ABA Comments to FRS re the Creation of FedNow

The American Bankers Association appreciates the opportunity to comment on the Notice of the Board of Governors of the Federal Reserve System (Federal Reserve) regarding the creation of a new payments network to support faster payments in the United States, FedNow. ABA supports the adoption of faster payments to meet the needs of consumers and commercial entities throughout the United States. ABA’s members have a long association with technologies that have increased the speed of payments, from wires to card networks and recently-launched real-time payment systems. ABA continues to support the advancement of payment technologies, including accelerating payments in use cases where rapid settlement would benefit bank customers. We believe that a well-executed bank-centric model is essential to provide a valuable and safe payment system for all participants in a transaction. FedNow has the opportunity to encourage the adoption of faster payments across the country.

The Federal Reserve has been active in working with the industry to improve the payment system since 2013. The white papers and the creation of the Faster Payments Task Force by the Federal Reserve have helped to focus industry attention on the need for speedy, yet safe, payment products. One of the results of these efforts has been the creation of the Real Time Payments Network (RTP) by The Clearing House. RTP is a private sector solution that is already processing live transactions. We hope that RTP and FedNow will leverage each other’s solutions to extend faster payments services across the nation with the benefits to be shared by all.

The ABA believes that FedNow can contribute to a better, faster, and safer payment system if implemented correctly. The Notice has identified several areas where comment is sought, and this letter addresses the issues that have been declared the most important by our membership to optimize the payments products and services available to depository institutions and their customers. In general, faster payments products that promote safety, interoperability, and speed to market are encouraged by the ABA membership.

In addition to the specific FedNow related issues called out in the Notice, ABA is providing comments on a separate issue, the Federal Reserve’s stated goal of exploring expanded hours for Fedwire and the National Settlement Service (NSS). Enhancements to these services, including aspiring to 24/7/365 operating hours, would benefit not only faster payments initiatives, but the entire industry.