Banker Op-Ed: Lack of Interoperability in Real-Time Payments Could Limit Consumer Choice

As the Federal Reserve moves ahead with the creation of the FedNow real-time payments service, interoperability with existing systems will be critical to ensuring consumer choice, according to an op-ed in Payments Source today. “If we don’t have interoperability on day one, the payments system will become fragmented,” warned Luanne Cundiff, president and CEO of First State Bank of St. Charles in St. Charles, Mo.

Like many institutions, Cundiff faced the dilemma of joining the Clearing House’s RTP network—a solution available now—or waiting for the Federal Reserve or another private entity to deliver another product. Ultimately, the bank decided to begin working with its core provider to plug into RTP in order to meet customers’ needs, rather than waiting for FedNow, which is not expected to be operational until 2023 or 2024.

Cundiff—who is an American Bankers Association board member and vice chairman of ABA’s Community Bankers Council—emphasized that the Fed should focus on making interoperability an integral part of FedNow as the new system is being developed, rather than attempting to “retrofit” a solution later. “Multiple systems that are not interoperable will make achieving ubiquity impossible, because many banks in this country do not have the capacity to establish multiple rails,” she wrote.