Free market advocate calls for market based payment solution, not new Fed system

Wouldn’t it be nice not to wait days for checks to clear and funds to become available? That’s not true for most payments in the United States right now.

“If somebody sends you funds from one bank account to another, they typically use a system that’s called the TCH system,” said Phil Kerpen with American Commitment. “It takes one to three days to clear. Sometimes funds availability can be delayed even longer than that.”

The Federal Reserve studied the issue and recommended that the banks develop a private sector real-time payment system.

The consortium of large and small banks called TCH, The Clearing House, built such a system,” said Kerpen. “It’s already deployed for about 60% of deposit accounts in the United States. It was projecting to get over 90% by year end.”

Now, though, the Federal Reserve has said it is going to create its own system. This will likely slow adoption of either system.

“There’s no such thing as an honest competition between the private sector and its own regulator,” said Kerpen. “There are a million ways that the government can bias that in favor of themselves. The more practical problem is, you’ve got a lot of smaller banks that probably would have joined the TCH system that are saying, well, we don’t really want to join two systems. Let’s sit and wait and see what the Fed system looks like.”

The Fed says it will take five years for their system to be ready. There is a public comment period going on right now. If you’d like to weigh in on the issue, you can do so at