The FedNowSM Service

Technical Overview and Planning Guide

April 24, 2023 | Version 1.0
 FedNowSM Service Technical Overview and Planning Guide

Table of Contents
Introduction................................................................................................................................ 3
Purpose..........................................................................................................................................................3
Audience........................................................................................................................................................3
Part One: Get to Know the FedNow Service................................................................................ 4
Features and Benefits...................................................................................................................................4
Customer Payment Flow...............................................................................................................................5
Part Two: Technical Overview..................................................................................................... 7
FedNow Service Network Architecture.........................................................................................................7
FedNow Service Profiles and Components...................................................................................................8
MQ Connectivity and Queues.........................................................................................................................9
24x7x365 Availability and Resiliency.............................................................................................................9
Designing Client Applications.................................................................................................................10
Security and Controls..................................................................................................................................10
FedNow ISO® 20022 Service Messages.......................................................................................................11
FedNow Service Usage Guidelines..........................................................................................................11
Additional Resources on MyStandards®..................................................................................................11
Message Signing..........................................................................................................................................11
Public/Private Key Pair Creation.............................................................................................................11
Key Pair Registration, Management and Confidentiality........................................................................11
Part Three: Technical Considerations...................................................................................... 12
Impact to Internal and External Systems....................................................................................................12
Fraud and Risk Mitigation............................................................................................................................13
Glossary................................................................................................................................... 14

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 FedNowSM Service Technical Overview and Planning Guide

Introduction
The FedNow Service is an interbank, 24x7x365 real-time gross settlement (RTGS) service with integrated clearing
functionality. The service allows participants to deliver end-to-end instant payments to their customers.

Like other payment and settlement services offered by the Federal Reserve Banks, the FedNow Service settles
obligations between participating financial institutions through debits and credits to balances in their master accounts
or those of their correspondents at the Federal Reserve Banks. The FedNow Service allows financial institutions to
enable their customers to send and receive payments instantly.

Purpose
The purpose of this guide is to provide an understanding of the technical aspects of the FedNow Service so financial
institutions can make decisions about adopting the service, which may include:

Whether to connect directly Assessing the impact Determining

with the service or through a on internal systems and the cost of adopting
Service Provider business processes the service

We recommend obtaining clear business requirements from the business operations staff at your financial institution.
This can save valuable time and allow your financial institution to focus when determining the primary use cases and
requirements of the organization.

Audience
The target audience for this guide is senior and lead developers, managers and system architects who are
experienced with software development life cycle (SDLC) and have the technical knowledge to design and integrate
payment products.

It may also be helpful for business and product staff to review this document to determine how best to support
planning activities during FedNow Service implementation.

TIP: This guide may also be useful to other industry providers interested in using the FedNow Service through
a financial institution partner, or to create and offer a variety of instant payment solutions.

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 FedNowSM Service Technical Overview and Planning Guide

Part One: Get to Know the FedNow Service

This section introduces the FedNow Service, and includes:
Features and benefits | Customer payment flow

Features and Benefits

FINANCIAL INSTITUTIONS INDIVIDUALS BUSINESSES

Remain competitive, create new Instantly send and receive money Gain better control of cash flow
products and meet the needs with confidence and reduce the management, improve efficiency of
of customers risk of overdraft and late fees corporate payments and streamline
reconciliation processes

INITIAL FEATURES AT LAUNCH

Feature Description

• Instant payments, 24x7x365 availability.

• Core clearing and settlement capabilities with credit transfers completing in seconds.
Service level • A FedNow Service interface via FedLine® Solutions for Participants to support reports and
queries, and manage configurations.
• Access to balance information around the clock, activity reports available on demand or end of day.

• FIs can settle using their own master account or a correspondent’s master account.
• Configurable features for each routing transit number (RTN) enabled, such as the ability to send
and receive customer transfers, receive requests for payments, support liquidity management
Flexibility
transfers and support settlement services for other financial institutions.
• Connectivity to the FedNow Service through a FedLine Solution directly or through a Service Provider.
• Support for a variety of credit transfer use cases.

• Encryption of all data flows.

