Payments Modernization Act of 2022
Bill: S.4946 | Sponsor: Sen. Van Hollen, Chris (D-MD)
Policy area: Finance and Financial Sector

Summary:
Payments Modernization Act of 2022
This bill requires the Federal Reserve Board to create a real-time payment system that allows funds to be available to any end user immediately at any time, including funds deposited at a depository institution.

To amend the Expedited Funds Availability Act to require that funds 
   deposited be available for withdrawal in real-time, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Payments Modernization Act of 
2022''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Families in the United States spend billions of dollars 
        in overdraft fees in part because they are waiting for checks 
        to clear over a weekend or holiday.
            (2) The inefficient payment system in the United States 
        drives families, especially those living paycheck to paycheck, 
        to use high-cost financial services to access funds more 
        rapidly.
            (3) A faster payment system would provide people of the 
        United States immediate access to funds and relief for those 
        who overdraw their accounts because their deposits are not 
        available in real-time, helping families potentially save 
        billions of dollars each year.
            (4) The United States lags behind other countries in the 
        speed and efficiency of its payment system.
            (5) Central banks around the world have already implemented 
        real-time payment systems, including in the United Kingdom, 
        Australia, Mexico, Poland, Japan, and South Africa.
            (6) The Federal Reserve System was created by Congress on 
        December 24, 1913, in response to the financial panic of 1907.
            (7) Since its beginning, the Federal Reserve System has 
        played a crucial role in the payment system of the United 
        States.
            (8) The role of the Federal Reserve System in providing 
        payment services is--
                    (A) to promote the integrity and efficiency of the 
                payment mechanism; and
                    (B) to ensure the provision of payment services to 
                all depository institutions on an equitable basis and 
                in an atmosphere of competitive fairness.
            (9) The Monetary Control Act of 1980 (title I of Public Law 
        96-221; 94 Stat. 132) provided the Board of Governors of the 
        Federal Reserve System with the authority to oversee the 
        payment system in the United States.
            (10) The Expedited Funds Availability Act (12 U.S.C. 4001 
        et seq.), enacted on August 10, 1987, provided the Board of 
        Governors of the Federal Reserve System with full authority to 
        regulate all aspects of the payment system, including the 
        receipt, payment, collection, clearing of checks, and related 
        functions of the payment system pertaining to checks.
            (11) In a July 2018 report on financial technology, the 
        Department of the Treasury acknowledged the important role of 
        the Board of Governors of the Federal Reserve System in 
        bringing real-time payment settlement services to the United 
        States when the Department recommended the Board of Governors 
        work to facilitate a faster retail payment system, in 
        particular, for smaller financial institutions such as 
        community banks and credit unions, noting that such 
        institutions should also have the ability to access the most 
        innovative technologies and payment services.
            (12) The authorities described in paragraphs (9) and (10) 
        are more critical than ever given how the financial services 
        sector has been defined as a vital component of critical 
        infrastructure in the United States.
            (13) The role of the Board of Governors of the Federal 
        Reserve System in the financial services sector will ensure the 
        resiliency of the payment system in the United States.
            (14) The Board of Governors of the Federal Reserve System 
        should develop a real-time interbank payment system to ensure 
        that--
                    (A) consumers are prioritized;
                    (B) consumers and small businesses are protected 
                from fraud and errors, including with respect to a 
                payment initiated by a consumer or small business;
                    (C) the payment system is open to increased 
                competition; and
                    (D) outsized entities do not monopolize the 
                financial infrastructure of the United States.
    (b) Purposes.--The purposes of this Act are--
            (1) to ensure that the United States has a safe, fast, 
        efficient, equitable, and fair payment system;
            (2) to clarify that the Board of Governors of the Federal 
        Reserve System has the existing authority to build a real-time 
        payment system; and
            (3) to make certain that the Board of Governors of the 
        Federal Reserve System follows through on implementing the 
        system described in paragraph (2).

SEC. 3. DEFINITION.

    In this Act, the term ``real-time'' has the meaning given the term 
in section 602 of the Expedited Funds Availability Act (12 U.S.C. 
4001), as amended by section 4(a) of this Act.

SEC. 4. REQUIREMENT THAT FUNDS DEPOSITED BE AVAILABLE FOR WITHDRAWAL IN 
              REAL-TIME.

