What’s So Cool About FedNow Payments?

You may have heard about making “FedNow^® payments” within the past year. If so, you may be confused about what exactly it is. While the purpose of the service is easy to grasp, the particulars can sound complicated. The rollout of the FedNow payments service poses an exciting new benefit to our members. I’d love to answer a few of the big questions about the service, starting with your most important one…

WHAT ARE FEDNOW PAYMENTS?

FedNow is a service that facilitates real-time (within a few seconds) transfer of funds between financial institutions. The service doesn’t require human intervention, so it’s available 24/7, every day of the year. The precise technical steps involve a bit of back-and-forth, which the Federal Reserve details through this animation. From a member’s perspective – a payment moving through FedNow payments will arrive in your account almost instantly.

When transferring money between financial institutions, we usually expect a delay of at least a day (maybe more). With FedNow payments, it’s possible to all but eliminate that delay.

Similarly, most of us set up bill payments with a few days of buffer to prevent delays in transferring funds from causing a payment to post late or cause an overdraft. This is another problem that widespread adoption of FedNow payments can remedy. With instant payments available, the guesswork and planning won’t be necessary – transfers could happen right when scheduled.

ARE FEDNOW PAYMENTS AVAILABLE FOR FFCCU MEMBERS?

We’re excited by the many conveniences that FedNow payments can provide. At this time, all FFCCU members are eligible to RECEIVE instant payments from financial institutions that choose to send money through FedNow.

As of this publication, members are NOT able to SEND instant payments from FFCCU accounts. We hope to provide this option in the future, and we’ll share details as they become available.

An important thing to remember: FFCCU does not have any direct control over when a payment is sent via FedNow. However, our members CAN receive payments that are sent instantly through the service.

WHAT ARE SOME OF THE BENEFITS OF FEDNOW PAYMENTS?

A few scenarios where making FedNow payments could make a difference:

• Gig workers or contractors could receive payment for their work immediately upon completion of services. This can happen either directly from a client or their employer if funds are transferred through a financial institution where FedNow is available.
• Getting paid immediately by an employer on payday is a possibility! Currently, most payroll is conducted through Automated Clearing House – ACH – and can take 3-5 days to process. While shifting payroll to FedNow won’t happen for every business, some may offer this as a perk – particularly once FedNow payments become more common.
• You are at a restaurant, celebrating with a group of friends. You cover the cost of the meal. If everyone else in attendance makes a FedNow payment, you’ll receive their share of the bill immediately.
• You are experiencing an emergency that is covered by your insurer. It’s possible for them to send a disbursement of funds the moment your claim is approved (rather than sending a check by mail). While not every insurer will necessarily offer this option, it’s likely to become an increasingly popular offering.
• The Federal Reserve highlights some other applications in this helpful video.

WHAT HAS TO HAPPEN FOR INSTANT PAYMENTS TO WORK?

The financial institution SENDING a payment and the institution RECEIVING the payment must both be participating in FedNow and choose to transfer money that way. You may also need to provide your funding source with our routing number as well as your account number. You’ll want to use your full, 13-digit account number. You can find this number by logging into online banking and selecting the account you’d like your funds to deposit into. Then, scroll down to the “Details” section to find your 13-digit account number.

Keep in mind, because FFCCU can only receive instant payments at this time, whether or not a payment is sent instantly via FedNow is determined by the institution sending you the money.

IS FEDNOW SAFE TO USE?

Yes, FedNow payments incorporate new safeguards against fraud that layer with those already in place. Sadly, there is no 100% perfect deterrent for fraud. We urge you to continue to be vigilant in avoiding common scams and reporting possible fraud as soon as possible.

IS THERE A FEDNOW APP OR PLATFORM I NEED TO LOG IN TO?

No need for a new app or login! FedNow payments are made between financial institutions – you don’t need an intermediary app like you would for PayPal, Zelle, Apple Pay, etc.

HOW IS THIS DIFFERENT FROM PAYPAL, ZELLE, APPLE PAY, ETC.?

It’s common for payment apps to hold your funds on the app for several days. There’s often a surcharge to move funds same day. In contrast, FedNow payments are routed directly to your account in real-time. So your money is where you need it when you need it.

ENJOY FEDNOW RIGHT THIS INSTANT!

As always, FFCCU is thrilled to bring our members the best financial tools available. FedNow payments are quickly becoming a preferred feature for any account. We will keep you informed of changes related to FedNow payments and details on the option to send instant payments as soon as the function is available. Until then, keep your eye on FFCCU social media and our blog for further details.

Posted In: FFCCU Services