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The Federal Reserve Banks have narrowed the timing of the FedNow Service launch to mid-year 2023, specifically targeting a production rollout of the service in the May to July timeframe. This further defines the previously communicated 2023 launch window for the anticipated instant payments service and comes as the FedNow Pilot Program prepares to enter technical testing for the service starting in September.

The CPMI published a consultative report on initial considerations on governance and oversight for fast payment system (FPS) interlinking across borders. The interlinking of FPS is one of the most promising solutions for enhancing cross-border payments, offering the prospect of significantly faster, cheaper, more accessible and transparent cross-border payments. The interim report describes 10 initial considerations, resulting from a series of workshops with global stakeholders that was undertaken by the CPMI to better understand the sensitivities, complexities and experiences in this area.

The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia (BNM) have jointly launched a real-time payment systems linkage between Singapore's PayNow and Malaysia's DuitNow. The initiative follows the QR payment linkage announced in March 2023 which enabled cross-border QR payments to merchants. The PayNow-DuitNow linkage enables instant, secure and cost-effective P2P fund transfers and remittances between the two countries using the recipient's mobile phone number or virtual payments address. This real-time payment systems linkage is also the first to include the participation of non-bank financial institutions from both countries.

The Digital Currency Institute of the People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) are carrying out the second phase of technical testing on the use of digital yuan in cross-border payments, involving more banks in Hong Kong and the use of the Fast Payment System to top up digital yuan wallets. Earlier in November 2023, the Octopus Cards Limited (OCL) e-payment platform and the Bank of China in Hong Kong started to explore new digital yuan application scenarios, with a view to benefitting both mainland visitors to Hong Kong and Hong Kong residents visiting the mainland.

The HKMA and the Bank of Thailand launched the FPS x PromptPay Link for cross-border QR payment between Hong Kong and Thailand. This provides a fast, secure and easily accessible cross-border retail payment service to people travelling between Hong Kong and Thailand, who will be able to make retail payments by using their mobile payment applications to scan the Hong Kong FPS QR code and Thai PromptPay QR Code displayed by merchants respectively. Merchants will be able to receive their funds immediately.

"The Fed's new instant-payments system FedNow can be a game changer, giving people and businesses immediate access to their money and slashing fees that make it expensive to be poor in America. But for FedNow to work, banks must use it. Unfortunately, right now they aren't. Less than 1% of banks and credit unions have signed up, and many of these charge a lot for the service. "

The Reserve Bank of India (RBI) is proposing to allow linking of credit cards on the United Payments Interface (UPI) platform beginning with RuPay credit cards. Rupay is India's homegrown card network, which is promoted by the National Payments Corporation of India, a body of the RBI that also oversees UPI payments. The is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood.

"RTP® from The Clearing House is a real-time payments platform that all federally insured U.S. depository institutions are eligible to use for payments innovation. With mobile technology and digital commerce driving the need for safer and faster payments in the U.S., financial institutions of all sizes are taking advantage of the RTP network's capabilities to create or enhance digital services for their corporate and retail customers."

How did Pix become such a success? For starters, the central bank mandated participation by banks and other payment institutions with more than 500,000 transaction accounts. This created a critical mass of users and kick-started the network effects so that the open-loop payment platform could gain traction. The central bank amplified this mandate by facilitating community among the financial institutions participating in Pix. Prior to launch, they organized in-person meetings periodically to update everyone on key milestones and future plans. They solicited input to key decisions and created working groups to tackle specific issues. Secondly, Pix is available to any financial and payment institution licensed by the central bank that offers transaction accounts. Open participation was further fostered by allowing an indirect model of integration that significantly reduces the cost (eg connectivity costs associated with a direct integration). Thirdly, a consistent, simple and quick user experience was enforced by the central bank, including a flexible alias directory (based on phone numbers, email addresses or randomly generated string of characters), and standardized API and QR code technology. Finally, Pix is significantly cheaper for merchants (Pix charges 0.25% of the transaction amount versus 1-2% for credit cards and 3-4% for credit cards. Also with credit card transactions, the merchant may have to wait up to 30 days for their money.

The Clearing House, an entity owned by 23 of the largest US banks, operates RTP. They reported that there were 41.2M instant payments transactions in Q2 2022 worth $18B. FedNow is a second U.S. Instant Payment rail that will be offered by the Federal Reserve by July 2023. Any financial institution can become a part of either RTP or FedNow, but none are obligated. FedNow was driven by the Federal Reserve primarily as a real-time payment option for smaller banks who were reluctant to do business with RTP, a company run by the largest U.S. banks. The key difference between the two schemes is that RTP requires FIs to provide up-front funding to enable transactions. With FedNow, FI's can use the funds in their master account already on deposit with the Federal Reserve.

The US Federal Reserve announced that the FedNow Service will start operating in July and provided details on preparations for launch. FedNow Service to facilitate nationwide reach of 24/7 instant payment services by financial institutions - regardless of size or geographic location. Businesses and individuals will be able to send and receive instant payments at any time of day, and recipients will have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments.

