Payments group!
The Research Project
Starting in the fall of 2022, CU*Answers began studying the evolving world of payment processing, specifically the RTP® Network (The ClearingHouse) and the FedNow® Service (Federal Reserve) programs, and third-party partners who may be able to help us hook into these systems in order to receive funds for our credit unions on behalf of their members. Our goal was to understand the scope of potential projects, who we could partner with to connect, technical details about how the process works, and potential implications for fraud management.
For details about our RTP project, review the separate recipe.
Remember that these are payment options in addition to regular ACH. Whatever we do with these new payment channels will have no effect on our current ACH processes and functionality.
Status update as of March 4, 2023: Starting in September the Fed finally opened up the ability for us to start working with them on the development for our direct connection between CU*BASE and the Fed for the FedNow® Service. Since that time we have been meeting with them bi-weekly and are currently working through steps 19 & 20 of a 38-step checklist, which includes development and connectivity work, testing, and many other tasks. Our champion credit union is Frankenmuth CU.
Read an overview of instant payments and the differences between the RTP and FedNow networks.
Open the FedNow Service Operating Procedures
Open the FedNow Service Operating Circular 8 (OC8)
FAQs
Q: Will this project be in phases, like what you are doing with RTP?
A: Yes. Our first phase will allow CUs to jump on the FedNow rail and receive deposits to member accounts. After that we’ll tackle the Send and Request for Payment (RfP) functions, which, like RTP, will require a great deal more controls and fraud mitigation components.
Q: My corporate credit union said that they can hook us up to FedNow. Are you going to be working with corporates on this?
A: Our plan is to go directly to the Fed and complete all components of the project – Receive, Send, and Request for Payment – before we open the door to working directly with any particular corporate CU’s solution. Remember that unlike RTP, which you can hook to without changing your existing relationship with your corporate credit union, FedNow will require a greater level of entanglement with the corporate. Our plan is intended to allow everyone across the entire network to tap into FedNow without having to alter their existing corporate CU relationship.
Q: Should I wait for FedNow? Do I need to choose between them?
A: Don’t wait! Your credit unions will need to be on both payment rails! There is no interoperability between these independent payment systems, and members will not be able to pick and choose: if the payment app they are trying to use is on FedNow and your CU is only on the RTP rail (or vice versa), members won’t be able to send an instant payment using that tool. So get on board with RTP now, then plan to jump on FedNow later when it’s ready!
Chefs for this recipe: Dawn Moore, Jim Lawrence, Jeff Miller
So sounds like if you ” our core ” will not be partenering with specific corporate credit unions, like Catlyst to start. If we wanted to offer this FedNow Service for our members, it would be something we set up with you, and you will provide all we need to have that intergrated to our mobile and online applications. If you are starting off with only the receive, is there any idea how long before you would be able to offer both the SEND and RECEIVE and the request for payment?
On the RTP side, as you can see by the research summary we compiled for RTP Send, we have a lot of work to do, and keep in mind we have to invent this completely from scratch. Although FedNow is not exactly the same, a lot of the same requirements will be true for FedNow. So far we’ve received very little direction from CUs who’ve done their due diligence enough to have their own fraud mitigation strategies and wish list of controls ready to share, so if you have requirements to share, we’d love to hear them! (For example, do you want members to be able to send up to a million dollars to anywhere in the middle of the night, or do you want to vet those payments before they go out? Remember that like wires, you have no recourse to get that money back if it’s sent fraudulently.)
We have no target date for FedNow Receive yet, so I cannot give you any estimate on Send and Request for Payment at this time. But stay tuned for news as things move along!
Our Corporate Credit Union, Vizo, is set up and currently ready to handle “receiving” payments through FedNow. However, we cannot take advantage of this because CU Answers is not set up for this (according to Vizo). I’m reading that other credit unions are taking advantage of their Corporate Credit Union (PIMA FCU, who utilizes Catalyst, for example) being set up to take advantage and offer this service through their corporate credit union. I believe CU Answers has established connections with Vizo, so please help me to understand what the challenges would be in creating a process where we offer this service through Vizo/CUA channel.
