After years of ICBA-led advocacy on behalf of a real-time payments system that ensures access and choice for community banks, the Federal Reserve on Monday announced plans to build a real-time gross settlement service. The real-time payments system called FedNow is currently being developed and will be available by 2024. The Fed stated it will be “ubiquitous, safe and efficient.” The Fed system will ensure universal access to real-time payments, avoid a megabank monopoly, and encourage innovation that will benefit consumers nationwide. Fed Governor Brainard noted: “FedNow will permit banks of every size in every community across the country to provide real-time payments.”
ICBA President & CEO Rebeca Romero Rainey commented: “ICBA and the nation’s community banks strongly support the Fed’s decision to develop a real-time settlement system. As we have said all along, the Fed is uniquely positioned to provide equitable access to real-time payments. Today’s decision by the Fed will benefit consumers nationwide and serve as a launchpad to future payments innovations. Now, the hard work begins as the Federal Reserve must move quickly to establish the service.” ICBA noted a Fed-operated real-time settlement system will ensure industry-wide access and is consistent with the roles it already serves in providing payments services to nearly 11,000 financial institutions of different sizes and charter types. Fed involvement will also avoid the risk of having only one, for-profit settlement service run by the nation’s largest and riskiest financial institutions. Furthermore, expanding access beyond this private-sector monopoly will encourage innovation and avoid a fragmented marketplace.