Federal Reserve Building in Washington, D.C. (Source: Shutterstock)
The Federal Reserve's FedNow service is desperately needed and should be implemented as soon as possible, credit union trade groups said.
"The development of FedNow is imperative to the continued success of credit unions, and likely the only way that all credit unions will be able offer Americans of modest means critical financial services in the future," Lance Noggle, CUNA's senior director of advocacy and senior counsel for payments and cybersecurity told the Fed, in commenting on the proposal.
Recommended For You
"Given strong credit union support for FedNow's development, NAFCU encourages the Board and the Reserve Banks to expedite delivery and launch at the earliest possible date," said Andrew Morris, NAFCU's senior counsel for research and policy.
Once implemented, the Fed has said the service would allow customers to send and receive payments at financial institutions instantly. The Fed has been soliciting comments on the proposal.
The Clearing House, a company owned by the largest commercial banks, offers a quick-payment service, but Noggle added that credit unions have little control over the company.
"The 25 or so banks that own TCH can dominate real-time payments policy and operation if TCH is the sole operator of a real-time payments network," he wrote. "While TCH has created an advisory committee for credit unions and community banks, these institutions have no ownership of TCH and no formal voice in its operation."
Credit unions also are concerned about the cost of the service.
"For credit unions, the decision to participate in the FedNow Service will largely depend on member demand and pricing terms, variables which are difficult to quantify at present," according to Morris.
But a House Republican contends that the Fed must do a better job of demonstrating the need for the service before its can be allowed to proceed.
"If the Federal Reserve does decide to enter the faster-payments space they need to explain why in a thorough and transparent manner," said Rep. Denver Riggleman (R-Va.).
Riggleman has introduced legislation that would require the Fed to justify the service before it is implemented.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
