If the Fed launches its own real-time payments system, it could popularize alternative payments and impact card networks alongside big banks:
. But big banks — which work with The Clearing House , a would-be competitor for the Fed's potential offering — appear to be opposed to the Fed introducing its own system.The fear of competition hangs over the number of reported reasons why major banks are against the Fed building an RTP system.
The Fed's system doesn't have to make a profit, which could threaten banks, per The WSJ. Legally, the Fed only needs to show it can break even on its system, and banks are concerned that the governing body could offer volume discounts to attract customers, the report says. This would make it challenging to compete — and even harder to turn a profit — which might threaten banks' standing in the space.
The announcement of the Fed's system could slow RTP adoption as firms may wait to use its eventual offering."If the Federal Reserve decides to launch its own network, it's just delaying the access to faster payments to everybody," TCH SVP for product and strategy Steve Ledford said, per The WSJ.
There could be compatibility issues between the Fed's system and TCH. TCH reportedly noted it would be difficult for its system to communicate effectively with the Fed's if they're operating at the same time. The two entities currently work together to enable settlements between all banks, and losing that ability would hurt both systems' effectiveness.If the Fed launches its own RTP system, it could popularize alternative payments, impacting card networks alongside big banks.
Instant access to funds and RTP could enable US merchants to avoid card fees and lead them to develop and promote direct-to-bank payment options. Cards are the
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