Hi all, Julie here.

Earlier in November, we hosted a webinar with the Federal Reserve to talk about its new payment system launching in mid-2023. Known as FedNow, it will provide financial institutions of every size, and in any location across the nation, access to safe and efficient instant payment services in real time, 24 hours a day. As one of the launch partners, Orum’s instant payment solutions can help financial institutions seamlessly adopt the FedNow service. The full webinar is below, but I wanted to call out a few key points as well.

How it will work

Announced in 2019, FedNow will be a payments rail that will move money from an account at one bank to an account at another bank instantly. That means within seconds, the receiver has the funds in their account and can use those funds. The Fed will also ensure that both participants receive confirmation that the activity is complete and both banks are whole. This means the sending bank had the money come out of their account at the Fed, and the receiving bank has the money deposited in their account at the Fed.

Not only that, but money will be moving instantly 24/7/365, and the Fed has added some features and functionalities around that to support bank transfers over the course of a weekend. On weekends and an overnight period, the Fed will be able to support the movement of liquidity amongst banks to support the service.

In terms of cost, there will be a $25 monthly service fee (waived for customers in 2023) and $0.045 per customer credit transfer. Other FedNow pricing fees include a $1.00 Liquidity Management Transfer fee, a $0.01 request for payment fee, and a $0.045 return customer credit transfer fee.

Aligned missions

Orum’s founding mission is building a better financial system so that everybody has the freedom to build their potential for businesses for consumers. We interpret that as building infrastructure and the payment space. That can then be embedded into financial services, products or everyday products. 

At the Fed, foundational to its decision to move into instant payments is the economic benefit. For the end users, the notion that they can send and receive money in real time, even on nights, weekends or holidays, means real economic benefit to them. According to Dan, the team did a deep analysis and had to have a strong public policy reason to move forward. 

Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community. FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.
Lael Brainard Federal Reserve Board Governor


One question that came up a few times was how the Fed is going to increase adoption for the new system when it launches. Other countries have put in place various mandates, but Dan said they’re thinking about it differently.

We’re going to create the right incentives for financial institutions to want to use instant payments. We’re going to quite frankly try to build the right mouse trap so that everyone wants to use the solution and then drive the bank through all the incentives that are typically used, pricing and other benefits, to want to participate in the network.
Dan Baum Head of Payments Product Management for FedNow

And while the team certainly wants to have mass adoption, it knows that managing the ramp up will present its own challenges. Right now there is a pilot actively working with the FedNow network of 120 customers, with thousands of financial institutions that are actively participating with the Fed on a routine basis. The Fed is planning to ramp up the program, continuing to have a greater share of its network using it for instant payments on top of ACH and other services.


If you look around the world, new payment options have meant new opportunities for fraudsters. Dan viewed fraud protection as a multi-step and multi-party process. While there’s some requirement of the end user to maintain security by doing things like using strong passwords, most of the fraud responsibility falls with the banks and their ability to do KYC and all of the things that are inherent to securing a payment channel.

The Fed believes its role will be to provide tools that will allow for the safety and security and soundness of the payment rail itself. This means things like message signing and receiver account validation prior to the payments going through. Beyond that, the Fed is also going to allow banks to manage their own account level transaction levels. So if you’re a small community bank, and you don’t want to allow instant payments of up to $500,000, they can lower that amount to as little as a few hundred or a few thousand.

Tune in to our full webinar below to get all the details. And if you’re interested in working with Orum and processing payments instantly for your customers, reach out!