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Consider CU Burden in New Payments Regs: CUNA Urges Fed
WASHINGTON (12/17/13)--Federal Reserve Banks must ensure that credit unions and small financial institutions are able to access and utilize the latest developments in payments, without undue regulatory restrictions, as it develops a new payments framework, the Credit Union National Association said in a comment letter.

The Fed Banks are working to address potential gaps and opportunities in the payments system, including payment speed, closed payment communities, and international, mobile, and traditional payment channels. The Fed is also exploring where it fits in the payment system going forward.

"As the payment system continues to evolve, it is critical that credit unions and their providers have access and utilize the latest developments in payments," including mobile payments, payments systems that could potentially enable ubiquitous near-real-time payments, and a potential new centralized directory to be used for payments, CUNA Payments Policy Subcommittee Chair Jane Watkins wrote. Watkins is also the president/CEO of Virginia CU, Richmond, Va.

While credit unions support appropriate and flexible rules, Watkins said they are concerned with regulatory and other changes that may result in compliance burdens that will reduce the ability of credit unions to provide current payment products. Watkins also noted that increasing costs and reductions in payments-related revenue, including with debit interchange or overdraft, could have a negative impact on the ability of credit unions to offer important services to many consumers, as well as to expand current and develop new products and services.

The CUNA letter suggested the Fed Banks should continue to work with, and coordinate with, the Consumer Financial Protection Bureau, Federal Reserve Board, NACHA--The Electronic Payments Association, other regulators, and policymakers to target problem areas without creating new regulatory restrictions.

Watkins said CUNA appreciates the Fed Banks' plan to examine the costs and benefits of implementation, as well as ongoing costs, of offering "ubiquitous near-real-time payments." These payments could offer benefits to end users, different stakeholders, and the payment system, she said.
 
The CUNA letter also suggested the Fed banks:
  • Join in efforts to address cybersecurity issues;
  • Remain important providers and partners that help meet the payments needs of their members;
  • Continue to act as major service providers to the interbank market for financial institution payment services, given the role of the Fed Banks in the payment system and economy; and
  • Collaborate and work with regulators, financial institutions, and others on potential improvements to international payments.
For the full comment letter, use the resource link.
Other Resources

CUNA Comment Letter
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