FROM VISION TO VELOCITY The Making of the FedNow Service By Matt Helsing SVP & Northwest Regional Manager, PCBB, ICBC Associate Member The Federal Reserve’s FedNow® Service, an instant payments rail that launched this past July, was a long time in the making. As you dive into the faster payments space, you probably have a few questions about how the FedNow Service was created. What were the criteria, who was in the room and — most importantly — are you behind if your team hasn’t gotten started yet? We sat down with Sheila Noll, PCBB’s Chief Operating Officer, who served on the FedNow Service’s Faster Payments Task Force, to give you an inside look at how the FedNow Service was launched. With over 30 years of banking leadership experience and expertise in the payments space, Sheila is a current or former member of many committees in the payments sector, including the ICBA Operations & Payments Committee, the Clearing House RTP® Advisory Committee and the Faster Payments Council Advisory Board. Below is an abbreviated version of our longer interview. Tell us about the work that went into building the FedNow Service payments rail. There were six major categories of criteria that the Faster Payments Task Force considered: ubiquity, efficiency, safety, soundness, security and speed. It was important for everyone to know that any payment would be settled, final and irrevocable — and that it would happen within seconds. We also needed to make sure that the laws of our country supported what we were trying to bring forth, that we had sufficient rules so everyone knew what was expected, and that everyone could play by the same rules, regardless of whether there were multiple operators. The work of the task force was extremely inclusive. Banks and credit unions of all sizes were able to be engaged, but it wasn’t just the financial institutions. Everyone was invited to the table, including core providers, fintechs and software developers who were looking to develop applications for this new great idea of a payment system. We also had some of the largest merchants at the table, as well as consumer advocacy groups, rulemaking bodies like the National Automated Clearinghouse Association (NACHA) and credit card associations. What did you learn while you were developing the FedNow Service? There were many other countries that jumped into instant payments before the U.S. did, as their economies are far less complex than ours. So as a self-professed payments geek, I’d always cringe a little bit when people would say, “Oh, the U.S. is so far behind.” I’m thinking, no, we were very thoughtful and methodical with our approach, and I think that was an important thing for us to do as a country. In addition, we heard and maybe even thought to ourselves to a certain degree early on, that faster payments meant faster fraud. But quite frankly, we’re not seeing that. It could be because it’s not yet 22 | INDEPENDENT REPORT
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