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May 26, 2023

On the web

On the wires

May 19, 2023

On the web

New York Fed and Monetary Authority of Singapore Publish Results of Joint Wholesale Cross-Border Payments Research Study

New York Fed

"The Federal Reserve Bank of New York’s New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) today published a research report detailing the results of the joint Project Cedar Phase II x Ubin+ (Cedar x Ubin+) experiment. The Cedar x Ubin+ experiment examined whether distributed ledger technology (DLT) could be used to improve the efficiency of cross-border wholesale payments and settlements involving multiple currencies."

May 12, 2023

On the web

FedNowSM Service Illustration Video


"Watch an example of how financial institutions can enable their customers to access instant payments through the FedNow Service. In this video, you’ll see a business customer immediately pay a supplier using their financial institution’s online interface. You’ll also get a look at what’s happening between the sender’s and receiver’s financial institutions when a payment is made over the service."

May 4, 2023

On the web

April 28, 2023

On the web

April 24, 2023

On the web

April 21, 2023

On the web

The Federal Reserve Payments Study: 2022 Triennial Initial Data Release

Federal Reserve

"The 2022 Federal Reserve Payments Study (FRPS) collected data for the 2021 calendar year. This initial release includes top-line figures for the core noncash payment methods used in the United States by consumers, businesses, and governments, including payments by general-purpose and private-label cards, automated clearinghouse (ACH) transfers, and checks. This release also covers automated teller machine (ATM) cash withdrawals. Wire transfers, used primarily for large financial transactions, are excluded from these data."

April 6, 2023

On the web

Fighting First-Party Fraud

Federal Reserve Bank of Atlanta

"Over the past three years, the rate of first-party fraud, also called friendly fraud, in the United States has risen dramatically, especially with online transactions. Unscrupulous cardholders are leveraging the favorable cardholder dispute resolution rules to get their goods or services for free. One vendor specializing in helping merchants with card disputes claims that at least 60 percent of all chargebacks stem from first-party fraud. The major growth in the overall share of online purchases has made investigations of claims more difficult, but the industry is working on ways to battle these fraudulent chargebacks."

The Fed is Restructuring the US Payments Ecosystem with the FedNow Service – What FIs Need to Know


"The Federal Reserve’s long-awaited digital payments system, FedNow, will be deployed in phases, with the initial launch planned for July 2023. FedNow is the first government-created system in the US for financial institutions to send and receive funds in near real-time online, with the primary goals of providing immediate access to funds and offering real-time and accurate views of account balances. FedNow promises to enable smoother operations by ensuring instant payment capabilities without any delays of a few business days, or during holidays or weekends. In addition to money transfers, the system will allow bill payments and other consumer activities to move more rapidly -- decreasing transfer time from several days to just a few seconds -- and at a lower cost."

March 20, 2023

On the web

The Ransomware Battleground in 2022

Federal Reserve Bank of Atlanta

"The Retail Payments Risk Forum team has been writing a lot about ransomware in Take on Payments since 2018, when criminals shifted their targets from consumers with small ransom payouts to large government entities, educational institutions, and healthcare industries with their deeper pockets. Some of the initial victims in the United States were the cities of Atlanta and Baltimore and Florida's Monroe County School District. As with consumer attacks, criminals get to the bigger targets primarily by using phishing or smishing messages to obtain account credentials. They then exploit known software security gaps and make brute force attacks."

March 16, 2023

On the web

Federal Reserve Announces July Launch for the FedNow Service

Board of Governors of the Federal Reserve System

"The Federal Reserve announced that the FedNow Service will start operating in July and provided details on preparations for launch. The first week of April, the Federal Reserve will begin the formal certification of participants for launch of the service. Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, to prepare for sending live transactions through the system."

March 15, 2023

On the web

The Federal Reserve Announces July Launch for the FedNowSM Service


"The Federal Reserve announced that the FedNow Service will start operating in July and provided details on preparations for launch. The first week of April, the Federal Reserve will begin the formal certification of participants for launch of the service. Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, to prepare for sending live transactions through the system."

Tassat Blockchain to Join FedNow Service with B2B On-Ramp as Pilot Prepares for Launch


Blockchain operator Tassat announced on March 14 that it would provide access to the United States Federal Reserve’s FedNow payment system. FedNow, which will launch as a pilot project later this year, will provide real-time, round-the-clock payment service. Tassat will serve as a business-to-business on-ramp for FedNow through a client-facing application programming interface, CEO Kevin Greene told Cointelegraph. Both the company’s interbank and intrabank services will provide FedNow access. The FedNow pilot is expected to begin in June or July with a small number of banks.