• Features to support message integrity and data security, including message signing.
Security • Ability to have multiple keys in rotation.
and risk • Tools to help combat fraud, such as a transaction value limit and the ability to reject
mitigation transactions for specific accounts.
• Network-level maximum transaction value limits, which may be adjusted over time
(Participants may configure transaction limits that are equal to or below the network limit).

• Rich data supported within ISO 20022 messages (for example, the option to include remittance
information in payment messages and request for payment messages).
• Financial-institution-to-financial-institution liquidity management transfers in support of
Efficiency and instant payments.
transparency • Use of the widely accepted ISO 20022 standard and other industry best practices to support
interoperability.
• Broadcast messages notifying of changes to Participant availability to receive credit transfers,
as well as a list of participating RTNs.

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 FedNowSM Service Technical Overview and Planning Guide

Customer Payment Flow

One of the primary advantages of the FedNow Service is its ability to clear and settle transactions in real time — allowing
financial institutions of all sizes to enable their customers to instantly send and receive money.

Follow a customer payment from start to finish by referring to the step-by-step overview of the FedNow Service
payment process below.

within seconds

4
1 Sender FI 2 FedNow 5 Receiver FI
8 7 Service 7 8
Reserve Banks
10 9 9
Sender Receiver
6
End User Service Provider Service Provider End User
Interface Settlement Interface
Master Account

Correspondent Account

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 FedNowSM Service Technical Overview and Planning Guide

STEP 1 – Initiation: The sender (an STEP 7: The FedNow Service sends
individual or business) initiates a payment an advice to the receiver financial
with their financial institution through institution and an acknowledgement to
an end-user interface outside of the FedNow Service. the sender financial institution, notifying each that
The FedNow Service sender financial institution is the Federal Reserve Banks settled the credit transfer.
responsible for validating the payment according to its Correspondents enabled within a FedNow Service profile
internal processes and requirements. may choose to receive a notification of debit/credit entries
(camt.054).
STEP 2: The sender financial institution
submits a credit transfer message (pacs.008) STEP 8: The receiver financial institution
to the FedNow Service. makes funds available to the recipient
immediately after step 7.
STEP 3: The FedNow Service validates the
In communicating with the recipient, the receiver
payment message — for example, by verifying
financial institution should immediately notify its
that the message meets proper format
customer following receipt of an advice and may use any
specifications and complies with applicable
reasonable means of communication that is consistent
controls.
with their customer agreements, including standard
channels for which the recipient is enabled.
STEP 4: The FedNow Service sends the
contents of the payment message to the
STEP 9 – Confirmation of posting: The
recipient’s financial institution to seek
receiver financial institution has the option
confirmation that the receiver’s financial
of sending a message through the FedNow
institution intends to accept the payment message. At
Service to the sender financial institution
this point, the receiver financial institution determines
indicating that the payment has been
how it will handle the message (accept, reject or accept
posted to the recipient’s account.
without posting (ACWP)). The receiver financial institution
should use this step to determine whether it maintains an
STEP 10: If the receiver financial
account for the recipient identified in the contents of the
institution sends a confirmation of
payment message.
posting message through the service,
the sender financial institution should notify its customer
STEP 5 – Confirmation: In this example flow,
that the funds have been made available to the recipient.
the receiver financial institution sends a positive
response of “accept” to the FedNow Service,
Note: The FedNow Service will limit
confirming it intends to accept the payment message.
processing of payments to 20 seconds and
will settle within this set amount of time or
STEP 6: The FedNow Service settles
not at all. While the Federal Reserve Banks
the payment, debiting and crediting
expect most payments to settle in a few seconds, well
the designated master accounts of
below the maximum allowable limit, the payment timeout
the sender financial institution and
clock sets expectations for financial institutions that
receiver financial institution (or of their correspondents),
transactions submitted to the service will be settled or
respectively. Steps 2-6 are expected to complete within a
rejected almost immediately.
few seconds but will take no more than 20 seconds.

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 FedNowSM Service Technical Overview and Planning Guide

Part Two: Technical Overview

This section provides a technical overview of the FedNow Service, including key information about the architecture and
components that comprise the system. This is important information for financial institutions to understand as they
assess and plan for adoption of the service.

FedNow Service Network Architecture

The FedNow Service, like the other Federal Reserve payment systems, is accessible via communication channels
provided by the Federal Reserve Banks’ FedLine Solutions. Access to the FedNow Service is available over a dedicated
wide area network (WAN) or a virtual private network (VPN) connection over the internet.

