Bill Overview
Title: Payments Modernization Act of 2022
Description: 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.
Sponsors: Rep. Pressley, Ayanna [D-MA-7]
Target Audience
Population: People with bank accounts relying on depository institutions
Estimated Size: 240000000
- The bill mandates the Federal Reserve Board to establish a real-time payment system.
- This payment system will allow immediate fund availability at any time, impacting how individuals and businesses manage and access funds.
- The payment modernization will affect individuals who have bank accounts that rely on depository institutions.
- Globally, in 2021, around 2 billion people were unbanked, indicating a significant majority is banked and will be impacted by banking system changes.
- Global bank account holders are estimated to be around 3.5 billion people, factoring in a global adult population of approximately 5 billion and banking penetration rates.
- The system could also impact businesses and retail operations globally in regard to transaction speeds and fund management.
Reasoning
- The Payments Modernization Act of 2022 is aimed at improving the speed and efficiency of financial transactions, primarily impacting bank account holders in the U.S.
- The target population is quite large, with approximately 240 million Americans potentially benefiting from faster access to funds.
- Despite the vast reach, individual experiences can vary greatly based on factors such as financial literacy, current use of digital banking, and the nature of transactions undertaken.
- Many might experience small but significant improvements in convenience, particularly those who rely on transferring funds frequently, small business owners, or people living paycheck to paycheck.
- The budget constraints suggest a focus on technical development and initial rollout rather than extensive consumer education or support mechanisms, which might limit consumer uptake or awareness among less engaged populations.
Simulated Interviews
Software Engineer (New York, NY)
Age: 32 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- This policy will definitely make transfers and managing payments easier.
- I'm already using a lot of online banking features, so this adds more convenience.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Small Business Owner (Atlanta, GA)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 12/20
Statement of Opinion:
- Having immediate payment options will make managing business finances much simpler.
- It's a relief to know that payments are processed instantly, particularly during weekends.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Freelance Graphic Designer (Los Angeles, CA)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Real-time payments will help, especially when clients are slow to pay.
- I appreciate the ability to access funds immediately for personal expenses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Factory Worker (Dallas, TX)
Age: 55 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I'm not sure how much it will change for me since I mostly use cash.
- If I use my bank more, maybe it will help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
University Lecturer (Chicago, IL)
Age: 40 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- The policy is a positive step for faster access to funds across borders.
- University logistics might simplify with immediate payments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Customer Service Representative (Miami, FL)
Age: 23 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- It will be a game changer for people like me who live paycheck to paycheck.
- Having funds immediately available is crucial for emergencies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 8 | 4 |
| Year 20 | 8 | 4 |
Tech Startup Founder (Seattle, WA)
Age: 37 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Crucial for startup operations where time is money.
- Really amplifies our operational efficiency in a competitive landscape.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 10 | 8 |
| Year 10 | 10 | 8 |
| Year 20 | 9 | 8 |
Retired (Boston, MA)
Age: 61 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- I'm not sure how this will affect me, I don't use much online banking.
- If I start using it more, I guess it could help?
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Public School Teacher (Phoenix, AZ)
Age: 48 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- This is convenient for when I receive tutoring fees.
- Helps manage my finances and savings more easily.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Part-Time Consultant (Portland, OR)
Age: 66 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- This will simplify how I handle the rare payments I receive.
- Instant payments mean I don't worry about fund availability delays.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $1500000000 (Low: $1000000000, High: $2000000000)
Year 2: $1200000000 (Low: $900000000, High: $1500000000)
Year 3: $1000000000 (Low: $800000000, High: $1200000000)
Year 5: $800000000 (Low: $700000000, High: $1000000000)
Year 10: $500000000 (Low: $400000000, High: $600000000)
Year 100: $300000000 (Low: $200000000, High: $400000000)
Key Considerations
- The policy requires significant technical infrastructure that might face operational challenges in the early years of implementation.
- Security risks associated with a real-time system increase the need for robust cybersecurity investments.
- The change might face resistance from established financial institutions accustomed to slower, batched processes.
- Consumer education and adaptation to benefits and changes offered by the system are crucial for full uptake.
- The potential positive effects on financial inclusion and the modernization of transactions which might have long-term economic benefits.