‘Real-time payments’ decision soon, Fed chairman says; gives clue to partnership arrangement

A decision by the Federal Reserve in its involvement with a “real-time payment system” proposal will be made soon, the chairman of its board said Wednesday, noting the Fed received “overwhelmingly favorable” comments about that involvement last year.

Federal Reserve Board Chairman Jerome H. (“Jay”) Powell said in a press conference that the Fed has not yet made a decision about its involvement in a so-called “faster payments system.” However, he did give clues as to how the agency might proceed — that is, in partnership with private sector players.

“I would point out that in our payments system, in many places the Fed operates alongside private sector operators — for example, wholesale payments, ACH, and in checks. So it wouldn’t be unusual or out of keeping with how we’ve done things in the past,” Powell said.

(In the brief video, Federal Reserve Board Chairman Jerome H. (“Jay”) Powell says the Fed will “soon” have more to say about its “faster payments” initiative to deliver round-the-clock payments to U.S. consumers and business.)

He said although the Fed board has not yet made a decision on its involvement in a payments system solution, he did say that “it’s something we are looking at carefully, and something I do expect we will make a decision on soon.”

Holding a bit of school for reporters gathered to hear about the Federal Open Market Committee’s action on interest rates (a cut a of 25 basis points), Powell noted that the U.S. is “far behind other countries in terms of having real-time payments available to the general public.” He said the financial industry, consumer and government group convened by the Federal Reserve Banks and the Fed recommended that the Fed should build a “24x7x365 real-time settlements system to address that problem” of the U.S. being so far behind.

“We put out a proposal last October about ‘should we do this,’” Powell said. “We got quite a lot of comments; they were overwhelmingly favorable.”