The Invoiced Guide to FedNow Real-Time Payments

Published on October 31, 2022

Pending transactions are annoying. Your funds are there, but they aren’t. Or your payment has been made, but it hasn’t…yet. And while Automated Clearing House (ACH) transactions offer a secure, reliable way to shift money, don’t you wish that these transactions could be handled a lot faster? Well, the FedNow Service intends to do just that.

What Is the FedNow Service?

Developed by the Federal Reserve System, the FedNow Service is a new instant payment rail that is intended to launch in 2023. The service, ideally, will allow financial institutions of every size from across the United States to process real-time payments at any time. So businesses and individuals connected to the service via their financial institutions will be able to engage in transactions and have immediate, full access to their funds without processing delays.

Instant Payments: Beyond Faster

A recently-emerged term, “instant payments” is commonly confused with the already existing “faster payments” label. And technically the transactions of the new FedNow Service qualify as both. Faster payments describe a broader category of transactions that can be sent and received within seconds at any time and that are available 24x7x365.

Instant payments, in turn, reflect a more specific class of transactions within the faster payments category. As defined by the Federal Reserve System, instant payments require not only that the recipient receives their funds in near-real-time but also that a corresponding, immediate interbank settlement occurs for the payment.

FedNow Real-Time Payments 

In many ways, the real-time payments to be performed by the FedNow Service rail will be very similar to the Real-Time Payments (RTP) service already offered by The Clearing House (THC). Of course, one key differentiator between the services is that the TCH RTP service is already live — and has been since 2017 — while the FedNow Service is currently in a pilot phase with an anticipated launch date of May – July, 2023.

It’s also anticipated that the FedNow Service will more closely cater to the needs and expectations of smaller, regional financial institutions. In fact, one of the major influences that led the Federal Reserve to launch the service was an influx of requests from small businesses to offer an RTP alternative.

And this focus also aligns with the breadth and scope of the Federal Reserve’s existing FedLine network and its established customer service relationships with more than 10,000 depository institutions.

Service Capabilities

Currently, the Federal Reserve intends to roll out the FedNow Service in phases, delivering new service enhancements and features at each update. At launch, the FedNow Service will deliver:

  • 24x7x365 service availability
  • A liquidity management tool
  • Features to support payment inquiries, reconcilements, and exceptions
  • A user interface that delivers visibility into account balances during banking off-hours
  • The ability to enroll as a receive-only participant
  • Data security tools to help financial institutions combat fraud
  • Request-for-payment capabilities
  • Functionality that aligns with ISO 20022 standards

Everyday Use

Wanting to support varied businesses across the country, the Federal Reserve has already identified a number of typical use cases for the FedNow Service:


The FedNow Service will enable instant fund transfers between an individual user’s bank accounts at different financial institutions, including the creation of a new account or the shifting of funds to an outside brokerage account. And future users can also fund and defund reloadable credit cards and mobile wallets without a waiting period.


Individuals will be able to quickly and easily send money to friends and family members. And payments for private, individual services — such as babysitting, tutoring, or dog grooming ­— can be completed seamlessly.

Bill Pay

Users can instantly pay bills, reducing the likelihood of late fees from processing delays. Conversely, electronic invoice senders will have the ability to submit a payment request directly to their customers via the FedNow Service, with the corresponding remittance details being captured in the request.


The FedNow Service will allow businesses to send electronic invoices alongside a request for payment that includes all of the necessary payment information. And invoiced businesses will be able to better manage their working capital by paying suppliers instantly upon receipt of goods or services.


The soon-to-be-launched service will also offer access to instant payroll distributions, encouraging better worker relations. Similarly, businesses will be able to more quickly direct payments — for example, rebates or insurance payouts — to consumers.

From ACH to Instant, Invoiced Has You Covered

As time passes, your customers, vendors, and suppliers will be expecting simpler, easier transactions — a stark contrast to the technical complexities you’ll face as the transition to real-time payments accelerates. Rather than reinventing the wheel, consider a robust payment platform that can handle cash, credit, ACH, and more. Schedule a demo of the Invoiced Payment Acceptance tool to see how simple your payment processing can be.

Published on October 31, 2022

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