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Tyfone CCO Debunks ‘Myths’ Surrounding FedNow Platform

An Interview with Marcell King, Chief Commercial Officer, Tyfone


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Tyfone CCO Debunks ‘Myths’ Surrounding FedNow Platform


A handful of myths are still keeping some financial institutions from adopting FedNow, but as consumers increasingly demand access to instant payments, banks and credit unions will likely need to get on board.

And that already seems to be happening.

The Federal Reserve's instant payments network launched in July, and 300 financial institutions had enrolled by the end of 2023. But that number grew dramatically in the following three months and now totals more than 600.

The benefits of FedNow cut across multiple demographic groups, recipients say. The speed and convenience appeal to younger consumers who are accustomed to instant gratification, but it also appeals to other groups – such as retirees – who want immediate access to government benefit funds.

And many of the reasons cited by those institutions that have been hesitant to enroll are easily debunked, said Marcell King, chief commercial officer for Portland, Oregon-based Tyfone, a digital banking company and certified service provider of the FedNow service.

Tyfone partnered with the $10 billion-asset Star One Credit Union in Sunnyvale, California, to initiate the first-ever transaction on FedNow, just moments after the platform’s go-live.

“There are some key challenges for institutions in adopting FedNow,” King said. “So it’s important for institutions to understand how to overcome them.”

King said most of the 600-plus financial institutions using FedNow are doing it as receive-only, and Tyfone believes that is a good way to get started on the platform so that account holders can receive money faster.

Some FIs worry that their core processors will not easily integrate FedNow into their systems, and King said some institutions have expressed concerns that their core is not ready or does not operate in real time.

“In actuality, the connection to the core for a third-party service provider is probably the easiest connection across any digital platform,” King said.

To receive payments, FedNow requires only the ability for the provider to move money in real time from a general ledger account to the recipient’s account.

 “That’s it,” King said. “It’s a very simple, lightweight integration to the core.”

Some financial institutions are also still trying to figure out what the FedNow payment rail can do. That lack of understanding of how use-cases are applied to FedNow is an issue, but King said they are no different than use-cases for ACH except that the system is moving and settling money in real time versus in one to three days.

“So if I’m a Star One Credit Union member and I want to move money from my Star One account to, say, Wells Fargo, I can instantly move money using A2A,” King said.

Other use cases include payroll, bill payment and insurance disbursements that are currently made by check or ACH.

Additionally, some employers – including healthcare companies – are offering “instant” earned-wage access at the end of the day for services provided to patients.

“There are existing use cases that these institutions are using for ACH traditionally, and this just replaces the ACH rail with an instant-payment and settlement,” King said.

Some financial institutions also worry that faster payments equals faster fraud, but King said although that can be true without the right fraud management tools in place, it is largely a myth.

Those tools may include a “cool-off period” when a new recipient or a new email address is added or the sender’s credentials have been changed.

“What we’re finding is that because of how we’ve set up our layered approach to fraud mitigation, we’re getting these institutions much more comfortable,” King said. “Our ability to set a lower threshold if one of these triggers takes place has helped Star One minimize fraud.”

Since implementing FedNow, Star One has in fact experienced a staggering 53% reduction in fraud on a dollar-to-dollar basis compared to ACH transactions.

Some FIs also worry about FedNow's service provider price tag.

It can cost between $25,000 and $100,000 to get the FedNow system up and running through some third-party providers, but Tyfone has built an economic model that allows any FI in the country to be a player on the platform. Tyfone does not charge up-front fees or for receive-only transactions, King said.

“We want to enable every institution in the country to have access to FedNow, so our pricing is extremely economic compared to the rest of the market,” King said.

King expects that perhaps as many as 2,000 financial institutions will be certified for FedNow by the end of 2024, as some institutions may now be experiencing “FOMO” due to the rapid growth of institutions joining FedNow. In fact, King said a $50 billion-asset bank reached out to Tyfone recently for information about getting enrolled.

“Some of these larger, regional institutions that have held off are starting to think about this because they have commercial customers who are looking for faster money movement,” King said.

Reconciliation issues with FedNow are also a concern raised by some institutions, but King said it is actually an operational benefit realized by the FIs because they don't have to reconcile exceptions. 


With FedNow, the transaction clears and settles instantly or it rejects instantly. There are no returns, NOCs, NSFs, or unauthorized debits that create additional back-office overhead to reconcile transactions, he said.

But why are they choosing Tyfone among the many providers in the space?

King said the company offers a comprehensive, end-to-end extensible gateway that has made Tyfone the third largest originator on the network.

According to King, other firms offer more “bare bones” solutions that don’t match Tyfone’s best-in-class fraud management tools.

“We’ve built out the entire platform to support an institution that wants to start small but grow its use cases across its entire ecosystem,” King said.

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