Participating financial institutions have various options to connect with the service, including connecting directly with
Federal Reserve Bank Services using their own FedLine Solutions or connecting via a Service Provider.

Participants exchange messages with the FedNow Service using an IBM® MQ client. Participants use an IBM MQ client
library to connect remotely to FedNow MQ servers over the FedLine Solutions. The FedNow MQ environment operates
as a single cluster across sites, allowing Participants to connect to a server at any site.

Customer Zone Federal Reserve Banks Zone

VPN Device FRB Payments
Application
CUSTOMER FIREWALL

Internet
FRB FIREWALL
Customer
Payments Application FRB Endpoint
and MQ Client

Wide Area
Network

Dedicated FRB Endpoint

WAN Router
Other Desktops Including FRB Middleware
FedLine Advantage Servers

FRB-Issued Certificate-Based Authentication FRB-Issued

Digital Certificate and TLS Encryption Digital Certificate

FRB – Federal Reserve Banks WAN – Wide Area Network VPN – Virtual Private Network TLS – Transport Layer Security

For more detailed information on connecting to the FedNow Service via FedLine Solutions, refer to the
FedNow Service Guide to FedLine Connectivity on FedNow Explorer.

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 FedNowSM Service Technical Overview and Planning Guide

FedNow Service Profiles and Components

To understand the messaging flows and connectivity requirements of the FedNow Service, it is important to first
understand the elements that comprise the FedNow Service participation and connectivity model.

Element Description

The Authorized Connection Profile defines FedNow Service connectivity settings used to
access the FedNow interface and send or receive messaging via the FedNow Service, on
behalf of one or more Participants (represented as RTNs). All Participants are required to
have an Authorized Connection Profile or to be connected to one via a Service Provider(s).

Each Authorized Connection Profile consists of:

Authorized
Connection Profile A Connection Party | A Connection Point | Queues (endpoints)

A Connection Party is a conceptual entity that owns connectivity to the FedNow Service and is
authorized to send and receive messages, as well as log in to the FedNow interface.

A Connection Party is mapped to one or more Participant Profiles. Each mapping carries
specific permissions that control what functions the Connection Party can execute on behalf
Connection
Party of the Participant Profile.

A Connection Point is a logical grouping of endpoints (queues), which is owned by a

Connection Party. A Connection Point represents a site or location from which a Participant
connects to the FedNow Service. Consequently, a Connection Party can own one or more
Connection Points. A Connection Point holds a set of endpoints (queues) over which the
Connection
Point Connection Party exchanges messages with the FedNow Service.

A Participant Profile is required for each RTN that a Participant uses to send and/or receive
payments and messaging through the FedNow Service, regardless of whether they connect
to the FedNow Service directly or via a Service Provider(s). Each RTN is associated to a
single Participant Profile, and there can be multiple Participant Profiles per institution.
The Participant Profile defines the settings and features in the FedNow Service that are
Participant
Profile enabled for each RTN.

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 FedNowSM Service Technical Overview and Planning Guide

MQ Connectivity and Queues

FedNow Operating Site

PARTICIPANT A – Data Center 1

Payments App
FedLine
MQ Connection Point
Client
IBM MQ
FLD

FLD FedNow
IBM MQ Service
PARTICIPANT B – Data Center 1

Payments App
MQ FLA IBM MQ
Client

FLA

FLD – FedLine Direct FLA – FedLine Advantage

For the first release of the FedNow Service, the application-to-application flow shown above supports an asynchronous
messaging-based paradigm, implemented using IBM MQ. The FedNow Service hosts a cluster of IBM MQ queue
managers, and the payment applications operated by Participants or their Service Providers interact directly with the
queue managers to put and get messages, using an embedded IBM MQ client library.

Each Participant connecting directly to the FedNow Service has dedicated queues hosted by the FedNow Service MQ
queue managers. Queues are defined as either “to FedNow” (OUT queues) or “from FedNow” (IN queues) to indicate
the direction of the messages. The naming pattern for OUT queues is controlled by the FedNow Service. The naming
pattern for IN queues allows for customization by a Participant.

