Notice2023-25925
Federal Reserve Bank Services
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 24, 2023
Effective
January 2, 2024
Issuing agencies
Federal Reserve System
Abstract
The Board of Governors of the Federal Reserve System (Board) has approved the private-sector adjustment factor (PSAF) for 2024 of $29.2 million and the 2024 fee schedules for Federal Reserve priced services and electronic access. These actions were taken in accordance with the Monetary Control Act of 1980, which requires that, over the long run, fees for Federal Reserve priced services be established based on all direct and indirect costs, including the PSAF.
Full Text
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<title>Federal Register, Volume 88 Issue 225 (Friday, November 24, 2023)</title>
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[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Notices]
[Pages 82356-82375]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25925]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1822]
Federal Reserve Bank Services
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notification of 2024 private sector adjustment factor and fee
schedules.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
has approved the private-sector adjustment factor (PSAF) for 2024 of
$29.2 million and the 2024 fee schedules for Federal Reserve priced
services and electronic access. These actions were taken in accordance
with the Monetary Control Act of 1980, which requires that, over the
long run, fees for Federal Reserve priced services be established based
on all direct and indirect costs, including the PSAF.
DATES: The new fee schedules become effective January 2, 2024.
FOR FURTHER INFORMATION CONTACT: For questions regarding the fee
schedules: Ian Spear, Assistant Director, (202) 452-3959; Larkin
Turman, Senior Financial Institution Policy Analyst, (202) 657-9306;
Division of Reserve Bank Operations and Payment Systems. For questions
regarding the PSAF: Rebecca Royer, Associate Director, (202) 736-5662;
Kelsey Cassidy, Financial Institution Policy Analyst, (202) 465-6817;
Division of Reserve Bank Operations and Payment Systems. For users of
TTY-TRS, please call 711 from any telephone, anywhere in the United
States. Copies of the 2024 fee schedules for the check services are
available from the Board, the Federal Reserve Banks, or the Federal
Reserve Financial Services (FRFS) website at <a href="http://www.FRBservices.org">www.FRBservices.org</a>.
SUPPLEMENTARY INFORMATION:
I. Private-Sector Adjustment Factor, Priced Services Cost Recovery, and
Overview of 2024 Price Changes
A. Overview--Each year, as required by the Monetary Control Act
(MCA) of 1980, the Reserve Banks set fees for priced services provided
to financial institutions. These fees are set to recover, over the long
run, all direct and indirect costs and imputed costs, including
financing costs, taxes, and certain other expenses, as well as the
return on equity (profit) that would have been earned if a private-
sector business provided the services.\1\ The imputed costs and imputed
profit are collectively referred to as the private-sector adjustment
factor (PSAF).
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\1\ Although the Monetary Control Act does not define ``over the
long run,'' the Board has generally measured long-run cost recovery
for mature services to be over a 10-year rolling time frame. The
Board currently views a 10-year cost recovery expectation as
appropriate for assessing mature services, which are those that have
achieved a critical mass of customer participation and generally
have stable and predictable volumes, costs, and revenues. The 10-
year recovery rate is based on the pro forma income statements for
Federal Reserve priced services published in the Board's Annual
Report. In accordance with Accounting Standards Codification (ASC)
715 Compensation--Retirement Benefits, the Reserve Banks recognized
a $590.0 million cumulative reduction in equity related to the
priced services' benefit plans through 2022. Including this
cumulative reduction in equity from 2013 to 2022 results in cost
recovery of 103.8 percent for the 10-year period. This measure of
long-run cost recovery is also published in the Board's Annual
Report.
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From 2013 through 2022, the Reserve Banks recovered 102.5 percent
of their total expenses (including imputed costs) and targeted after-
tax profits or return on equity (ROE) for the mature services. During
that period, Check Services, the Fedwire[supreg] Funds Service,
National Settlement Service (NSS), and Fedwire[supreg] Securities
Service achieved full cost recovery. The FedACH[supreg] Service
achieved 98.1 percent cost recovery as a result of the Reserve Banks'
development and implementation of a multiyear technology initiative to
modernize the capabilities of the FedACH Service processing platform.