We have a member who is interested in using QuickBooks Instant Deposit. She is asking if we can accept instant deposits. Our corporate is Alloya and is ready with FedNow, however, we are waiting access to this service on your side. Once this is in place will the QuickBooks Instant Deposit work for this member?
i would suggest that you get this project moving, because it is here, and we need to keep pace.
Believe me, we are moving! According to the Fed, we are actually ahead of the game compared to some and moving very quickly. Despite the buzz you may have been hearing, the ability for “the rest of us” to hook into this network has only just opened up in the past couple of months, so we’re definitely not behind! We are meeting with our onboarding and technical contacts at the Fed regularly and the project is moving along. While much of the infrastructure we built for the RTP project gives us a head start, there are nuances for this connection that still need to be designed and programmed.
As an aside, CUs should not wait for FedNow before jumping on the faster payments bandwagon. We believe all financial institutions will ultimately want and need to be on both of the new payment rails, RTP via The Clearing House and FedNow via the Fed, in order for members to be able to get this functionality wherever it’s available in the world. So check out the RTP recipe and get in the queue today!
One the things we’re learning is that while insiders use precise terms like RTP and FedNow to distinguish between two completely separate payment rails, the rest of the world uses vague terms like “instant” and “faster” and “right away” which may mean RTP, or FedNow, or even the debit card rails! So how QuickBooks Instant Deposit works depends on which rail they are on. If you can find out, let us know and we’ll share as we are all learning!
Whats the status in the FEDNOW via CUA going….. I know you all had alot of work to do, but curious as to where you are with it? Will you be having any sort of education–webinars for this as it approaches, To review the “how it will work and the settlement process?”
We have only just started being able to have bi-weekly meetings with our onboarding team at the Fed, so not much to report yet. So far we’ve been introduced to the many documents that have to be signed and have seen a little of the CU onboarding process, but the real meat will be when we start meeting with the technical teams later this month to determine the specific programming and communications work we still need to do. As mentioned elsewhere on this page, a lot of what we’ve designed for RTP will be used here, too, but there are additional pieces we have to build from scratch yet.
As far as settlement, the only thing I know for sure is that we are doing the processing, but will have nothing to do with settlement. According to one credit union who talked to their rep at the Fed, CUs can elect up front to settle the receive-only items directly to their Fed account, or through a Corporate. (Remember that the first project we’re doing is receive only. Later when we move toward send/origination there will be additional things to consider, such as monitoring for fraud. But you can start with receive to settle with the Fed and change to settle via a Corporate later on if you wish.)
I know everyone is anxious to hear about an implementation date and training, etc., but we are not far enough along in designing the technical specs for that just yet. But we believe all CUs should include jumping onto both the RTP and FedNow rails in their business plan for 2024!
Hi CUA Team!
We are just looking for an update to the progress of FedNow.
I know the last update was posted in October, so we wanted to see where the project is currently at and if there is an ETA or anything.
Thank you!
Actually we posted an update in December, and since that time we have been meeting bi-weekly with the FedNow team. It’s been a much slower path than our work on RTP, but mostly because we are building our own connection direct to the Fed so that all CUs can take advantage of it equally. But progress is definitely being made – in fact, we did our first connectivity test on Feb 22nd! But development has really only just begun so while we’d love to give a timeline, we’re not quite there yet.
I do hope that no one out there is still waiting around for FedNow before jumping into the instant payments arena. The ability to receive funds via the RTP rail is available NOW, and many CUs are live and receiving transactions from their members daily. Your members will NOT be able to choose which rail is being used by the many different apps out in the world, so your CU needs to be on BOTH. Get started today! Learn more in the store: https://store.cuanswers.com/product/real-time-payments-with-corp-one/