    (a) Definitions.--
            (1) In general.--Section 602 of the Expedited Funds 
        Availability Act (12 U.S.C. 4001) is amended--
                    (A) by redesignating paragraphs (20) through (25) 
                as paragraphs (21) through (26), respectively; and
                    (B) by inserting after paragraph (19) the 
                following:
            ``(20) Real-time.--The term `real-time'--
                    ``(A) means any time; and
                    ``(B) includes a Saturday, Sunday, and a legal 
                holiday.''.
            (2) Technical and conforming amendment.--Section 3 of the 
        Check Clearing for the 21st Century Act (12 U.S.C. 
        5002(2)(D)(iv)) is amended by striking ``section 602(24)'' and 
        inserting ``section 602(25)''.
    (b) Expedited Funds Availability Schedules.--Section 603 of the 
Expedited Funds Availability Act (12 U.S.C. 4002) is amended--
            (1) in subsection (a)--
                    (A) in the subsection heading, by striking ``Next 
                Business Day'' and inserting ``Real-time'';
                    (B) in paragraph (1)--
                            (i) by striking ``Except as provided in 
                        subsection (e) and in section 604, in'' and 
                        inserting ``In''; and
                            (ii) in the matter following subparagraph 
                        (B) by striking ``not later than the business 
                        day after the business day on which'' and 
                        inserting ``in real-time when''; and
                    (C) in paragraph (2), in the matter preceding 
                subparagraph (A), by striking ``not later than the 
                business day after the business day on which'' and 
                inserting ``in real-time after'';
            (2) by striking subsection (b) and inserting the following:
    ``(b) Permanent Schedule.--Funds deposited in an account at a 
depository institution by a check drawn on a local or nonlocal 
originating depository institution shall be available for withdrawal in 
real-time.'';
            (3) by striking subsection (c);
            (4) by striking subsection (d);
            (5) by redesignating subsections (e) and (f) as subsections 
        (c) and (d), respectively;
            (6) in subsection (c), as redesignated by paragraph (5)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A)--
                                    (I) by striking ``Not more than 4 
                                business days shall intervene between 
                                the business day a'' and inserting 
                                ``A'';
                                    (II) by inserting a comma after 
                                ``subparagraph (B)'';
                                    (III) by striking ``is''; and
                                    (IV) by striking ``and the business 
                                day on which funds from such deposit 
                                are available for withdrawal'' and 
                                inserting ``shall be available for 
                                withdrawal in real-time''; and
                            (ii) in subparagraph (B), in the 
                        subparagraph heading, by striking ``paragraph'' 
                        and inserting ``subparagraph''; and
                    (B) in paragraph (2)--
                            (i) by striking ``, (b), and (c)'' and 
                        inserting ``and (b)''; and
                            (ii) in the paragraph heading, by striking 
                        ``temporary and permanent schedules'' and 
                        inserting ``permanent schedule''; and
            (7) in subsection (d)(2), as redesignated by paragraph (5), 
        by striking ``(c), or (e)'' and inserting ``or (c)''.
    (c) Safeguard Exceptions.--Section 604 of the Expedited Funds 
Availability Act (12 U.S.C. 4003) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in the paragraph heading by striking 
                        ``Next business day'' and inserting ``Real-
                        time''; and
                            (ii) in the matter following subparagraph 
                        (D) by striking ``on the business day after the 
                        business day on which such cash or funds are 
                        deposited or, in the case of a wire transfer, 
                        on the business day after the business day on 
                        which'' and inserting ``in real-time after such 
                        cash or funds are deposited or, in the case of 
                        a wire transfer, in real-time after'';
                    (B) in paragraph (2)--
                            (i) by striking ``, 603(c), or paragraphs'' 
                        and inserting ``paragraph''; and
                            (ii) by striking ``603(e)'' and inserting 
                        ``603(c)''; and
                    (C) by striking paragraph (3)(B) and inserting the 
                following:
                    ``(B) any such funds deposited in excess of such 
                amount shall be available for withdrawal in real-
                time.'';
            (2) in subsection (b), in the matter preceding paragraph 
        (1), by striking ``(c), or (e)'' and inserting ``or (c)'';
            (3) in subsection (c)(1), by striking ``(c), and (e)'' and 
        inserting ``and (c)''; and
            (4) in subsection (d), by striking ``(c), and (e)'' and 
        inserting ``and (c)''.
    (d) Miscellaneous Provisions.--Section 607 of the Expedited Funds 
Availability Act (12 U.S.C. 4006) is amended--
            (1) by striking subsections (a) and (b); and
            (2) by redesignating subsections (c) through (f) as 
        subsections (a) through (d), respectively.
    (e) Regulations and Reports by Board.--Section 609 of the Expedited 
Funds Availability Act (12 U.S.C. 4008) is amended--
            (1) by striking subsections (d) and (f); and
            (2) by redesignating subsection (e) as subsection (d).
                                 <all>