In a letter today, American Bankers Association offered several recommendations for the Federal Reserve to consider as it continues to develop its FedNow service. The letter came after the Fed last month released further details about key features of its “initial service offering,” including fraud prevention, liquidity management and interoperability.
ABA continued to emphasize the need for the Fed to pursue interoperability with private-sector solutions, “even if it is not realistic at FedNow’s launch.” Among other things, ABA called on Fed to strengthen its commitment that only chartered, regulated financial institutions be able to directly access FedNow and that nonbanks accessing FedNow through partnerships with depository institutions be subject to stringent regulatory oversight.
As noted in previous comments, ABA also continued to urge the Fed to work constructively with core providers to ensure smooth implementation for community banks and create a flat pricing model offering the same per-item fees regardless of institution size.
“ABA continues to support the advancement of payment technologies, including accelerating payments in use cases where rapid settlement would benefit bank customers,” the association wrote. “We believe that a well-executed bank-centric model is essential to provide a valuable and safe payment system for all participants in a transaction.”