In comments today, the American Bankers Association said it supports a proposal to expand the operating hours of the Fedwire Funds Service to include weekends and holidays, although it urged the Fed to push back the implementation date of the change by one year to 2028. ABA also urged the Fed to consider as a separate proposal a similar expansion of the National Settlement Service’s operating hours, for the purposes of enabling weekend and holiday Automated Clearing House processing. It also opposed language suggesting a possible expansion of private check-clearing services.
The Fed in May proposed expanding operations for both Fedwire and NSS so they would be available every day of the year. Certain financial institutions may explore the opportunity of extending wire services for their customers, although such a move could put institutions that do not extend services at a competitive disadvantage, ABA said in the letter. One question the Fed did not address was how expanding NSS would affect the two payment rails currently used by financial institutions: the Clearing House Real Time Payments system and the FedNow Service.
“Unfortunately, this proposal lacks the detailed information needed to make an informed decision about the costs and benefits of implementation,” ABA said. “There is also the concern that this proposal will have a significant impact on community banks and others that have leaner resources and more hurdles to overcome (whether vendor, personnel or technology and core platform related) in order to participate in the extended hours and may not result in high enough demand to support associated costs.”
ABA suggested separating the NSS proposal enabling ACH processing and moving forward with the Fedwire expansion, saying that in the case of the latter, institutions that process a large number of wires can determine if the additional hours of operating time are worth the expense of providing the service. As for the possibility of expanding check-clearing services, banks have worked for years to reduce the number of paper checks given the time and expense of dealing with check fraud, the association said.
“The [Fed] should not take any action to prop up paper check processing, additional check processing hours should be excluded from the policy consideration, and efforts should be focused on decreasing paper check usage,” ABA said.
