The Potential of the FedNow Service for Credit Unions

FedNow Service logo seen displayed on a smartphone with hundred dollar bills in background
By Kristen Jason

3 minutes

Credit unions can gain a better understanding of the FedNow Service with this comprehensive guide. 

Sponsored by CUES Supplier member Alacriti

We know a thing or two about connecting credit unions to the FedNow® Service. Our experiences and expertise shaped the creation of a FedNow guide, addressing common misconceptions and questions. Here are a few FAQs from the guide:

What is FedNow?

At its core, the FedNow Service represents the Federal Reserve's foray into the realm of instant payments. Launched in July 2023, it offers a modern payment rail that enables banks and credit unions to facilitate immediate, 24/7 money transfers. This service is not just about speed; it's about providing businesses and individuals with a reliable, real-time payment option that enhances liquidity and accessibility.

How Does FedNow Work?

The magic of FedNow lies in its streamlined process, which can be broken down into a 10-step journey, all unfolding within mere seconds:

  • Initiation: The transaction begins with the payee interacting with their financial institution.
  • Payment Message: The payor sends a payment message to their bank or credit union.
  • Authorization: The financial institution checks for sufficient funds and authorizes the transaction.
  • Submission: The payment message is sent to the FedNow Service.
  • Validation: The FedNow Service validates the message and sends back an acceptance or rejection.
  • Deduction and Credit: Upon acceptance, funds are deducted from the payor's account and credited to the payee's account.
  • Debit/Credit Notification: The financial institutions involved are notified of the transaction.
  • Advisory: Both parties receive a notification of the payment.
  • Confirmation: The receiving institution can confirm the posting.
  • Final Notification: The FedNow Service announces the successful transaction.

This intricate yet immediate set of steps ensures that payments are not only fast but also secure and compliant with regulatory standards.

How Can FedNow Help Credit Unions?

The introduction of FedNow offers a myriad of benefits for financial institutions, including:

  • Enhanced Customer Experience: Instant payment capabilities can significantly boost customer satisfaction, especially for those in urgent need of funds.
  • Operational Efficiency: The automation and streamlining of payment processes reduce the burden on back-office operations.
  • Liquidity Management: Real-time transfers enable better management of funds, ensuring that financial institutions can optimize their liquidity positions.
  • Technological Advancement: By adopting FedNow, banks and credit unions can stay at the forefront of payment technology, meeting the growing demand for instant, digital payment solutions.

The FedNow Service is not just a new payment rail; it's a gateway to a more efficient, member-centric financial ecosystem. By embracing this service, credit unions can unlock new possibilities for growth and innovation.


To learn more about operationalizing instant payments, watch the webinar Integrating Instant Payments: An Operational Perspective.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP® network, Visa Direct, and the FedNow® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at 908.791.2916 or

Kristen Jason, director of product marketing, is responsible for marketing strategy and content for CUES Supplier member Alacriti, while staying abreast of industry trends. She offers over 18 years of marketing experience, including nine years of experience in financial technology and payments. She holds a Bachelor of Science in both psychology and business administration from Florida A&M University and an MBA from the University of Central Florida.


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