January 30, 2023

On the web

January 20, 2023

On the web

Who Pays For Your Rewards? Redistribution in the Credit Card Market

Federal Reserve

We study credit card rewards as an ideal laboratory to quantify redistribution between consumers in retail financial markets. Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers. To probe the underlying mechanisms, we exploit bank-initiated account limit increases at the card level and show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers also follow a sub-optimal balance-matching heuristic when repaying their credit cards, incurring higher costs....

January 17, 2023

On the web

Money and Payments: The U.S. Dollar in the Age of Digital Transformation

Federal Reserve

The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability, and a safe and efficient payment system. This paper is the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies (CBDCs). For the purpose of this paper, a CBDC is defined as a digital liability of a central bank that is widely available to the general public.

January 9, 2023

On the web

Open Banking's Slow March Advances

Atlanta Fed

"In June, I wrote about the revived and deliberate process of the Consumer Financial Protection Bureau (CFPB) in developing rules covering the implementation of open banking in the United States. I promised that the Retail Payments Risk Forum would continue to follow developments in open banking, so in this post, I'm providing a small update. In an October 25 speech at this year's Money20/20 conference, CFPB director Rohit Chopra delivered a detailed roadmap and timeline for the rulemaking process for open banking."

December 23, 2022

On the web

Boston Fed, MIT Complete Research Project into Feasibility of a Central Bank Digital Currency

Federal Reserve Bank of Boston

“A joint research effort between the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology into the technical feasibility of a potential central bank digital currency is now complete. The Boston Fed’s work on CBDC with MIT’s Digital Currency Initiative is known as Project Hamilton. Boston Fed Executive Vice President Jim Cunha said the now-concluded project was “agnostic” from the start about any future policy decisions regarding new technologies and U.S. currency.”

December 21, 2022

On the web

Why the Fed Needs to Take the Digital Yuan Seriously


“If the Federal Reserve still wants proof of China’s intention to challenge the dollar’s hegemony, it should look no further than a small experiment currently under way in Hong Kong. Last week, Bank of China (Hong Kong), one of the city’s big deposit-taking institutions, had its offer of 500 trial accounts tied to the e-CNY, the electronic version of official Chinese money, snapped up in two days. The customers are each being gifted 100 yuan in digital form, which they can spend at mainland stores, the JD.com website or a supermarket chain in Hong Kong.  (Subscription required)”

December 8, 2022

On the web

Industry Working Group to Establish Principles for FedNowSM Service Request for Payment Solutions


“In preparation for the mid-2023 FedNow Service launch, the Federal Reserve has formed an industry working group to establish voluntary principles for a consistent end-customer experience for solutions leveraging FedNow Service request for payment (RFP) functionality, and to consider other practices or standards that may be useful to encourage broad adoption of RFP functionality across the industry. RFP will be one of the key features of the FedNow Service. It will allow financial institutions and service providers to build bill pay solutions that can help consumers and businesses conveniently send invoices, receive instant bill payments and better manage cash flow. The working group, composed of nearly 100 FedNow Community members (PDF) , will meet monthly between Q4 2022 and the second half of 2023 to outline recommended payer and payee experiences for business and consumers, and provide input on practices for the Federal Reserve to consider. The working group will also produce an “RFP Customer Experience” document that will be publicly available.”

November 28, 2022

On the web

Real-Time Payments In U.S. Marks Fifth Year — FedNow Coming In July

“To mark the fifth anniversary of real-time payments in the U.S. The Clearing House (TCH) and Jack Henry launched a flurry of statistics which cast a bit of an obscuring haze over the topic.   TCH says its RTP network reaches 62% of all demand deposit accounts in the U.S. and 85% of insured depository institutions have technical access to the network through more than 20 technology solutions providers, including Jack Henry & Associates, FIS, Fiserv, COCC, Finastra and Shazam. The Clearing House is eager to show that it provides services for small banks and credit unions and isn’t just a network for the major banks.”

November 8, 2022

On the web

New York Fed Completes Pilot For Cross-border CBDC Transactions


“Central banks around the world have made massive investments into CBDC’s research. The FED, despite lagging behind other peers in the race, has sharply ramped up efforts to issue its CBDC in recent times. The Federal Reserve Bank of New York has completed a successful pilot of the use of central bank digital currencies (CBDCs) for wholesale, cross-border transactions. The experiment, also known as Project Cedar: Phase One, aims to explore the capabilities of blockchain technology in payment delivery and the application of CBDC in wholesale payments. Conducted on separate blockchains to explore the capabilities of blockchain technology in delivering fast and safe payments for a lower settlement cost, the FED is now taking blockchain seriously.”

November 4, 2022

On the web

Federal Reserve Board Announces Pricing for Payment Services (FedNow)


The Federal Reserve Board on Thursday announced pricing, effective January 3, 2023, for payment services the Federal Reserve Banks provide to depository institutions, such as the clearing of checks, ACH transactions, and wholesale payment and settlement services…The Board also announced the 2023 pricing for the FedNowSM Service, a real-time payments platform, which is targeted to launch between May and July next year. The pricing is substantially similar to the anticipated pricing announced on January 27, 2022.