The BIS Innovation Hub Singapore Centre and partners successfully connected the test versions of three established instant payment systems (IPS) using the Nexus model. The next phase of the project will work on the real-world potential of a multilateral network that could be scaled up across more countries. The year-long collaboration included the Bank of Italy, Central Bank of Malaysia (BNM) and Monetary Authority of Singapore (MAS). Test payments were initiated using only the mobile phone numbers or the recipients' company registration numbers via the Eurosystem's TARGET Instant Payment Settlement (TIPS), Malaysia's Real-time Retail Payments Platform (RPP) and Singapore's Fast and Secure Transfers (FAST) payment system. For the next phase of the project Bank Indonesia, BNM, Bangko Sentral ng Pilipinas, MAS and the Bank of Thailand will leverage experiences from Phase I and Phase II of the project towards connecting their countries' IPS and facilitate cross-border transactions across a combined population of about 500 million people. Looking ahead, the BIS and the five central banks envisage that Nexus could eventually be implemented globally. To achieve this, they will aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project's development beyond the Southeast Asian region. The Bank of Italy and the European Central Bank will be invited to join this panel.

The FedNow is an instant payments service provided by the U.S. Fed, launching in July 2023. It will be available to U.S. depository institutions, such as banks and credit unions, and will enable individuals and businesses to send payments through their depository institution accounts 24/7, so that the receiver of a can use the funds almost instantly.  FedNow is like other Fed payments services, such as Fedwire and FedACH. To be absolutely clear, FedNow is neither a form of currency nor a step toward eliminating any form of payment, including cash.

In the first quarter of 2023, the Central Bank of the United Arab Emirates (CBUAE) will start phasing in an Instant Payment Platform with a pilot group of licensed financial institutions. The initiative will enable payments processing and fund transfers in the UAE both around the clock and in real time. The new platform will enable the provision of the next generation of payment services to UAE financial institutions and consumers. https://www.centralbank.ae/media/muuenquk/cbuae-fosters-transformation-and-digitalisation-in-dialogue-with-financial-industry-officials_en.pdf

FIS published its 2023 Global Payments Report that examines how consumers pay today both in-store and online across 40 global markets. In 2022, there were almost 70 real-time payment (RTP) schemes providing high-speed payment rails that helped drive account-to-account (A2A) payments to account for $525 billion in global e-commerce transaction value, versus $463 billion in 2021. A2A payments flow directly - and often instantly - from a consumer's bank account to a merchant's account, helping to drive down the cost of acceptance for merchants. The growth of A2A in the U.S. mirrors the global trend, with A2A accounting for 9% of e-commerce transaction value in 2022. This is projected to keep growing, fueled in part by consumer use cases arising from the 2023 launch of the Federal Reserve's FedNow payments network, and the existing RTP from The Clearing House and Zelle real-time payment networks

"Although FedNow is not a CBDC, that's not to say there is no reason to object to it. Faster payments are needed in the United States, but FedNow is not the only option. FedNow was announced in 2019, but that was two years after the Clearing House (TCH) introduced the Real‐​Time Payments (RTP) Network. In fact, while not offering instant payments, even just expanding the operating hours of Fedwire and the National Settlement Service (NSS) to run 24x7x365 would have improved the U.S. financial system. Yet, the Federal Reserve seems to have chosen to ignore the simpler option and walk over the private sector. Both choices are grounds for fair and longstanding objections to FedNow."

"Nexus or Icebreaker? Two competing ideas are jostling for attention, each promising to reshape the inefficiency-ridden landscape of moving money from one country to another. Instead of trying to choose between them, central banks ought to give both a shot. The European payment system recently did a trial linkup with Malaysia and Singapore under the Bank for International Settlements' Nexus protocol, designed to transfer funds between bank accounts in different countries under 60 seconds. Meanwhile, the monetary authorities of Israel, Norway and Sweden have tested a separate BIS-backed initiative that achieves the same goal of fast cross-border retail payments. Project Icebreaker uses central bank digital currencies, or CBDCs, instead of bank accounts."

"Since the launch of FedNow, the adoption of TCH-RTP has also intensified. As non-compatible networks, TCH-RTP and FedNow must compete for bank adoptions. At the moment, TCH-RTP has a larger network and offers more services than FedNow. But FedNow might still win out - even if it shouldn't."

Bank of Namibia (BON) launched its Instant Payment Project, with a targeted launch year of 2025. It will be focusing specifically on enhancing financial services in rural areas and the informal sector, thereby reducing cash dependency, and increasing transactional efficiency. Designed for inclusivity, the platform will be accessible on any device, including non-smartphones, ensuring that everyone can use it effortlessly. And according to Finextra, BON will partner with NPCI International Payments, the firm behind India's Unified payments Interface (UPI). https://www.finextra.com/newsarticle/44088/namibia-signs-on-for-indias-upi-tech

The Committee on Payments and Market Infrastructures (CPMI) published a brief that highlights key payment trends as observed in the 2022 Red Book statistics (available at the BIS Data Portal). These statistics were collected in the second half of 2023 from CPMI member jurisdictions. The use of digital payment methods continues to increase, particularly for small amounts. In tandem, cash withdrawals and the number of small-denomination banknotes in circulation have declined. Fast payments reached new heights and are a prominent driver of the digitalisation of countries' payment ecosystems. Even so, consumers continue to use cash to pay at home and abroad: both cross-border card and e-money payments and cross-border cash withdrawals increased sharply in 2022. (Data portal: https://data.bis.org/topics?topicFilter=CPMI)