24x7x365 Availability and Resiliency

The FedNow Service is designed for 24x7x365 availability and resiliency, while maintaining transparency to connected
Participant systems or their Service Providers. Client systems do not need to enable operations to resume if a FedNow
Service component fails. While the FedNow Service operates at multiple locations (separated by large distances), it
appears to the client as a single target for connectivity.

Resiliency is achieved through multiple layers of redundancy at all tiers between the client and FedNow Service
applications. If a component fails along the communication path, the connection is dropped, but the client should
immediately reconnect. New connection requests are routed by surviving components to one of the FedNow Service
queue managers.

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 FedNowSM Service Technical Overview and Planning Guide

Designing Client Applications

When designing client applications to operate in a 24x7x365 environment:
• Ensure that processes consuming messages from the FedNow Service queues are long-running services that
use persistent connections, potentially by using pooled connections. This helps to ensure optimal performance
in configurations of clustered FedNow Service MQ queue managers.
• Participants are allowed to have multiple connections open and are expected to make use of concurrent
connections to send and receive messages to meet their performance needs.
• Participants should consider solution designs that decouple the processing of messages received from the
FedNow Service from the FedNow Service MQ servers. This can be achieved by creating a layer that quickly
pulls messages from FedNow Service queues and stores them locally onto a messaging, streaming or other
storage solution, where the actual business processing can occur.

Security and Controls

The FedNow Service relies on multiple layered controls to ensure a high level of security for its operations, including:
• Security measures employed by the FedLine Solutions network on which the FedNow Service runs.
• The FedNow Service uses mutual Transport Layer Security (TLS) for authentication. Participants use FRS-
issued client certificates to perform the mutual TLS authentication.
• The FedNow Service validates that the entities referenced in the message are allowed to use the queue on
which the message is received.
• The FedNow Service requires all messages to be cryptographically signed. The service validates the signature
and association between the entity sending the message and the key used to sign it.

NOTE: Participants are expected to use internal security and control measures and adapt them as needed
so they are sufficient to handle the requirements of a real-time payment system.

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 FedNowSM Service Technical Overview and Planning Guide

FedNow ISO 20022

Service Messages
FedNow Service messages comply
with ISO 20022 standardized
metadata and types to ensure
compatibility with other messaging
systems. FedNow Service messages
can carry a variety of payloads
defined by the ISO 20022 standard.

FedNow Service Usage

Guidelines
While the FedNow Service supports the standard ISO 20022 types, similar to other real-time payment systems, the
service provides usage guidelines and rules to support technical and connectivity requirements, while maintaining
formal compatibility with the original standard. The guidelines and rules are provided in the form of FedNow Service
enhanced schemas of the ISO messages (XSD files).

Additional Resources on MyStandards®

The MyStandards platform houses current ISO 20022 message specifications, an implementation guide and message
flows for the FedNow Service. The FedNow ISO 20022 Readiness Portal on MyStandards offers a place to test
compliance of messages. It’s easy to set up a free account and available to anyone who registers. A step-by-step guide
is available to help access MyStandards.

Message Signing
The Federal Reserve Banks require messages exchanged with the FedNow Service to be cryptographically signed
using asymmetric public and private key pairs. Keys in a key pair are mathematically related and are used to sign and
validate the signature on messages. Digital signatures help the receiver verify that a message originated from the
sender and that the message content is unchanged.

Public/Private Key Pair Creation

Participants create public and private key pairs with specifications defined by the FedNow Service. Participants can
generate key pairs using any key management service or standard enterprise protocol, such as OpenSSL or Java.

Key Pair Registration, Management and Confidentiality

Participants must register their public keys with the FedNow Service. First-time key registration is done by uploading
the initial key through the FedNow interface. Subsequent key registrations can be done by exchanging messages with
the service using the FedNow Service MQ queues.

Keeping track of public keys stored in the FedNow Service and keeping the key store up to date with active keys helps
to prevent issues arising from rejected connections due to expired keys.

NOTE: Participants must maintain the confidentiality of their private keys consistent with the Federal Reserve
Banks Operating Circular 8 and any other agreement with the Federal Reserve Banks, which impose confidentiality
or information security obligations on a FedNow (Service) Participant and/or its Service Providers.

