Published: November 2019

Advocates applaud the Fed’s faster payments system, but urge fraud protection

Consumer and privacy advocates applauded the announcement by the Federal Reserve Board (the Fed) that it will develop a real-time payment system, while urging the Fed to ensure protection against scammers and criminals who use faster payment systems to receive and move money.

Currently, both The Clearing House—a banking association and payments company that is owned by the largest commercial banks—and the Federal Reserve Board operate clearing houses used to make ACH payments, a 45-year-old system that is the primary mode of moving money electronically today. But ACH payments typically take one business day to clear, meaning that a payment made on a Friday may not appear in the recipient’s account until Monday. The Clearing House recently launched the RTP network, a real-time payments platform that financial institutions are eligible to use. There is no other competing real-time system in this country. Services such as Venmo, Zelle, and Square Cash, which appear to move money instantly, actually rely on either the ACH system (with funds made available before they actually transfer) or, in some instances, RTP to move the money.

Having two operators, The Clearing House and the Fed, operate the older ACH electronic payment system has worked relatively well to keep the system honest and prices low. A public role as the new system is developed is critical in to ensure robust due diligence, error resolution, and other requirements for financial institutions, and wide and safe access to the new system.

Lead Organization

American's for Financial Reform (AFR)

Other Organizations

Americans for Financial Reform Education Fund | Allied Progress | Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces | Consumer Action | Consumer Federation of America | Consumer Federation of California | Demand Progress Education Fund | Florida Alliance for Retired Americans | GLOBAL GREEN INITIATIVE | Hispanic Baptist Convention of Texas | Housing Action Illinois | Main Street Alliance | Montana Organizing Project | NAACP | National Advocacy Center of the Sisters of the Good Shepherd | National Association of Consumer Advocates | National CAPACD – National Coalition for Asian Pacific American Community Development | National Fair Housing Alliance | New Economics for Women | OnTrack Financial Education & Counseling | PathWays PA | Public Justice Center | THE ONE LESS FOUNDATION | The Value Alliance | U.S.PIRG | Virginia Citizens Consumer Council | VOICE-OKC | West Virginia Center on Budget and Policy

More Information

Click here to read the coalition letter in full.

For more information, please visit AFR's website.

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