US-made PTR service being rolled out

The US Federal Reserve has just taken a (big) step forward in the area of payment initiation. It has just announced the upcoming launch of its own service, called FedNow. It shows that the subject of instant payment is definitely a topical one, in the United States as well as in Europe.

FACTS

• Following initial positive feedback, the Federal Reserve has announced the launch of the technical test phase for FedNow, the US government's request-to-pay payment solution.

• This test phase will begin in mid-September with the first users (including financial institutions, service providers and software companies), before an official launch planned between May and July 2023.

• The FedNow service will then be open to all US financial institutions, of all sizes, which will be able to offer it to their customers as a new value-added service. FedNow will allow individual and corporate end-users to send instant payments or payment requests at any time and receive the funds directly.

• The Fed's goal is to make FedNow available to all Americans in the medium term.

CHALLENGES

• Boosting payment in the control: The FedNow service is presented as a new payment tool made available to American financial institutions to boost their offers. The FED is in charge of deploying this service, which it originated, to harmonise the payment market with a secure and up-to-date solution.

• Disrupting alternative payment methods: While the US government has been fighting for several years to curb the development of alternative digital currencies, working in particular on its own MNBC, the launch of FedNow competes with its digital currencies on the terrain of immediacy and interoperability.

MARKET PERSPECTIVE

• If the question of the legitimacy of Request to Pay does not concern its potential to move payment into the future, the many initiatives developed on this theme nevertheless illustrate a certain anarchy reigning on this market.

• Thus, on an international scale, solutions are developing at particularly varied rates. Until now, the United Kingdom has been the model for the development of this type of service, including by American players such as MasterCard and American Express.

• International initiatives are also being launched, such as that of Emirates and Deutsche Bank, which allow air tickets to be purchased via the initiation of a transfer.

• In Europe, the European standard for Request To Pay came into force on 15 June 2021, but the service is still struggling to become more widespread. And local initiatives are multiplying, as recently announced by the French Treasury, for example.