The Federal Reserve Board is seeking public comment on possible solutions to support faster payments in the United States.
Services that provide faster payment allow for on-the-spot payments using a mobile phone application. Payments can be sent and received at any time of the day, on any day.
The Fed is considering two potential actions to support the concept of faster payments. One is to develop a service for real-time interbank settlement of faster payments 24 hours a day, seven days a week, 365 days a year. The other is the creation of a liquidity management tool that would enable transfers between Federal Reserve accounts at any time, on any day, to support services for real-time interbank settlement of faster payments. The Fed is not committing to one or the other and is seeking public feedback on which is the best option.
“Consumers and businesses increasingly expect to be able to send and immediately receive payments at any time of the day, any day of the year,” Federal Reserve Board Governor Lael Brainard said. “A 24/7 economy with 24/7 real-time payments needs 24/7 real-time settlement. That is where we believe that the Federal Reserve and the private sector together need to make investments for the future.”
Option one, real-time settlement, aligns the speed of interbank settlement with the speed of underlying payments and avoids interbank credit risk. This could enhance the overall safety of the faster payments market. A nationwide, real-time interbank settlement infrastructure, established by the Federal Reserve, could encourage more banks to develop faster payment services.
Option two, the liquidity management tool, could improve the level of participation by banks in a real-time settlement infrastructure for faster payments. This, in turn, would improve public access to faster payment services, by mitigating risk that can arise for banks outside of standard business hours.
Comments are due to the Fed by Dec. 14.