Although the modernized platform was implemented in 2021, the Reserve
Banks are continuing to invest in platform capabilities, as well as
resiliency, as part of a broader enhancement strategy. At the same
time, the Reserve Banks have made limited changes to existing FedACH
Service fees to provide price stability for customers in alignment with
pricing policies.\2\
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\2\ In alignment with the Board's Principles for the Pricing of
Federal Reserve Bank Services, the Reserve Banks will continue to
assess the tradeoffs between price stability for customers,
investment in technology infrastructure to reflect desirable longer-
run improvements in the ACH system, and the expectation of achieving
full cost recovery for the FedACH Service over the long run. See
Board of Governors of the Federal Reserve System, ``Adoption of Fee
Schedules and Pricing Principles for Federal Reserve Bank
Services,'' 46 FR 1338, 1343 (Jan. 6, 1981). Available at <a href="https://cdn.loc.gov/service/ll/fedreg/fr046/fr046003/fr046003.pdf">https://cdn.loc.gov/service/ll/fedreg/fr046/fr046003/fr046003.pdf</a>.
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The Board communicated in its 2019 Notice Federal Reserve Actions
to Support Interbank Settlement of Instant Payments (``2019 Notice'')
that it expects the FedNow[supreg] Service to achieve its first
instance of long-run cost recovery outside the 10-year time frame
typically applied to mature services. New services like the FedNow
Service may not initially have stable volumes, costs, and revenues.\3\
Thus, FedNow
[[Page 82357]]
Service revenue and expenses are excluded from the overall performance
projections. The FedNow Service is discussed in section G.
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\3\ Application of the 10-year rolling time frame used to
evaluate mature services to the FedNow Service would result in
prohibitively high or unnecessarily volatile pricing, negatively
affecting the Federal Reserve's public policy objectives in
providing the service. See ``Federal Reserve Actions to Support
Interbank Settlement of Instant Payments,'' 84 FR 39297, (August 9,
2019). Available at <a href="https://www.govinfo.gov/content/pkg/FR-2019-08-09/pdf/2019-17027.pdf">https://www.govinfo.gov/content/pkg/FR-2019-08-09/pdf/2019-17027.pdf</a>.
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Table 1 summarizes 2022 actual, 2023 forecasted, and 2024 budgeted
annual cost recovery rates for all mature priced services. Cost
recovery is forecasted to be 104.4 percent in 2023 and forecasted to be
103.0 percent in 2024.
Table 1--Aggregate Mature Priced Services Pro Forma Cost and Revenue Performance \a\
[Dollars in millions]
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Recovery rate
Year Revenue Total expense Net income Targeted ROE after targeted
(ROE) ROE (%)
1 \b\ 2 \c\ 3 [1-2] 4 \d\ 5 \e\ [1/(2 +
4)]
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2022 (actual)................... 466.8 462.9 3.9 7.2 99.3
2023 (forecast)................. 504.9 475.5 29.4 8.3 104.4
2024 (budget)................... 501.4 477.0 24.4 9.7 103.0
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\a\ Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding.
Excludes amounts related to the FedNow Service.
\b\ Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital
requirements and, when combined with liabilities, exceeds total assets (attachment 1). For 2024, the projected
revenue assumes implementation of the fee changes.
\c\ The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses
include taxes, Board of Governors' priced services expenses, the cost of float, and interest on imputed debt,
if any. Credits or debits related to the accounting for pension plans under ASC 715 are also included.
\d\ Targeted ROE is the after-tax ROE included in the PSAF.
\e\ The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be
recognized in accordance with ASC 715. Future gains or losses, and their effect on cost recovery, cannot be
projected.
Table 2 provides an overview of cost recovery budgets, forecasts,
and performance for the 10-year period from 2013 to 2022, 2022 actual,
2023 budget, 2023 forecast, and 2024 budget by mature priced service.
