Federal Reserve Nears Completion of Industry Engagement on FedNowSM ISO® 20022 Specifications
The Federal Reserve is collaborating with industry participants to ensure the FedNow Service ISO 20022 specifications promote efficiency while meeting industry needs and expectations. Through the FedNow Community ISO 20022 Working Group, a broad range of industry stakeholders met regularly over the past several months to thoroughly review draft FedNow Service ISO 20022 message specifications. The Federal Reserve is also engaging with The Clearing House to review the Real Time Payment System and the FedNow Service draft specifications, with the goal of compatible message standards and implementation guidance. Together, these collaborative efforts will help to inform and refine the Release 1 version of the FedNow ISO 20022 specifications, which are on track to publish Q1 2021.
Working Group Review of Release 1 Specifications
The Federal Reserve is committed to using widely accepted standards in designing the FedNow Service. This will help support innovation and greater end-to-end efficiency of payments, help achieve nationwide reach for instant payments and promote interoperability with the private-sector service. In addition to serving as a building block for multiple forms of interoperability, the adoption of the global ISO 20022 standard will benefit participants by facilitating rich data exchange and enabling efficient end-to-end straight-through processing. FedNow Service Release 1 messages will include: customer credit transfer, request for payment, interbank liquidity transfer, and administrative and account reporting messages. Working group participants, including representatives of large and small financial institutions, processors, aggregators and software providers, conducted a line-by-line review of the draft specifications for these messages with FedNow ISO 20022 experts to validate the message flows and individual message implementation guidelines.
Working Group Key Takeaways
Working group discussions resulted in strong engagement among industry stakeholders who provided meaningful feedback on the draft specifications referenced above. In many cases, discussions validated the proposed message implementation guidelines; however, the working group participants also helped identify areas where modifications can be considered and areas where additional guidance for FedNow participants may be developed. Key takeaways included:
- Validation of the FedNow Release 1 ISO 20022 message portfolio; no gaps in message types were identified.
- Strong preference from the participants to remain true to the ISO 20022 standard and the intended scope and use of the ISO 20022 messages. This will promote efficiency and effectiveness by reducing potential frictions and costs, which may occur with deviations from the ISO 20022 standards.
- Requests that additional guidance be developed in some areas to promote consistency in information exchanges, for example, in the use of reason codes.
The Federal Reserve is continuing its careful consideration of industry feedback to make modifications, where necessary, to the ISO 20022 specifications and implementation guidelines. Comments from working group participants – as well as interested members of the broader FedNow Community – are requested by December 16. The Federal Reserve will continue to promote collaboration to ensure FedNow Service ISO 20022 specifications are reflective of industry needs and expectations. More communications related to the publication of the FedNow ISO 20022 specifications will follow in Q1 2021. If you have any questions, please contact SYSFedNowWorkGroup@chi.frb.org.