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 FedNowSM Service Technical Overview and Planning Guide

Part Three: Technical Considerations

Financial institutions considering adoption of the FedNow Service need to make decisions about possible changes to
their technology, services and software ahead of implementation. This includes internal systems and those managed
by external partners.

Financial institutions are strongly encouraged to assess their existing platforms, products and functionality based
on planned services, users and capabilities for instant payments. In some cases, FedNow Service specifications and
business policies and programs may require upgrades to ensure systems can meet expectations.

To facilitate these conversations, it may be valuable for the business to identify which customers and accounts will be
enabled to perform specific functions within the service — for example, who will be able to receive or send transactions.

NOTE: The information provided here is not intended to be comprehensive. Rather, the goal is to jump-start
planning and facilitate outreach and conversations with your organization’s internal and external partners.

Impact to Internal and External Systems

Financial institutions should review their plans for the FedNow Service with internal and vendor solutions to assess
the current and desired function of each system and the timing of relevant activities when migrating to 24x7x365
availability. Questions to consider may include:
• Which internal and external solutions may be impacted by instant payments? What is the plan to manage real-
time processing?
• What additional capabilities are needed to handle real-time processing?
• Will downstream applications need to operate on a 24x7x365 basis?
• Consider whether back-end systems designed for batch files can be prepared to support message-based
payment processing. Can they be used as part of the instant payments ecosystem? Systems affected include
core banking, fraud prevention and sanction screening systems.
• Will additional authentication protocols be needed to support instant payments? What other impacts might
there be on customer interfaces such as online banking, mobile apps and interactive voice response?
• What will the impact be on interfaces used by support teams?
• Will current interfaces enable a user to report fraud or a mistake, like a duplicate payment?
• What alerts, notifications or other information relative to instant payments will be made available to customers?
Are systems set up to alert customers of payments received or other status messages and to meet anticipated
requirement to make funds available immediately?
• Is there a plan to offer real-time payment services to customers via a user interface or mobile application? Will
the UI or mobile application be built in house or will the work be outsourced?
• How will the FedNow Service integrate with the organization’s current architecture (e.g., core banking system,
payment systems, fraud and online banking)?
• What changes may be needed on statements, reports, data extracts or other information sources?
• If using Service Providers, what tools and support will they provide to facilitate integrating the current
architecture and the solutions of other Service Providers, if needed?
• What contingency arrangements are needed to mitigate service disruptions?

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 FedNowSM Service Technical Overview and Planning Guide

Fraud and Risk Mitigation

Implementing a real-time payment system requires enhanced capabilities for fraud screening,
as transactions are settled in a matter of seconds and are irrevocable. Participants are expected
to use internal security and control measures and adapt them as needed so they can sufficiently
handle the requirements of a real-time payment system.

Consider the following:

• Review your fraud and risk programs or opportunities to leverage existing capabilities and determine necessary
adjustments to meet the demands of instant payments.
• Threat detection and recovery models: How will the riskiness of a transaction be assessed, including the decision
to proceed with the transaction or require additional verification?
• Employ systems or tools that can analyze and manipulate incoming transactional data in real time, 24x7x365, to
prevent fraudulent transactions from starting (or completing).
• Use strong authentication measures.
• Alerts and notifications may be powerful tools to help customers stay aware of account activity.

TIP: Fraud must be reported using the FraudClassifierSM model, which can provide a better understanding of
current and emerging fraud trends across multiple payment types, help spot trends early, and identify
similarities or differences between cases encountered.

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 FedNowSM Service Technical Overview and Planning Guide

Glossary
Term Description

A profile that defines connectivity settings to the FedNow Service for a

Authorized Connection Profile
Participant or Service Provider, which are used to process and manage
(ACP)
messages and payments on behalf of one or multiple RTNs.

A role played by a Participant that maintains an electronic connection

Connection Party to the FedNow Service through which the organization enables one or
more RTNs to access the FedNow Service.  

The grouping of endpoints maintained by a Participant in their role as a

Connection Point
Connection Party that enables them to communicate with the FedNow Service.  

A financial institution (FI) that maintains a Master Account with a Federal

Correspondent Reserve Bank and has agreed to maintain a Settlement Account for another
FedNow Participant.