Table 2--Mature Priced Services Cost Recovery
[Percent]
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2023 Budget 2024 Budget
Priced service 2013-2022 2022 Actual \a\ 2023 Forecast \b\
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All mature services............. 102.5 99.3 98.2 104.4 103.0
Check........................... 108.4 99.8 96.7 101.2 95.4
FedACH.......................... 98.1 101.7 99.0 105.9 105.8
Fedwire Funds and NSS........... 101.5 95.3 96.2 101.3 103.2
Fedwire Securities.............. 103.1 107.6 106.5 118.9 110.9
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\a\ The 2023 budget figures reflect the final budgets as approved by the Board of Governors in December 2022.
See Board of Governors of the Federal Reserve System, ``2023 Federal Reserve Banks Budgets'' available at
<a href="https://www.federalreserve.gov/foia/files/2023ReserveBankBudgets.pdf">https://www.federalreserve.gov/foia/files/2023ReserveBankBudgets.pdf</a>.
\b\ The 2024 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks
will submit final budget data to the Board for consideration by December 2023.
1. 2023 Forecasted Performance--The Reserve Banks forecast that
they will recover 104.4 percent of the costs of providing mature priced
services in 2023, including total expense and targeted ROE, compared
with a 2023 budgeted recovery rate of 98.2 percent, as shown in Table
2. Overall, the Reserve Banks forecast that they will fully recover
actual and imputed costs and earn net income of $29.4 million, compared
with the targeted ROE of $8.3 million. The Reserve Banks forecast that
all services will achieve full cost recovery in 2023.
2. 2024 Private-Sector Adjustment Factor--The 2024 PSAF for Reserve
Bank mature priced services is $29.2 million.\4\ This amount represents
an increase of $5.5 million from the 2023 PSAF of $23.7 million. This
increase is attributable to a $6.1 million increase in the cost of
capital primarily driven by rising interest rates, and a $0.8 million
increase in Board of Governors expenses, offset by a $1.4 million
decrease in sales tax.
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\4\ The FedNow Service launched in July 2023. Inclusive of the
FedNow Service, the PSAF increases to $46.3 million for 2024. Per
its 2019 Notice ``Federal Reserve Actions to Support Interbank
Settlement of Faster Payments'' (``2019 Notice''), the Board has
determined that it is most appropriate to report FedNow Service cost
recovery independently of mature priced services until the service
has relatively stable revenues and costs. Thus, FedNow Service
revenue is excluded from overall performance projections for 2023.
See ``Federal Reserve Actions to Support Interbank Settlement of
Faster Payments,'' 4 FR 39297, (August 9, 2019). Available here:
Federal Register: Federal Reserve Actions To Support Interbank
Settlement of Faster Payments.
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3. 2024 Projected Performance--The Reserve Banks project a mature
priced services cost recovery rate of 103.0 percent in 2024, with a net
gain of $24.4 million and targeted ROE of $9.7 million. The Reserve
Banks project that each of the individual service lines will achieve
full cost recovery in 2024 except for Check Services. Check Services
are expected to under recover primarily because of anticipated volume
declines. The Reserve Banks' primary risks to current projections are
unanticipated volume and revenue reductions and the potential for cost
overruns from new and ongoing improvement initiatives.
4. 2024 Pricing--The following summarizes the Reserve Banks'
changes
[[Page 82358]]
to fee schedules for priced services in 2024:
Check Services
The Reserve Banks will increase participation fees and Reject
Repair fees and reduce fixed fees across image cash letter options. The
Reserve Banks will additionally replace their existing 5:00 a.m.
eastern time (ET) and 9:30 a.m. ET forward check deposit deadlines with
a single consolidated deadline at 7:30 a.m. ET. The Reserve Banks will
reassign their customers across new volume tiers based on recent actual
levels, a process they perform every year. These changes will help
address declining check volumes and continue a value-based pricing
strategy for financial institutions.
FedACH Service
The Reserve Banks will increase the FedACH settlement fee for some
customers and introduce a new FedACH receipt 5-year discount program
for customers with Premium Receiver status. These changes will help
address ongoing operational costs while also providing incentives for
customers who handle high volumes of FedACH receipts.
