A bipartisan group of Congress members is urging the Federal Reserve to expedite its plan to extend the operational hours of the U.S. payments system. Reportedly, the initiative’s intents include faster and safer transactions for consumers, workers, and businesses.
Lynne Marek, Payments Dive, chronicled the action from Capitol Hill.
Congressional Inquiry Demands Clarity on 2027 Payments System Expansion Timeline
In a letter to Federal Reserve Board Chairman Jerome Powell, lawmakers questioned the delay in expanding the system’s availability until 2027. Further, they sought clarity on potential earlier timelines.
House Financial Services Committee Vice Chair French Hill emphasized, “Our goal is that the Fed… advance the ability to go 24 hours a day, seven days a week, sooner than a date in 2027.”
Financial Inefficiencies in Current U.S. Payments System
The current U.S. payments system can take days to complete transactions, causing financial inefficiencies. Hill noted that speeding up transaction clearance could save money on accounts receivable and payable, making the financial system more efficient and giving consumers and businesses more control over their finances.
Lawmakers Seek Faster Implementation of Extended Payment System Hours
The Fed proposed extending the operating hours of Fedwire Funds Service and the National Settlement Service (NSS) to include holidays and weekends by 2027.
Lawmakers, however, believe this capability should be added in a more immediate manner.
The letter, signed by six bipartisan legislators, requested explanations for the delay and the identified barriers to quicker implementation, including infrastructure, technology, and staffing issues.
The associated inquiry comes ahead of Powell’s testimony before Congress on the Fed’s semiannual monetary policy report.
Historical Milestones in U.S. Payments System Modernization
The push for an upgraded payments system gained momentum with last year’s launch of the FedNow real-time payments system. It processes payments in seconds, complementing the Real-time Transport Protocol (RTP) network launched by The Clearing House in 2017.
Benefits and Challenges of Expanding U.S. Payments System
An expanded payments system would allow direct deposits to workers on additional days and enable transactions at any time, reducing late fees and enhancing efficiency. While FedNow and RTP have struggled to attract widespread bank adoption due to technology investments and concerns over financial float, Hill emphasized the need for consumer education on the benefits and risks of real-time payments.
The lawmakers also inquired about the potential for a 24/7 U.S. payments service.
Currently, Fedwire operates 22 hours per day, with NSS closing a half-hour earlier. An April Fed memo mentioned the possibility of full 24/7/365 operations but did not explain the 2027 target date.
The public comment period on the Fed’s proposal has been extended to September 6.
Read the full story about the expanding U.S. Payments System at Payments Dive.
