Implementation Date Set for FedNow℠ Interbank Settlement Service

The Federal Reserve Board revised its testing strategy, backout strategy and other details regarding the implementation of the ISO® 20022 message format for the FedNow℠ interbank settlement service. The "single-day" implementation strategy will be on March 10, 2025.

As previously covered, the FRB adopted final rule amendments modifying Regulation J ("Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire"), which included (i) establishing the new real-time gross FedNow℠ settlement service regulations and (ii) making a variety of other related rule changes.

In response to submitted comments on the rule, the FRB opted to (i) revise the depository institution testing strategy to include 12 months of testing time for users to prepare to migrate to the new messaging format, (ii) include a provision in the backout strategy that would require the FRB to provide affected firms with two weeks' advance notice if the implementation date must be delayed and (iii) develop a communication and education strategy that is intended to promote industry readiness.