Congressmen Urge Federal Reserve to Mandate Real-Time Payments
Earlier this week, four members of the Congressional Black Caucus sent a letter to Federal Reserve Chairman Jerome Powell urging the federal agency to mandate real-time payments. This is becoming an increasingly important issue among Democratic Congressmen.
In their letter, the four congressmen state that “a preponderance of evidence already exists that highlights the overwhelming public benefit of a faster payments system … The increased prevalence of overdraft fees, high-cost small-dollar credit, and check cashing has cost our constituencies tens of billions of dollars that a real-time payments system would help ameliorate.”
The letter comes on the heels of an August letter sent by Senator Chris Van Hollen (D-MD) to Chairman Powell expressing his concern for the lack of a real-time payments system. “The United States’ outdated payment system imposes significant and unnecessary costs on Americans, leading consumers to incur billions of dollars a year in fees associated with the delayed movement of funds,” said Hollen. “These costs are primarily borne by the millions of American families who live paycheck-to-paycheck, while they are rarely, if ever, applicable to wealthier families who never approach the lower bounds of their bank account.”
Calls for faster payments have not only come from Congressional Democrats, but also the Trump Administration. The U.S. Treasury Department issued a report in July urging the Federal Reserve to develop a real-time settlement service.
In response, the Federal Reserve issued a request for comments specifically seeking input on “a service for 24x7x365 real-time interbank settlement of faster payments; and a liquidity management tool that would enable transfers between Federal Reserve accounts on a 24x7x365 basis to support services for real-time interbank settlement of faster payments” and whether these actions would “help achieve ubiquitous, nationwide access to safe and efficient faster payments.”
For those interested, all comments must be received before December 14, 2018. Interested parties can submit comments here.