Fedwire Funds Service
The Reserve Banks will increase the Fedwire Funds transfer price
for all three tiers, the participation fee, and the FedPayments[supreg]
Manager Import/Export fee. These changes will help address costs
stemming from ongoing customer enhancement projects and will increase
overall fixed fee revenue.
National Settlement Service
The Reserve Banks will increase the National Settlement Service
pre-file and pre-entry fees. These changes will help address rising
operational costs.
Fedwire Securities Service
The Reserve Banks will maintain prices at existing levels for all
priced Fedwire Securities Service products.
FedNow Service
The Reserve Banks will maintain the previous year's fee schedule,
inclusive of discounts to the monthly participation fee as well as for
customer credit transfers under a threshold of 2,500 per month.\5\
These discounts will support financial institution testing and
validation of 24x7 instant payments processing capabilities.
Additionally, to support initial onboarding, the Reserve Banks will
continue to discount certain FedLine[supreg] Solutions fees. New
FedLine Advantage[supreg] channel connections or upgrades from existing
FedLine Solutions to FedLine Advantage will be discounted to $0.00 for
a rolling 12-month period following initiation.
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\5\ See Federal Register Notice for Federal Reserve Bank
Services (December 12, 2022). Available here: Federal Register::
Federal Reserve Bank Services
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FedLine Solutions
The Reserve Banks will increase the monthly fees for
FedMail[supreg], the FedMail Email [agrave] la carte option, and all
electronic access service offered by Accounting Information Services.
The Reserve Banks will also introduce a new FedLine Web[supreg] pricing
tier called FedLine Web Premier to reflect the value-add service of
check payment automation. These changes will help address the rising
operating costs for attended access and extended support for the FedNow
Service.
For the mature services, these changes collectively are an average
price increase of 1.8 percent. The price changes are in line with the
Reserve Banks' strategy to offset rising costs, diversify revenue
sources, and continue to reduce pricing volatility associated with
volume-based pricing. For the FedNow Service, the Reserve Banks
continue to focus on adoption and achieving network effects as a new
service.
B. Private-Sector Adjustment Factor--The imputed debt financing
costs, targeted ROE, and effective tax rate are based on a U.S.
publicly traded market model.\6\ The method for calculating the
financing costs in the PSAF requires determining the appropriate
imputed levels of debt and equity and then applying the applicable
financing rates. In this process, a pro forma balance sheet using
estimated assets and liabilities associated with the Reserve Banks'
priced services is developed, and the remaining elements that would
exist are imputed as if these priced services were provided by a
private business firm. The same generally accepted accounting
principles that apply to commercial-entity financial statements apply
to the relevant elements in the priced services pro forma financial
statements.
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\6\ Data for U.S. publicly traded firms is from the Standard and
Poor's Compustat[supreg] database. This database contains
information on more than 6,000 U.S. publicly traded firms, which
approximates information for the entirety of the U.S. market.
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The portion of Federal Reserve assets that will be used to provide
priced services during the coming year is determined using information
about actual assets and projected disposals and acquisitions. The
priced portion of these assets is determined based on the allocation of
depreciation and amortization expenses of each asset class. The priced
portion of actual Federal Reserve liabilities consists of post-
employment and post-retirement benefits, accounts payable, and other
liabilities. The priced portion of the actual net pension asset or
liability is also included on the balance sheet.\7\
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\7\ The pension assets are netted with the pension liabilities
and reported as a net asset or net liability as required by ASC 715
Compensation--Retirement Benefits.
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The equity financing rate is the targeted ROE produced by the
capital asset pricing model (CAPM). In the CAPM, the required rate of
return on a firm's equity is equal to the return on a risk-free asset
plus a market risk premium. The risk-free rate is based on the three-
month Treasury bill; the beta is assumed to be equal to 1.0, which
approximates the risk of the market as a whole; and the market risk
premium is based on the monthly returns in excess of the risk-free rate
over the most recent 40 years. The resulting ROE reflects the return a
shareholder would expect when investing in a private business firm.
