Nearly 1,000 depository institutions are using FedNow roughly a year after its implementation, Federal Reserve Governor Christopher Waller said this week during a financial technology conference in India. The Fed launched its FedNow service for instant payments in July 2023. Since then, the central bank has seen “widespread adoption” of the service, “including many of the largest banks that will drive origination volume,” Waller said.
“Yet we are still at the beginning of a multiyear journey of establishing a ubiquitous network covering the majority of institutions in our country,” Waller said.
Waller also expressed skepticism about the practicality of linking various domestic payments networks to allow cross-border payments. From a technological perspective, it sounds simple, he said. In practice, “achieving interoperability is not simple.”
“Technology is probably the easiest part,” Waller said. “The legal, compliance, settlement and governance challenges I mentioned earlier are more substantial. In addition, even when technological connections are in place, payments may not actually be instant as they traverse across systems because of domestic variations in ISO 20022 implementation, which is the global standard used by most fast payment systems. To send an ISO message seamlessly from one country to another across a technical link, operators need to coordinate and align on common practices.”
