U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, along with Senators Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Tina Smith (D-MN), and John Fetterman (D-PA) have urged Federal Reserve Chair Jerome Powell to finalize a proposed rule expanding the Fed’s settlement services' operating hours to weekends and holidays. They also called for additional steps to enable 24/7/365 access.
The current Fed settlement services, including Fedwire Funds Service (FedWire) and National Settlement Service (NSS), facilitate electronic funds transfers through Automated Clearing House (ACH) payments. However, these transactions often take several days to clear. The proposed expansion aims to reduce costs associated with overdraft and non-sufficient funds fees for individuals and help small businesses maintain liquidity.
“Given its ubiquity, it is no surprise that consumer and industry groups support expanding settlement services to weekends and holidays,” the Senators wrote. “Faster payments help Americans gain access to their money, reducing the likelihood that they will overdraw their accounts or pay an NSF fee.”
In a letter addressed to Chair Powell, the Senators emphasized that modern business practices necessitate round-the-clock financial operations. The Federal Reserve Board of Governors proposed on May 3, 2024, to extend Fedwire Funds Service and NSS operations to include weekends and holidays.
Fedwire currently operates from 9:00 p.m. to 7:00 p.m. ET, while NSS runs from 9:00 p.m. to 6:30 p.m. ET on weekdays only. The proposal seeks year-round daily operation but stops short of full 24/7 service.
“Expanding settlement services would lower costs for individuals vulnerable to overdraft and non-sufficient funds fees,” the letter noted. In 2023 alone, Americans paid over $5.8 billion in combined overdraft and NSF fees.
The letter also highlighted benefits for small businesses facing slow payment challenges. Faster cash flow would enhance liquidity management crucial for meeting payrolls, settling debts, and maintaining emergency buffers.
In addition to ACH payments facilitated by community banks and credit unions, the proposal includes expanded hours for wire transactions processed via Fedwire—often used in large-value cross-border payments averaging $5.6 million per transaction in 2023.
The Senators stressed that any expansion should be accompanied by robust fraud protection measures and regular risk assessments by the Federal Reserve Board.
Acknowledging potential cost implications for smaller financial institutions like community banks, they supported feedback solicitation efforts aimed at minimizing operational expenses while enhancing security measures.
“The Board’s proposal notes that expanding settlement services strengthens our nation’s payment system by improving liquidity management,” they concluded.
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