Black Lawmakers Press Fed on Real-Time Payments
Paper checks are still the norm when it comes to payments in the business sector -- but companies aren’t happy about it. Rarely anyone uses paper checks, and business contends that change is overdue. Some members of the Congressional Black Caucus (CBC) are eager to help the business community secure real-time payments. In a letter on Monday to Federal Reserve Board Chairman Jerome Powell, Congressman Gregory Meeks (D-NY) and three of his colleagues argued that the nation’s aging payments system is contributing to economic inequality. The letter, which was also signed by CBC Chair Congressman Cedric Richmond (D-LA), Congresswoman Joyce Beatty (D-OH), and Congressman Dwight Evans (D-PA), comes in response to a recent request for comment by the Fed about its own role in the future of immediate payments. Last year, an industry-led group convened by the Fed established a goal which says that by 2020, anyone with a U.S. bank account should have access to payments that are highly secure and delivered in close to real time. Real-time capabilities have long been in place in the United Kingdom, Sweden, and a host of other countries. American Banker reports that the question of the Fed’s role in a future system of real-time payments is a sensitive one. According to the outlet, the central bank does not want to be seen as usurping authority from the private sector. It also wants to avoid being seen as favoring large banks or small banks; firms in those two segments of the industry often hold differing views on the proper role of the Fed in the payments system. In the letter, members say real-time payments would produce sizable benefits to communities of color. “The increased prevalence of overdraft fees, high cost small dollar credit and check cashing has cost our constituencies tens of billions of dollars that a real time payments system would help ameliorate,” the letter stated. Read it in its entirety here.