WASHINGTON—NAFCU wrote to the Federal Reserve in response to its proposed amendments and modifications to Regulation J pertaining to the release of the FedNow service to offer support for the development of the service.
"For credit unions, access to affordable faster payments capabilities will help attract new members and improve overall satisfaction with services such as online bill pay, peer-to-peer (P2P) payments, and business-to-business payments (B2B)," wrote Regulatory Affairs Counsel James Akin. "Real-time capabilities provided through the Reserve Banks will help meet demand for faster payments and encourage a competitive market for real time payments."
Recommendations Made
In addition, Akin shared with the Fed several recommendations which include:
- The establishment of appropriate controls to address persistent levels of fraud
- Coordination with the CFPB on appropriate guardrails to ensure that consumers know they should be exercising heightened care when initiating instant payments
- Additional clarity from the Federal Reserve regarding the delineation of applicability between Uniform Commercial Code (UCC) Article 4A and Regulation E to FedNow transactions, including examples of instances in which a transaction would fall under the provisions of Regulation E
‘Parameters’ Needed
Akin also called for the creation of accommodative time parameters to clarify the meaning of "immediately" as it is used in the funds availability requirement.
According to Akin, the sharing of data and feedback from participants from the FedNow Pilot Program regarding what constitutes reasonable timing parameters for funds availability and what circumstances might necessitate a credit union requiring more time to determine whether to accept a payment order will be helpful for credit unions.
The Federal Reserve in February released its updated launch timing, indicating the Fed's real-time payments system will be ready in 2023.