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Fed finalizes rule to govern fund transfers over its FedNow Service
The Federal Reserve Board Thursday finalized amendments to Regulation J, specifying the terms and conditions under which Reserve Banks will process fund transfers through the FedNow Service. The final rule provides a “comprehensive set of rules governing funds transfers over the FedNow Service and provides legal certainty and clarity on the rights and obligations of parties to a transfer over the FedNow Service.”
Of note, the Board alluded to examining Regulation E’s applicability to instant transfers.
“The Board recognizes that the irrevocable, real-time nature of instant payments can pose a challenge to the industry as a whole in detecting and preventing fraud, which as noted in the consumer group letter, ultimately might impact the safety of all instant payment systems,” stated the board. “The Board believes strengthening consumer protections related to instant payments broadly is a desirable goal and supports commenters’ suggestions for examining Regulation E as a potential tool.”
NAFCU has previously worked with the Federal Reserve to develop FedNow as a secure and cost-effective platform for real time payments. The association has also met with Federal Reserve leadership to advocate for the Fed to play an operational role in the faster payments landscape.
As the planned launch of FedNow approaches in 2023, NAFCU has also encouraged the Fed to educate the industry about the service ahead of launch. Stay tuned to NAFCU Today for future updates on the FedNow Service's progress and launch timeline.