Is an Alternative to Zelle Coming Soon?
Yes, but it may be just as susceptible to fraud
Following an announcement by the Federal Reserve of the launch of a “FedNow” payments system in 2023, a coalition of consumer groups is raising concerns about potential fraud similar to the fraud issues that have plagued payment provider Zelle.
The groups, including the National Consumer Law Center (NCLC), National Consumers League (NCL), and National Community Reinvestment Coalition (NCRC) indicated support for a public payments system but also expressed concern over consumer safety.
“An instant payments service like FedNow can have a lot of benefits to consumers. The coming FedNow service will prevent instant payments from being controlled by the largest banks, but fraud protection is critical and is sorely missing,” said Lauren Saunders, associate director at the National Consumer Law Center. “The new FedNow rules leave payments exposed to the same type of fraud that plagues Zelle today. The Fed must take measures before FedNow launches to ensure that it does not become a haven for fraud, and the CFPB and Congress must enact rules to make all person-to-person payment services safe.”
FedNow will be a new bank-to-bank payment rail, similar to The Clearing House’s Real Time Payments (RTP) that undergirds Zelle, enabling…
