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Thomas Wade

Executive Summary

  • A real-time payment platform would benefit American consumers, particularly those living paycheck-to-paycheck who incur significant overdraft and payday lending fees.
  • Although a robust private market providing instantaneous payments exists and is improving, the Federal Reserve has taken the unusual step of seeking comment on entering the market as both participant and regulator.
  • A Federal Reserve real-time payments platform would be costly, time consuming, duplicative, discourage competition, retard progress of existing real-time services, and is likely not consistent with the Fed’s mandate.


Since the first recorded uses of money in the form of stamped gold…

The Daily Dish

Douglas Holtz-Eakin

Eakinomics: Real-Time Payments

If you are like me, you don’t think too much about how your payments are processed. You write a check, swipe a credit card, or use your PayPal account on a website and assume your transaction is complete. The reality is that there is a complex infrastructure for processing payments that has steadily evolved from hand-processed physical checks to electronic methods. But as Thomas Wade points out in his new insight, for all the advances to date, the only really “instant” payment method is good, old-fashioned cash.

There are, however, cutting edge…

More than ten years after the pseudonymous Satoshi Nakamoto published the source code for Bitcoin, and after hundreds of other cryptocurrencies have been introduced, Facebook is the latest entrant in the cryptocurrency market. Yesterday, Facebook launched a new digital currency called Libra that will attempt to combine a decentralized blockchain-the hallmark of successful cryptocurrencies-with the reach of the Facebook community.

As I said upon the yesterday’s launch: “If successful, Libra could have benefits for consumers and small businesses in reducing the transaction costs of electronic payments, but the success of Libra is not guaranteed. …

Beyond its monetary policy and bank supervisory functions, many would be surprised to learn the Federal Reserve has a third role: operating, oddly enough, revenue-generating payments services that compete with private-sector systems.

Whatever justification led Congress to authorize the Fed to establish a national check clearing system in 1913 no longer makes sense today, with the private sector, including financial utilities, card networks and fintechs, already delivering significant results in modernizing the country’s payments infrastructure. …

Until recently, banking transactions in America failed miserably to keep up with our 24/7 real-time economy. Apps, websites, and mobile payment companies allowed us send money to friends, accept credit cards at garage sales, employ a driver to deliver food from a restaurant that doesn’t offer delivery, and book an apartment on the other side of the world within seconds.

But it would take hours or even days until the money became available to the recipient.

The private marketplace responded.

In 2017, a group of 24 leading banks and credit unions came together with the approval of the Federal Reserve…

The Federal Reserve is considering entering real time payments in the United States. If this happens, the modernization apace in this market will stall out. There is no reason for the Federal Reserve to intervene here, except for it to expand once again into an area beyond its mission. For background, most payments conducted by check and electronic transfer take time, sometimes days, to clear to make funds fully available. This creates inefficiencies and inconvenience for customers and businesses that expect better in an age when technology makes everything faster.

The private sector has responded to this need, providing the…

Audrey Mullen

Advocacy Ink is a PR firm in Alexandria, VA. Please email for more info on real-time payments & the Fed. @AdvocacyInk

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