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FedNow Reg J Instant Payments

United States

2023

Payments

Overview

The FedNow Reg J Instant Payments framework refers to amendments made by the Federal Reserve to Regulation J to support the FedNow Service, which launched in July 2023. The amendments extend the legal infrastructure of Reg J, originally governing check and wire transfers, to cover real-time payments settled through the FedNow system.

The rule applies to banks, credit unions, payment processors, core banking providers, and financial institutions participating in the FedNow Service. It establishes the terms under which these institutions send and receive instant payments and outlines the responsibilities for settlement and messaging.

Key Obligations

Comply with revised Subpart C of Reg J for FedNow transfers
Adhere to real-time settlement protocols via Federal Reserve master accounts
Ensure participation agreements and technical readiness for 24/7 operations

Follow format and content standards for ISO 20022 messages
Manage fraud risk, identity validation, and transaction verification in real time
Accept liability for unauthorized or misrouted transfers unless mitigated by proof

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FAQ

What is the FedNow Service?

A real-time payment system developed by the Federal Reserve for instant fund transfers between U.S. banks.

How does Reg J apply to FedNow?

Amended Subpart C outlines legal and operational rules for FedNow clearing and settlement.

Is participation in FedNow mandatory?

No, financial institutions can choose to participate, but must comply fully if they do.

Does FedNow replace ACH or RTP?

No, it is a separate rail that coexists with ACH and The Clearing House RTP network.