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Sure but AFAIK FedNow is not going to hold funds or authority to payback or revert "fraudulent" transactions?

If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?

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These are called ACH return codes and are similar to disputes on credit card.

Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant.

However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.

The bank usually handles initiating reversals, not the payment processor. Though FedNow may not have the API to facilitate them easily, not sure on that.

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