ATR led a coalition letter urging the Chairman of the Federal Reserve, Jerome Powell, to refrain from the Federal Reserve competing directly with the private sector’s currently operating real-time payments system. If the Federal Reserve moves forward to implement any proposal to enter the payments processing space, customers and businesses would be at risk of delayed financial transactions by forcing financial institutions to choose between doing business with an existing private structure or waiting until their regulator builds a clearing system in the next five years.
In 2014, The Clearing House Payments Company (an institution that provides much of the technological “plumbing” or “infrastructure” for conducting financial transactions) began the process of creating the real-time payments system in use today. The system would go live in November 2017, after large financial institutions put up the funding to build the system and has actively been attracting banks of all sizes to join the network. This benefits customers across multiple financial institutions who can send and receive payments to use near-instantaneously. The goal of The Clearing House and banks joining the system is to have all deposit holding banks using the service by the end of 2020, making the system “ubiquitous.”
A year after The Clearing House’s real-time payments system went live, the Federal Reserve published a request for comments to review and consider feedback of how the current privately created system is operating and if there was a need for the Federal Reserve to enter the market and create its own version. Our groups are concerned if the Federal Reserve moves forward with any proposal to enter the payments processing space, the Federal Reserve would in effect create the public option for payments and place customers and business’s private information at risk.
For these reasons, Americans for Tax Reform opposes any entrance of the Federal Reserve into the real-time payments market and is proud to join the coalition of organizations who share this view.
Click here to view the coalition letter.
Similarly, ATR signed a coalition letter led by National Taxpayers Union urging Congress to reject the Federal Reserve’s entrance into the payments market. Click here to review the NTU letter.