Federal Reserve Proposes Extending Payment Service Hours to Enhance Efficiency


Federal Reserve Proposes Extended Operating Hours for Payment Services

Tuesday, May 14, 2024

The Federal Reserve has unveiled a proposal to expand the operating hours of its Fedwire Funds Service and National Settlement Service, aiming to enhance the efficiency and effectiveness of the payment system for financial institutions and their customers.

Extended Operating Hours: Under the proposed changes, the operating hours each day would remain the same, with the Fedwire Funds Service open 22 hours per day, and NSS open 21 and a half hours per day. Use of the expanded operating days by service participants, such as banks and credit unions, would be voluntary.

Benefits for Financial Institutions: The extended operating hours are expected to deliver several benefits to financial institutions and their customers, including:

  1. Improved Liquidity Management: Longer operating hours enable better management of liquidity positions and funding needs throughout the day, enhancing financial institutions' ability to optimize their resources.
  2. Increased Operational Flexibility: Financial institutions can better align their payment processing with their business hours and staffing models, potentially reducing operational costs and improving efficiency.
  3. Enhanced Risk Management: Extending the settlement window reduces potential disruptions and associated risks from compressed payment processing timeframes, mitigating operational and systemic risks.

Public Comment Period: The Federal Reserve has opened a public comment period on the proposed changes, which will remain open until July 8, 2024. Interested parties, including financial institutions, industry associations, and members of the public, can submit comments through the Federal eRulemaking Portal or by mail.This initiative aligns with the Federal Reserve's ongoing efforts to modernize the payment system and meet the evolving needs of the financial industry and its customers. The extended operating hours are expected to provide greater convenience, efficiency, and risk mitigation for financial institutions and their customers, ultimately strengthening the overall payment infrastructure.

Read the full press release here.


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