Ahead of the Federal Reserve’s decision on August 5 to own and operate a real-time payment (RTP) system, controversy about its role ramped up to the point at which Democrats introduced legislation to push the Fed to take an owner/operator role. On the other side, Republicans have pushed back in favor of at least some additional steps protecting private RTP providers. This debate pits community banks, merchants, and large tech-platform companies – which want the Fed to control faster payments – against large banks and the RTP system they have developed. The Democratic bill would also force banks to ensure real-time payments, perhaps accelerating use of private-sector RTP services given that the Fed does not believe its “FedNow” service will be even preliminarily operational until 2023 or 2024. Tech-platform companies working on real-time offerings through banks or on their own could also expand activities, especially if they fear that the FedNow system will block direct entry.
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