The Federal Reserve System’s announcement that it is developing the FedNowSM Service, a real-time payment and settlement service, has inspired comments about how the reduction in payment delays will reduce overdraft and short-term credit-related costs from policymakers.

Real-time payments can cut both ways for overdraft and consumer use of short-term credit. Given that real-time payment services are platforms for financial institutions, working out responsibilities and calculating restitution and damages may involve considering the dynamics between financial institutions.

Reprinted with permission from Law360, January/ 2020

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