Fed releases faster payments proposal during NAFCU-attended forum
As a member of the FedPayments Improvement Community, NAFCU on Wednesday attended its forum in Chicago during which the Federal Reserve released a proposal relating to settlements or other services to address the future needs of a real-time retail payments environment. The Fed is encouraging comments on the proposal – especially from smaller financial institutions, such as credit unions.
The comment period will remain open through Dec. 14.
This settlement proposal is a result of the Fed's efforts to assess settlements. Fed Gov. Lael Brainard delivered a keynote address during Wednesday's forum highlighting this effort. During her speech, she noted that the Fed could develop a service available 24/7 to "provide payment-by-payment interbank settlement in real time and at any time, on any day, including weekends and holidays."
"A 24/7 [real-time gross settlement] service provided by the Reserve Banks could significantly improve the prospect that banks of all sizes will have equitable access to a real-time interbank settlement infrastructure for faster payments in the long term," she added.
NAFCU is reviewing the proposal and will seek members' input.
On Tuesday, NAFCU President and CEO Dan Berger discussed the Fed's efforts to improve real-time payments and the association's encouragement to the Fed to play an operational role in a future, faster payments system with Brainard.
Also discussed during the forum, which was attended by NAFCU Regulatory Affairs Counsel Andrew Morris, were:
- the next steps for the Fed's payment security strategy;
- efforts to align fraud definitions regarding ACH and wire;
- authentication challenges regarding remote payments fraud; and
- opportunities for industry collaboration in cross-border payments.
As the Federal Reserve seeks to update the payments system, NAFCU has ensured that the credit union perspective on any advancements is taken into account. NAFCU has served on both the Fed's Faster Payments and Secure Payments Task Forces, which were formed as a part of the Fed's "Strategies for Improving the U.S. Payment System," since their inception in 2015. The conclusion of those task forces led to the development of the FedPayments Improvement Community.
NAFCU continues to be in constant communication with the Fed regarding its work to make the payments system faster and more secure; the association met last week with Fed staff to discuss the strategy for achieving more secure payments. NAFCU has also urged the Fed to stay away from a "one size fits all" approach to the payment system's future. It will continue to represent the credit union industry's best interests in this process.
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