A Conversation with Mark Gould on FedNow and the Future of Payments

Mark Gould will be delivering closing remarks at the 2023 Fintech: Innovation, Inclusion and Risks Conference in Santa Clara, CA. The goal of the conference is to provide a venue for dialogue among market participants, academics, and regulators to share knowledge on the current state and potential of Fintech.

Mark is the Federal Reserve System’s chief payments executive. He is responsible for leading the full range of payment services provided by Federal Reserve Financial Services (FRFS). Mark also leads the Fed’s strategic improvement efforts for the payments system, including paving the way for the smooth market entry of the new FedNow Service in 2023.

We asked Mark a few questions about the launch of the FedNow Service, and why he is excited to speak at the 2023 Fintech: Innovation, Inclusion and Risks Conference.

1. Can you remind everyone why the Fed is launching the FedNow real-time payments system?
   
   We are building FedNow to be a safe and efficient instant payments platform for all financial institutions in the US. The Fed made the decision to provide this service based on feedback and a call to action by market stakeholders after several years of deliberating on strategies to improve the US payment system. We’ve been deliberate about developing this new service and have involved industry members from the very beginning.

   The launch of the FedNow Service later this year will represent the start of the next transformational wave of change in the US payment system. To reach the goal of availability of instant payments to all Americans, it will require collaboration across the private and public sectors, and the technology and service providers who support the financial industry. This service is the latest example of the Fed carrying out its vital mission to provide a safe, modern, and efficient payment system that works for everyone.

2. How will the FedNow Service lead to a more efficient payment system?
   
   The Fed’s existing financial institution connections and relationships will lay the groundwork for nationwide adoption of instant payments. At scale, the FedNow Service will facilitate an efficient payment system by making instant, irrevocable payments an affordable and accessible option for many types of transactions. The opportunities are really endless – it could speed wage payments to gig workers, enable customers to avoid late fees by paying bills instantly, and create a new payment platform for future innovation by other firms. The FedNow Service will also provide choice in the market for clearing and settling instant payments, as well as promote resiliency through redundancy.
3. What are some of the lessons learned so far from the more than 120 organizations participating in the FedNow Pilot Program?
   
   Listening and learning are integral to broad adoption. The FedNow Pilot Program is providing critical lessons for the development of the service and our industry readiness efforts. Overall, feedback from medium and small financial institutions, including community banks, has highlighted the need for additional industry education on instant payments. We understand financial institutions are at different stages in their journeys, and we want to meet them where they are.

   We’ve also heard from many financial institutions that service providers play a critical role in enabling the implementation of instant payments. So, we’re actively engaging with the broader payments ecosystem to support industry readiness.

   We understand that the FedNow Service is a strategic investment in modernizing payments infrastructure, not only for Federal Reserve Financial Services, but for the financial institution participants as well.

4. Where do you see the FedNow Service in five years, and how do you see it supporting financial innovation?
   
   In five years, I’m hopeful we will be well on our way to achieving ubiquitous availability of instant payments in the US. The Fed doesn’t have the authority to mandate sending and receiving instant payments, so we are working exceedingly hard to articulate the potential benefits of this new platform in conversations with the industry. Then, I fully expect entrepreneurs and creatives in the industry to leverage the FedNow Service as a platform for innovation, maybe in ways we can’t even imagine today. Ultimately, FedNow will be used as an easy button for instant payments across all industries.
5. What are your hopes for the future of the US payments system?
   
   It’s important that no one is left behind when it comes to innovations in payments. Part of our mission in Federal Reserve Financial Services is to operate a safe, modern, and resilient payments system that works for everyone. We need to ensure that access remains an important element of financial services and we don’t lose sight of financial inclusion. I believe the FedNow Service will contribute to increased financial inclusion in this country.
6. What would you like to ask industry participants and academics attending the 2023 Fintech: Innovation, Inclusion and Risks Conference?
   
   Imagine the opportunities with instant payments, innovate with your peers across the industry, and share information and lessons learned along the way. How will your organization harness the power of instant payments? How do you think it will change consumer behaviors? What do you see as the greatest advantage of instant payments?

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