Federal Reserve Must Ensure Money Moves Safely As Financial Transactions Quicken
WASHINGTON, D.C. – Consumer Reports applauded the Federal Reserve Board’s announcement today that it plans to operate a new payment system to facilitate faster financial transactions. The Federal Reserve said it will develop the FedNow Service, a real-time payment and settlement service for the future.
The nonprofit consumer advocacy organization noted that the plan holds a number of potential benefits, but cautioned the agency to take steps to protect consumers from fraud that can come with faster transactions.
“The Federal Reserve’s plan will enable consumers to better manage their money in real time, especially those working paycheck to paycheck,” said Christina Tetreault, senior policy counsel for Consumer Reports. “A faster payment system will give workers quicker access to their pay and help them avoid overdraft fees from spending money before funds are credited to their accounts. Same day bill payment will make it easier for consumers to pay bills on time and avoid late fees.”
Consumer Reports noted, however, that some countries have seen an increase in fraud after implementing a faster payment system. “A faster payment system can enable crooks to get away with their ill gotten gains more quickly if steps aren’t taken to prevent fraud,” said Tetreault. “The Federal Reserve should work with stakeholders to ensure its new payment system is not only fast but safe.”
From 2015-2017, Tetreault served on the Steering Committee of the Federal Reserve’s Faster Payments Task Force, representing consumer interests. The task force brought together a diverse range of stakeholders. In 2016, it published its Faster Payments Effectiveness Criteria report, laying out a set of standards to ensure a successful faster payment system. Last year, Consumer Reports urged the Federal Reserve to consider developing a new payments system and to look to those effectiveness criteria for guidance.
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