A communication facility used to exchange data between a Federal Reserve Bank

and an institution or its Service Provider. The term includes but is not limited
to an internet, extranet, wireless, wide area network (“WAN”), local area
Electronic Connection
network (“LAN”), or other data connection, and a connection for which access,
authentication, or authorization is controlled by use of one or more Access
Control Features. See also “Service Provider.”

A financial institution authorized by a Federal Reserve Bank to send, receive or

Participant
settle messages through the FedNow Service.

Messaging solution used to send and receive data as messages between

IBM MQ
applications, services and systems.

A set of security credentials, composed of a public key and a private key used
Key Pairs
to verify identities.

The record of financial rights and obligations of an account holder and the
administrative Federal Reserve Bank with respect to each other, where
Master Account
opening, intra-day and closing balances are determined. A Master Account is
identified by a primary RTN.

Any message (whether a value or nonvalue message), notice or other

communication sent, received, processed or otherwise transmitted through the
Message
FedNow Service. A message includes any Advice of Credit (including a payment
order), Acknowledgement, Rejection and Nonvalue Message.

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 FedNowSM Service Technical Overview and Planning Guide

Term Description

Security protocols that verify the integrity and authenticity of the message sent
and received through the service, providing confidence the message received
Message
was the same as what was sent. Digital signatures do this by generating a
Signatures
unique hash of the message or document and encrypting it using the sender’s
private key.

Messages sent through the FedNow Service that do not generate an accounting
entry. A nonvalue message is a request pertaining to the details or status of
Nonvalue
an instant payment message, request for reporting, or message retrieval of
Messages
any kind which can either be sent from a Participant to the FedNow Service or
exchanged between a Sender FI and Receiver FI.

A Participant Profile is required for each RTN a financial institution uses to

send and/or receive payments and messages through the FedNow Service,
regardless of whether they connect to the FedNow Service directly or via
Participant
Service Provider(s). Each RTN is associated to a single Participant Profile,
Profile
and there can be multiple Participant Profiles per institution. The Participant
Profile defines the settings and features in the FedNow Service that are
enabled for each RTN.

The FedNow Service uses queues to send and receive messages. Queues are
Queue (Endpoint) defined as either “to FedNow” (OUT queues) or “from FedNow” (IN queues) to
provide clarity on the direction of the messages.

Real-time Gross Settlement A payment system that settles payment instructions immediately on a
System (RTGS) transaction-by-transaction basis.

Routing Transit Number A nine-digit number associated with a principal office used when clearing
(RTN) funds or processing checks.

An agent of a FedNow Participant authorized to do one or more of the following

on the FedNow Participant’s behalf: initiate, transmit or receive messages on
behalf of that FedNow Participant; operate or otherwise manage the Electronic
Connection used to send or receive messages on behalf of that FedNow
Service Provider
Participant; select the security procedure, profile settings or processing
options on behalf of that FedNow Participant; or obtain access to information
related to the FedNow Participant through the FedNow Service. See also
“Electronic Connection.”

Value messages are pacs.008, pacs.004 and pacs.009 messages sent as

Value Message
payment orders through the FedNow Service.

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© 2023 Federal Reserve Banks. Materials are not to be used or shared without consent.

The FedNowSM Service Technical Overview and Planning Guide is provided to help Participants,
Service Providers and others as they prepare for the FedNow Service. This guide may change from
time to time, including as the Federal Reserve Banks obtain feedback from various stakeholders.

To the extent a FedNow Service Participant uses a Service Provider(s), requirements in the
FedNow Service Technical Overview and Planning Guide, otherwise applicable to FedNow
Service Participants, also apply to the Service Provider when it performs functions as an agent
on behalf of a FedNow Service Participant.

The terms governing the FedNow Service will govern to the extent of any inconsistency between
the Technical Overview and Planning Guide and those terms. This guide does not create new
obligations for the Federal Reserve Banks and the standards outlined in it do not confer or
connote legal status or responsibilities of any party to a funds transfer through the service under
applicable law.

The Federal Reserve Financial Services logo, “FedNow” and “FedLine” are service marks of the
Federal Reserve Banks. A list of marks related to financial services products offered to financial
institutions by the Federal Reserve Banks is available at [Link]. The Federal Reserve
Banks do not sponsor, endorse, recommend, or provide any warranties, express or implied,
regarding any third party or any third-party products or services referenced in this guide.