The Federal Reserve Board has approved a new fee schedule for payment services in 2020 that is overall 2.4 percent higher than 2019, the Fed announced in a press release on Wednesday (Nov. 27).
The new payment services fees go into effective on Jan. 2. The changes will result in average price increases of 3.3 percent for check services, 3.7 percent for Fedwire Funds and 2.9 percent for FedLine customers. Fees will stay the same as 2019 for the FedACH service, National Settlement Service and Fedwire Securities Service.
The 2020 private-sector adjustment factor (PSAF) of $18.9 million was also approved. This is an increase of $1.1 million from the 2019 PSAF of $17.8 million.
The PSAF is “an allowance for income taxes and other imputed expenses that would have been paid and profit that would have been earned if the Reserve Banks’ priced services were provided by a private business,” per the release.
The fee schedule was established in accordance with the Monetary Control Act of 1980, which requires that the Federal Reserve recover the costs of services.
The Reserve Banks estimate that they will recover 100.8 percent of the costs of providing priced services in 2019. “Overall, the Reserve Banks estimate that they will fully recover actual and imputed costs and earn net income of $9.0 million, compared with the targeted ROE of $5.4 million,” according to supplementary information.
From 2009 through 2018, the Reserve Banks recovered 102.6 percent of their total expenses.
In August, the Fed launched a real-time payments system, FedNow, that is broadly accessible across the financial services ecosystem. The move was described by Kansas Federal Reserve President Esther George as the biggest infrastructure upgrade embraced by the Federal Reserve since the ACH system went online in 1972.
The goal of the FedNow service is to serve as an infrastructural platform on which the private sector can easily build. The central bank is currently requesting comments on the design of the service, which it expects to make available in 2023 or 2024.