For simplicity, given that federal corporate income tax rates are
graduated, state income tax rates vary, and various credits and
deductions can apply, an actual income tax expense is not explicitly
calculated for Reserve Bank priced services. Instead, the Board targets
a pretax ROE that would provide sufficient income to fulfill the priced
services' imputed income tax obligations. To the extent that
performance results are greater or less than the targeted ROE, income
taxes are adjusted using the effective tax rate.
Capital structure. The capital structure is imputed based on the
imputed funding need (assets less liabilities), subject to minimum
equity constraints. Short-term debt is imputed to fund the imputed
short-term funding need. Long-term debt and equity are imputed to meet
the priced services long-term funding need at a ratio based on the
capital structure of the U.S. publicly traded market.\8\ Any equity
imputed that exceeds the amount needed to fund the priced services'
assets and meet the minimum equity constraints is offset by a reduction
in imputed long-term debt. When imputed
[[Page 82359]]
equity is larger than what can be offset by imputed debt, the excess is
imputed as investments in Treasury securities; income imputed on these
investments reduces the PSAF.
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\8\ The FDIC rule, which was adopted as final on April 14, 2014,
requires that well-capitalized institutions meet or exceed the
following standards: (1) total capital to risk-weighted assets ratio
of at least 10 percent, (2) tier 1 capital to risk-weighted assets
ratio of at least 8 percent, (3) common equity tier 1 capital to
risk-weighted assets ratio of at least 6.5 percent, and (4) a
leverage ratio (tier 1 capital to total assets) of at least 5
percent. Because all of the Federal Reserve priced services' equity
on the pro forma balance sheet qualifies as tier 1 capital, only
requirements 1 and 4 are binding. The FDIC rule can be located at 12
CFR 324.403(b).
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Application of the Federal Reserve Policy on Payment System Risk
(PSR policy) to the Fedwire Funds Service. The Board's PSR policy
incorporates the international standards for financial market
infrastructures (FMIs) developed by the Committee on Payments and
Market Infrastructures and the Technical Committee of the International
Organization of Securities Commissions in the Principles for Financial
Market Infrastructures.\9\ The Board recognizes the critical role the
Fedwire Services, including the Fedwire Funds Service, play in the
financial system and requires them to meet or exceed the risk-
management standards in the policy, consistent with relevant guidance
and the requirements in the MCA.\10\ Principle 15 states that an FMI
should identify, monitor, and manage general business risk and hold
sufficient liquid net assets funded by equity to cover potential
general business losses so that it can continue operations and services
as a going concern if those losses materialize. Further, liquid net
assets should at all times be sufficient to ensure a recovery or
orderly wind-down of critical operations and services. The Fedwire
Funds Service does not face the risk that a business shock would cause
the service to wind down in a disorderly manner and disrupt the
stability of the financial system. To foster competition with private-
sector FMIs, however, the Reserve Banks' priced services will hold an
amount equivalent to six months of the Fedwire Funds Service's current
operating expenses as liquid financial assets and equity on the pro
forma balance sheet.\11\ Current operating expenses are defined as
normal business operating expenses on the income statement, less
depreciation, amortization, taxes, and interest on debt. Using the
Fedwire Funds Service's preliminary 2024 budget, six months of current
operating expenses would be $68.5 million. In 2024, $68.5 million of
equity was imputed to meet the FDIC capital requirements and was
sufficient to meet the PSR policy requirement.
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\9\ Principles for Financial Market Infrastructures, <a href="https://www.bis.org/cpmi/publ/d101a.pdf">https://www.bis.org/cpmi/publ/d101a.pdf</a>.
\10\ Certain standards may require flexibility in the way they
are applied to central bank-operated systems because of central
banks' unique role in the financial markets and their public
responsibilities. These principles include principle 2 on
governance, principle 3 on the framework for the comprehensive
management of risks, principle 4 on credit risk, principle 5 on
collateral, principle 7 on liquidity risk, principle 13 on
participant-default rules and procedures, principle 15 on general
business risk, and principle 18 on access and participation
requirements. See PSR Policy Part I.B.1.a.
\11\ This requirement does not apply to the Fedwire Securities
Service. There are no private-sector competitors to the Fedwire
Securities Service that would be expected to meet such a
requirement. Imposing such a requirement when pricing the securities
services could artificially increase the cost of these services.