October 4, 2022

On the web

Federal Reserve Board Finalizes Updates to the Board’s Rule Concerning Debit Card Transactions

Board of Governors of the Federal Reserve System

“The Federal Reserve Board on Monday finalized updates to the Board’s rule concerning debit card transactions. Pursuant to statute, the updates specify that debit card issuers should enable at least two payment card networks to process all debit card transactions, including “card-not-present” transactions, such as online payments. 1 The final rule is substantially similar to the proposal issued last year. By law, the Board is required to make rules ensuring that debit card issuers give merchants the opportunity to choose between at least two unaffiliated networks when routing debit card transactions. When the Board initially issued the rule in July 2011, the market had not developed solutions to broadly support multiple networks for card-not-present debit card transactions. Since that time, technology has evolved to address these barriers. However, some debit card issuers have not yet enabled at least two unaffiliated networks for merchants to choose between when routing such transactions. This issue has become increasingly pronounced because of continued growth in online payments.”

September 20, 2022

On the web

Federal Reserve Launches Service to Help Financial Institutions Track Trends for Payments Settled Through its FedACH® Service

FRB Services

“Federal Reserve Financial Services today launched the FedPayments® Insights Service, a business and analytics tool that generates reports on a financial institution’s payments settled through the FedACH Service to help the organization advance its business strategy and day-to-day ACH operations. “In recent years, ACH transactions have grown in both volume and total value,” said Keith Melton, senior vice president and head of product management, Federal Reserve Financial Services. “As a result, it’s more important than ever before for financial institutions to analyze their ACH payment trends to help inform operational, risk management and strategic decisions. The FedPayments Insights Service provides a comprehensive, easy-to-access view of an institution’s daily and historical FedACH activity, including government and commercial transactions.””

August 29, 2022

On the web

Federal Reserve Updates FedNow Service Timing to Mid-2023, Marks Beginning of Full-Scale Pilot Testing  

EIN News

“The Federal Reserve Banks have narrowed the timing of the FedNow Service launch to mid-year 2023, specifically targeting a production rollout of the service in the May to July timeframe. This further defines the previously communicated 2023 launch window for the anticipated instant payments service and comes as the FedNow Pilot Program prepares to enter technical testing for the service starting in September. “Today, with the FedNow launch date in sight, we are pleased with the collaboration and dedication our pilot participants have brought to advance modern payments in America,” said Esther George, president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the FedNow program. Currently, more than 120 organizations are participating in the FedNow Pilot Program. Recent newcomers include U.S. Bank, Exchange Bank, and several payment processors and solution providers, including Alacriti Payments LLC, ECS Fin Inc., Form3 and ModusBox, Inc.”

August 16, 2022

On the web

Federal Reserve Guidelines Crack Banking System Open to Crypto Banks


“The Federal Reserve Board on Monday announced final guidelines that could open up a path for institutions peddling new types of financial products, or those with novel charters, to tap into the banking system. Why it matters: The guidelines seek to clarify a longstanding question critical to the crypto industry — who is allowed to have a master account. Such accounts would allow crypto banks and fintech platforms to access the central bank’s rails (payments and services) without partnering with a traditional bank.”

August 11, 2022

On the web

New Participants Named to FedNowSM Pilot Program


“The Federal Reserve today announced the addition of several organizations to the FedNow Service Pilot Program. The participants are joining more than 120 other organizations amid the program’s testing phase, which began earlier this year and will continue through the launch of the FedNow Service in 2023. The new pilot participants include the U.S. Department of the Treasury’s Bureau of the Fiscal Service, Exchange Bank, and several payment processors and solution providers, including Alacriti Payments LLC, ECS Fin Inc., Form3 and ModusBox, Inc.”

August 9, 2022

On the web

China’s Digital Yuan Pushes Key US Lawmakers to Seek Urgency From the Fed on a Digital Dollar That Fends Off Global Rivals

Markets Insider

“A bipartisan group of US lawmakers wants the Federal Reserve to get more serious about issuing a digital dollar to compete with rivals like China’s digital yuan. Democrat Rep. Maxine Waters has drafted legislation that aims for the Fed to further study the prospect of a digital dollar and design a route for it to come to fruition, The Wall Street Journal reported.  It comes after Waters, who is chair of the House Financial Services Committee, called the area of central bank digital currencies “a new digital assets space race.” Another supporter of the digital-dollar effort, Republican Rep. French Hill, cited China’s creation of a digital yuan in 2020 as a concern, noting Beijing’s lending around the world could aid its adoption and threaten the dollar’s dominance.”

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