ABA: Fed Must Prioritize Interoperability in Development of FedNow

As the Federal Reserve develops its own faster payments system, it must focus on ensuring interoperability between the existing RTP Network, rthe American Bankers Association said in a statement for the record submitted ahead of a Senate Banking Committee hearing today.

“FedNow must be interoperable with RTP on day one,” ABA emphasized. “Otherwise banks would be forced to operate duplicative real-time payment systems in order to service all of their customers. FedNow and RTP should start working today to enable interoperability.”

The association added that as it moves ahead with FedNow—which is not expected to be operational until 2023 or 2024—the Fed should ensure that the system remains accessible only to chartered financial institutions; develop a liquidity management tool to help financial institutions manage fund balances in a real-time environment; ensure equitable pricing with no volume discounts; work closely with core service providers to facilitate rapid implementation; and strive to get FedNow operational and interoperable on an accelerated timeline.