By Glenn Wheeler, Catalyst Corporate VP of Payments Products & Innovations
What is the difference between the soon-to-launch FedNow℠ Service and other instant payments services? What is ISO 20022? How should my credit union prepare for the FedNow Service? Attendees generated more than 20 questions, including these, at Catalyst Corporate’s first no-cost Faster Payments Essentials webinar last week.
The growing interest around faster payments was apparent, as nearly 200 credit union attendees tuned in to hear Catalyst’s Senior Vice President and Chief Operating Officer
Brad Ganey and Vice President of Payments Products & Innovation Glenn Wheeler discuss all the faster payment essentials, introduce Catalyst’s new front and back-end faster payment transactional services and discuss how existing services will integrate with the launch of the FedNow Service, including connectivity via a core agnostic application programming interface (API).
Two of the biggest differentiators between the FedNow Service and other payment solutions are timing and speed of settlement between institutions, and use of the ISO 20022 format. Understanding and managing settlement and liquidity were highlighted as key for credit unions looking to onboard with the FedNow Service.
The FedNow Service will provide financial institutions of every size, in any location across the nation, access to safe and efficient real-time payment services, 24-hours a day, year-round, including weekends, bank holidays, nighttime and non-business hours. This new payment rail will enable the sending and receiving of transactions in real time, as well as settle at a transaction level to a Master Account at the Federal Reserve. In fact, the FedNow Service requires all transactions to settle between financial institutions within seconds. Catalyst introduced a faster payments settlement service that provides an efficient way for credit unions to manage the settlement of transactions transmitted through the FedNow Service.
Benefits of the FedNow Service operating in real-time include increased efficiency of business operations due to greater flexibility and cash flow and use cases for quicker access to salary payments for individuals instead of delayed payroll.
What role does ISO 2022 play in the FedNow Service?
Interoperability plays a critical role in expanding the reach of instant payments nationwide, so it is important to understand ISO 20022 and the FedNow Service. ISO 20022 is a financial industry messaging standard that serves as a universal language for global systems and networks to efficiently exchange data messaging with each other. Already accepted internationally, this messaging format enables rich data exchanges, end-to-end straight-through payments processing and supports interoperability with other payment systems.
The FedNow Service is built on ISO 20022 standards, which work to improve payment speed, traceability and transparency.
How can your credit union get ready for faster payments?
From planning to execution, Catalyst Corporate is here to help provide you with the latest developments and end to end transaction and settlement solutions for faster payments including participation on the new FedNow Service. Couldn’t make the first webinar? Register today for our next in-person workshop on Wednesday, May 24 in Plano, Texas, or any of the other upcoming faster payment essentials.