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Effective tax rate. Like the imputed capital structure, the
effective tax rate is calculated based on data from U.S. publicly
traded firms. The tax rate is the mean of the weighted average rates of
the U.S. publicly traded market over the past five years.
Debt and equity financing. The imputed short- and long-term debt
financing rates are derived from the nonfinancial commercial paper
rates from the Federal Reserve Board's H.15 Selected Interest Rates
release (AA and A2/P2) and the annual Merrill Lynch Corporate & High
Yield Index rate, respectively. The equity financing rate is described
above. The rates for debt and equity financing are applied to the
priced services estimated imputed short-term debt, long-term debt, and
equity needed to finance short- and long-term assets and meet equity
requirements.
The 2024 PSAF is $29.2 million, compared with $23.7 million in
2023. The increase of $5.5 million is attributable to a net $6.1
million increase in the cost of capital, and a $0.8 million increase in
Board of Governors expenses, offset by a $1.4 million decrease in sales
tax. The net $6.1 million increase in cost of capital is primarily
driven by a $1.6 million increase in ROE imputed to satisfy FDIC
requirements for a well-capitalized institution and rising interest
rates resulting in a $4.5 million increase in cost of debt.
The PSAF expense of $29.2 million, detailed in Table 5, includes
$17.7 million for capital funding, $7.6 million for Board of Governors'
expense, and $3.9 million in sales tax expense.
As shown in Table 3, 2024 total assets of $816.1 million increased
by $10.5 million from 2023. The net increase in total assets includes
an additional $62.6 million long-term assets partially offset by a net
$52.1 million decrease in short-term assets and imputed investments.
The net long-term asset increase of $62.6 million primarily
consists of a $94.4 million increase in the net pension asset,
reflecting higher surplus and higher discount rate. The increase is
partially offset by a decrease in the deferred tax asset of $28.1
million due to the higher discount rate.
The decrease in the short-term assets is primarily driven by a
$67.2 million decrease in the imputed investments in Treasury
securities from imputed equity required to meet FDIC capital
requirements for a well-capitalized institution and to comply with the
PSR policy, partially offset by a $37.0 million increase in imputed
investments in Fed Funds.
The capital structure of the 2024 pro forma balance sheet, provided
in Table 4, is composed of equity of $68.5 million, or 12.3 percent of
the 2024 risk-weighted assets detailed in Table 6, and long-term debt
of $100.3 million. The 2024 capital structure differs from that of
2023, which was composed of $69.5 million of equity and no long-term
debt. Provided in Table 5, the 2024 initially imputed equity required
to fund assets and meet the publicly traded firm model capital
requirements is $68.5 million. As long-term assets are marginally
greater than long-term liabilities, long-term debt of $100.36 million
was imputed at the observed market ratio of 59.4 percent. The equity of
$68.5 million was adequate to meet the FDIC capital requirements for a
well-capitalized institution and sufficient to satisfy the PSR policy
requirements.
The net Accumulated Other Comprehensive loss is $551.0 million,
compared with $640.8 million in 2023. The $89.8 million increase is
primarily attributable to a higher discount rate. The net Accumulated
Other Comprehensive loss position does not reduce the total imputed
equity required to fund priced services assets or fulfill the FDIC
equity requirements for a well-capitalized institution.
