Comments of 43 consumer, small business, civil rights, community and legal service groups on the Federal Reserve Board’s (FRB) proposed rules for implementing the FedNow payment system. We believe that an FRB real time payment system can provide competition and, if properly designed, can ensure that all consumers and businesses benefit from the widespread availability of person-to-person payments systems and faster financial transactions. At the same time, as many of our groups previously commented, it is essential to ensure rigorous protections as the FRB develops the FedNow service in order to ensure that the system is safe to use.
The FRB should not launch the FedNow service until sufficient protections ensure that the service is safe and reliable for consumers and small business users. The proposed rules do not meet that standard. In particular, the system must protect consumers and small businesses from fraud and mistakes. Scams and errors can be devastating and have a particularly harsh and targeted impact on low-income families and communities of color. Below, we first discuss our overall concerns with the proposed FedNow system, and we then note some specific issues with the proposed rules.