CUNA strongly supports the Federal Reserve board’s decision to develop interbank settlement of faster payments, it wrote Thursday. The Fed proposed potential actions to create an interbank 24x7x365 real-time gross settlement service with integrated clearing functionality called FedNow.
“Credit unions have long encouraged the board to extend the Federal Reserve system’s role as the foremost payments system operator into the nascent U.S. faster or real-time payments market,” the letter reads. “The board’s decision, as detailed in the notice and request for comment, is welcomed by credit unions and is an important step forward in the development of a ubiquitous real-time payments system.”
CUNA has also supported The Clearing House (TCH) efforts to develop its real-time payments network, and its letter notes that while credit unions have worked well with the TCH, “absent the [Federal Reserve] board or another entity operating a real-time payments network, the more than 10,000 credit unions and community banks that are not owners of TCH would be beholden to the whims of TCH’s bank owners for a critical aspect of their infrastructure.”
The Fed has proposed to roll FedNow out in 2024. During the development, CUNA urged the Fed to work closely with credit unions.
“Most credit unions will rely on service providers to help them connect and use FedNow. The timeframe for service providers to develop their offerings is nearly as important as the Federal Reserve Banks’ development of the timeframe for FedNow, which is why service providers should be involved in all phases of the development of FedNow,” the letter reads. “We are encouraged by the Board’s outreach to key vendors necessary to help credit unions use FedNow. The Board’s commitment to develop FedNow in conjunction with credit union partners will help ensure a rapid rollout of FedNow to credit unions.”