A FedNow instant payment (US, 24/7/365)
Riya sends USD 300.00 to Arjun on a holiday and he can spend it within seconds — the Federal Reserve settles the payment on its own, immediately and finally, in central-bank money.
Your notes
Riya instructs an instant payment
Riya (customer) → Bank Alfa (sending bank)
Riya asks Bank Alfa to send USD 300.00 to Arjun on a public holiday. FedNow runs 24/7/365, so there is no cut-off or waiting for a business day — but nothing has moved yet, this is only a request.
Step 1 of 7: Riya instructs an instant payment
- 02ProcessingBank Alfa checks its master account and screensBank Alfa (sending bank)
- 05SettlementFedNow settles the payment individually and finallyBank Alfa (sending bank) → Nordbank (receiving bank)
- 06PostingBank Alfa debits Riya's accountBank Alfa (sending bank)
- 07PostingArjun is credited and can spend at onceNordbank (receiving bank)
Full step-by-step text (works without JavaScript)
- 02ProcessingBank Alfa checks its master account and screensBank Alfa (sending bank)
Bank Alfa validates the payment, screens it for sanctions in real time, and confirms it holds enough prefunded balance in its Federal Reserve master account to cover the outgoing amount. On an instant rail these checks must finish in seconds.
Screening checkpoint: Real-time outbound screening — An instant payment settles with finality and cannot be recalled, so screening happens before the payment is submitted — there is no batch window to catch it later.
- 05SettlementFedNow settles the payment individually and finallyBank Alfa (sending bank) → Nordbank (receiving bank)
On the positive answer, the Federal Reserve debits Bank Alfa's master account and credits Nordbank's master account for this one payment, in central-bank money. Settlement is immediate, gross (one payment at a time, no netting), and irrevocable.
- DR Bank Alfa's master account at the Federal Reserve — USD 300.00
- CR Nordbank's master account at the Federal Reserve — USD 300.00
- 06PostingBank Alfa debits Riya's accountBank Alfa (sending bank)
With the interbank leg settled in central-bank money, Bank Alfa books the final debit against Riya's account. Because her bank had prefunded the master account, there was no credit risk in getting here.
- DR Riya's account at Bank Alfa — USD 300.00
- 07PostingArjun is credited and can spend at onceNordbank (receiving bank)
Because the settlement across the master accounts is already final, Nordbank credits Arjun immediately and he can use the money within seconds — even on a holiday, unlike a batch ACH transfer that would settle on a later business day.
- CR Arjun's account at Nordbank — USD 300.00
What this simplifies: One payment settling gross in central-bank money. Real FedNow operation depends on continuous prefunding of the Federal Reserve master account, liquidity management, and exception handling omitted here.
Sources for this flow2
- Official requirement
FedNow Service ↗ — Federal Reserve Financial Services
FedNow settles each payment individually and finally in central bank money, unlike the batch, deferred-net ACH network.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
What this simplifies: Fictional banks and customers and a single small payment; real FedNow flows involve liquidity management across the day, participant onboarding, and operational limits not shown here.
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.