WASHINGTON—Members of the Senate Banking Committee stressed the need for equal competition in faster payments during a hearing this week focused on the issue. Both credit union trade groups shared input with the committee.
Senators noted during the hearing a government real-time payment system would help to serve families, community banks, and credit unions.
The hearing featured a field of expert witnesses – including the president of the Federal Reserve Bank of Kansas City and a representative from The Clearing House – who answered questions related to the safety of and access to a real-time payments system. Senate Banking Committee Ranking Member Sherrod Brown (D-OH) said during the hearing, "Just like roads and bridges, faster payment is critical public infrastructure for Americans.”
As CUToday.info reported, ahead of the hearing NAFCU sent a letter to the Senate Banking Committee endorsing the need for a system like the Federal Reserve's proposed FedNow Service.
Former Federal Deposit Insurance Corporation Chair Sheila Bair said competition helps ensure consumers are protected. In response to a question regarding the effects of a hypothetical financial crisis, she cautioned against granting large banks monopolistic control over critical payments infrastructure.
CUNA Input
Ahead of the hearing, CUNA told the Committee credit unions across the country are seeking real-time payments to improve their members’ access to their finances. The Federal Reserve System’s real-time payments network, FedNow, has the support of CUNA, which said it believes having multiple real-time payment networks will ensure a more robust payment system.
“As the plumbing of the payments systems is essentially a utility, having multiple operators will help make the system more robust against a cyber-attack or other unforeseen technical glitches,” CUNA President/CEO Jim Nussle wrote in a letter to the committee. “Also, competition breeds innovation, and not just in product features but in other aspects such as the security and robustness of the system.”
CUNA noted it has supported The Clearing House’s (TCH) efforts to develop their real-time payments network, RTP, but maintains that efforts by both the Federal Reserve Board and the TCH will help to bring real-time payments to consumers, who will benefit from the innovation and clarity of a faster payment system.
“Having both vendors is a luxury but only the Federal Reserve is critical because they are the only vendor with the bandwidth and expertise to provide payments services to the entire financial services sector,” Nussle concluded.