The Federal Reserve today issued a final rule designed to help the agency implement the instant FedNow payments service, scheduled to go live in 2023. The rule creates a new subpart C in Regulation J that will apply solely to FedNow transactions, and it makes changes to subpart B, which governs Fedwire, to reflect the addition of a new payment service, plus technical updates to subpart A. The new rules take effect in the first calendar quarter after they are published in the Federal Register.
In issuing the final rule, the Fed agreed with the request in the American Bankers Association’s comment letter that the definition of “immediately” in Reg J remain undefined, at least until the Fed conducts a technical assessment of what would be reasonable. “As the instant payment industry evolves, the time period of what is considered immediate may continue to evolve and not specifying a particular time frame in the regulation will allow necessary flexibility in the future,” the Fed said.
In response to recommendations from ABA and others that the Fed to strive towards interoperability with the Clearing House’s RTP network, the Fed reiterated that it “is committed to working towards compatible standards and operating procedures with the existing private-sector instant payment service, and has already advanced that effort by using the widely accepted ISO 20022 standard for FedNow payment messages and aligning the implementation of the standard very closely to that of the private-sector service.”