[[Page 82360]]
Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Mature Priced Services a
[Millions of dollars--projected average for year]
----------------------------------------------------------------------------------------------------------------
2024 2023 Change
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Short-term assets:
Receivables................................................. $41.8 $41.9 $(0.1)
Inventory................................................... 0.2 0.2 0.1
Prepaid expenses............................................ 24.0 30.9 (6.8)
Items in process of collection \12\......................... 61.0 76.0 (15.0)
-----------------------------------------------
Total short-term assets................................. 127.0 148.9 (21.9)
Imputed investments: \13\
Imputed investment in Treasury securities................... .............. 67.2 (67.2)
Imputed investment in Fed Funds............................. 219.0 182.0 37.0
Total imputed investments............................... 219.0 249.2 (30.2)
Long-term assets:
Premises \14\............................................... 95.9 97.3 (1.4)
Furniture and equipment..................................... 53.9 54.2 (0.2)
Software and leasehold improvements......................... 67.0 69.9 (2.9)
Net pension asset........................................... 120.4 25.9 94.4
Deferred tax asset.......................................... 129.4 157.4 (28.1)
-----------------------------------------------
Total long-term assets.................................. 470.1 407.5 62.6
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Total assets........................................ 816.1 805.6 10.5
Short-term liabilities:
Deferred credit items....................................... 280.0 258.0 22.0
Short-term debt............................................. 32.7 47.0 (14.3)
Short-term payables......................................... 33.4 25.9 7.4
-----------------------------------------------
Total short-term liabilities............................ 346.0 330.9 15.1
Long-term liabilities:
Postemployment/postretirement benefits and net pension 300.0 403.9 (103.9)
liabilities \15\...........................................
Long term debt.......................................... 100.3 .............. 100.3
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Total liabilities....................................... 747.6 736.1 11.5
Equity \16\............................................. (551.0) (640.8) 89.8
-----------------------------------------------
Total liabilities and equity........................ 816.1 805.6 10.5
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\a\ Calculations in this table and subsequent PSAF tables may be affected by rounding. Excludes amounts related
to the FedNow Service.
Table 4--Imputed Funding for Mature Priced-Services Assets a
[Millions of dollars]
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2024 2023
------------------------------------------------------------------------
A. Short-term asset financing:
Short-term assets to be financed:...
Receivables..................... $41.8 $41.9
Inventory....................... 0.2 0.2
Prepaid expenses................ 24.0 30.9
-------------------------------
Total short-term assets to be 66.0 140.1
financed...........................
Short-term payables............. 33.4 25.9
Net short-term assets to be financed 32.7 47.0
-------------------------------
Imputed short-term debt financing 32.7 47.0
\17\...............................
B. Long-term asset financing:
Long-term assets to be financed:....
Premises........................ 95.9 97.3
Furniture and equipment......... 53.9 54.2
Software and leasehold 67.0 69.9
improvements...................
Net pension asset............... 120.4 25.9
Deferred tax asset.............. 129.4 157.4
Total long-term assets to be 470.1 407.5
financed...........................
Postemployment/postretirement 300.0 403.9
benefits and net pension
liabilities....................
Net long-term assets to be 68.5 69.5
financed.......................
-------------------------------
Imputed long-term debt \21\..... 100.3 0.0
Imputed equity \21\............. 68.5 69.5
-------------------------------
[[Page 82361]]
Total long-term financing... 68.5 69.5
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\a\ Excludes amounts related to the FedNow Service.
Table 5--Derivation of the 2024 and 2023 PSAF for Mature Priced Services a
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
2024 2023
---------------------------------------------------------------
Debt Equity Debt Equity
----------------------------------------------------------------------------------------------------------------
A. Imputed long-term debt and equity:
Net long-term assets to finance............. $168.9 $168.9 $2.3 $2.3
Capital structure observed in market........ 59.4% 40.6% 59.1% 40.9%
Pre-adjusted long-term debt and equity...... 100.3 68.5 1.4 1.0
Equity adjustments: \18\
Equity to meet capital requirements......... .............. 68.5 .............. 49.9
Adjustment to debt and equity funding given .............. .............. (1.4) 1.4
capital requirements \19\..................
Adjusted equity balance..................... .............. 68.5 .............. 2.3
Equity to meet capital requirements \20\.... .............. .............. .............. 47.5
----------------------------------------------------------------------------------------------------------------
Total imputed long-term debt and equity. .............. 68.5 .............. 49.9
B. Cost of capital:
Elements of capital costs:..................
