For credit unions not currently planning to become a FedNow participant, the two most commonly cited reasons for not adopting the service were lack of resources and staffing (58%), followed by lack of member demand (33%). Notably, a quarter of respondents said that liquidity management risk was a primary concern behind the decision not to adopt, despite the service offering a real-time liquidity management tool. “The benefits of an instant payment service depend on the credit union’s vision and how it fits into the overall strategy for payment services,” said Morris. “Some businesses operated by or used by members can benefit from instant payments and some consumers may like the increased control over funds going in and out of their accounts, but other credit union members may be satisfied with existing electronic payment options.” The decision to adopt FedNow requires a careful evaluation of the organization’s goals and expectations of its members, he added. Managing fraud risk will always be a challenge with real-time, irrevocable payments, but there are tools that can monitor trends or place limits on the value of funds that can be transferred, and processes that enable senders and recipients to acknowledge and verify transfers, said Morris. “Some credit unions may initially offer the FedNow service to business members, who may have a lower risk profile, as the organization evaluates the best ways to mitigate fraud risk at the consumer level.” Certification for use of FedNow includes executing an agreement to meet compliance and technical standards to securely access the payment system, said Morris. “Most credit unions will access FedNow through third party service providers,” he said. “This will allow the credit unions to focus on their core services rather than the specialized infrastructure needed to access FedNow.” The best step to take now is the education of credit union leaders, suggested 20 THE NAFCU JOURNAL November–December 2023
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