Lawmakers tell Fed to do more for faster payments

A group of lawmakers wants the Federal Reserve to do more to support faster payments. As it stands today it can sometimes take days for a payment can result in good funds for the recipient. And that just doesn't work in an always on economy. In a letter to Fed Chairman Jerome Powell, Republican and Democratic members of the House and Senate said the Fed needs to "act swiftly" to expand operating hours and days of its two large-dollar wire transfer systems, Fedwire and the National Settlement System (NSS).

Currently, Fedwire and the NSS operate Monday through Friday, excluding nationalholidays. In May, the Fed proposed extending those operating hours to include weekends and holidays as well, by 2027. (The proposal does not include changes to the Fed's new instant payments service, FedNow, which operates 12 hours a day, 7:00 am to 7:00 pm.)

In their letter to the Fed, lawmakers said three more years is too long to wait, and they are demanding an explanation for why the Fed is slow walking the plan. The lawmakers urged the Fed "to prioritize its work and act swiftly to expand the operating days and hours of the NSS and Fedwire."

The letter was signed by French Hill, R-AR, chair of the House Financial Services Committee, along with three other committee members: Representatives Young Kim, R-CA, Ayanna Pressley, D-MA and Nikema Williams, D-GA. Senators Chris Van Hollen, D-MD, and Cynthia Loomis, R-WY, both members of the Senate Banking Committee also signed the letter.

The Fed first broached the notion of expanding operating days and hours for Fedwire and the NSS back in 2015, in a report titled Strategies for improving the U.S. payment system. In that report, the Fed said the move would potentially "empower private sector innovation around solutions for making payments faster, safer and more efficient" for consumers and businesses.

Expansion will be good for consumers and businesses

Lawmakers, in their letter, had kudos for the Fed for progress in accommodating faster payments, such as expansion of ACH hours. But they added private sector ACH operators, such as the Clearing House, can only conduct interbank settlements when the Fed's wholesale payment services are open and available.

"Expanding the operating days and hours of the NSS and Fedwire will further allow the ACH network to settle payments during additional days and times of the week, and it will enable the continued adoption of real-time payments," the lawmakers said. This, in turn, will benefit workers and consumers with the availability of services like Direct Deposit on weekends and holidays, "which is especially important for gig workers and those working shifts."

It can also help consumers better manage their finances, for example, by paying bills on time and avoiding late fees, as well as reducing the overall cost of payments to consumers.

Expanded hours will also benefit small businesses by supporting quicker access to funds from card sales, instead of having to wait until the next day NSS is open. And it help mitigate credit risk and improve the operational efficiency of retail payment arrangements, spur innovation in private sector solutions, and support more efficient cross-border payment flows.

The Fed proposal, published in May, had requested public comments by July. But the Fed recently said it will accept comment letters through September 6.

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