Short-term debt \21\........................ 32.7 x 5.4% = 1.8 47.0 x 2.6% = 1.2
Long-term debt \25\......................... 100.3 x 4.0% = 4.0 x 3.6% =
---------------- ---------------
Equity \22\................................. 68.5 x 17.4% = 11.9 49.9 x 14.9% = 7.4
C. Incremental cost of PSR policy:
Equity to meet policy....................... x 17.4% = 19.7 x 14.9% = 2.9
----------------
D. Other required PSAF costs:
Sales taxes................................. .............. 3.9 .............. 5.3
Board of Governors expenses................. .............. 7.6 .............. 6.8
---------------- ---------------
.............. 11.5 .............. 12.1
---------------- ---------------
E. Total PSAF:.................................. .............. 29.2 .............. 23.7
As a percent of assets...................... .............. 3.6% .............. 2.9%
As a percent of expenses.................... .............. 3.6% .............. 3.9%
F. Tax rates................................ .............. 18.84% .............. 19.26%
----------------------------------------------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.
Table 6--Computation of 2024 Capital Adequacy for Federal Reserve Mature Priced Services a
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Weighted
Assets Risk weight assets
----------------------------------------------------------------------------------------------------------------
Imputed investments:
1-Year Treasury securities \23\............................. $ 0.0 $
Federal funds \24\.......................................... 219.0 0.2 43.8
---------------- ---------------
Total imputed investments................................... 219.0 .............. 43.8
Receivables................................................. 41.8 0.2 8.4
Inventory................................................... 0.2 1.0 0.2
Prepaid expenses............................................ 24.0 1.0 24.0
Items in process of collection.............................. 61.0 0.2 12.2
Premises.................................................... 99.4 1.0 99.4
Furniture and equipment..................................... 53.9 1.0 53.9
Software and leasehold improvements......................... 67.0 1.0 67.0
Pension asset............................................... 120.4 1.0 120.4
Deferred tax asset.......................................... 129.4 1.0 129.4
---------------- ---------------
Total................................................... 816.1 .............. 558.7
---------------- ---------------
Imputed equity:
Capital to risk-weighted assets............................. 12.3%
[[Page 82362]]
Capital to total assets..................................... 8.4%
----------------------------------------------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.
C. Check Services--Table 7 shows the 2022 actual, 2023 forecasted,
and 2024 budgeted cost-recovery performance for commercial check
services.
Table 7--Check Services Pro Forma Cost and Revenue Performance
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net income Recovery rate after targeted
Year Revenue Total expense (roe) Targeted roe roe
1 2 3 [1-2] 4 5 [1/(2 + 4)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022 (actual)............................................. 110.5 109.7 0.8 1.0 99.8
2023 (forecast)........................................... 110.7 108.1 2.6 1.3 101.2
2024 (budget)............................................. 106.1 109.1 (3.0) 2.2 95.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. 2023 Forecast--The Reserve Banks forecast that Check Services
will recover 101.2 percent of total expenses and targeted ROE, compared
with a 2023 budgeted recovery rate of 96.7 percent.
---------------------------------------------------------------------------
\12\ Credit float, which represents the difference between items
in process of collection and deferred credit items, occurs when the
Reserve Banks debit the paying bank for transactions before
providing credit to the depositing bank. Float is directly estimated
at the service level.
\13\ Consistent with the Board's PSR policy, the Reserve Banks'
priced services will hold an amount equivalent to six months of the
Fedwire Funds Service's current operating expenses as liquid net
financial assets and equity on the pro forma balance sheet. Six
months of the Fedwire Funds Service's projected current operating
expenses is $68.5 million. In 2024, the amount of equity was
sufficient to meet the regulatory capital requirements and no
additional equity was imputed.
\14\ Includes the allocation of Board of Governors assets to
priced services of $3.5 million for 2024 and $2.7 million for 2023.
\15\ Includes the allocation of Board of Governors liabilities
to priced services of $1.2 million for 2024 and $1.3 million for
2023.
\16\ Includes an accumulated other comprehensive loss of $551.0
million for 2024 and $640.8 million for 2023, which reflects the
ongoing amortization of the accumulated loss in accordance with ASC
715. Future gains or losses, and their effects on the pro forma
balance sheet, cannot be projected. See Table 5 for calculation of
required imputed equity amount.
\17\ Imputed short-term debt financing is computed as the
difference between short-term assets and short-term liabilities. As
presented in table 5, the financing costs of imputed short-term
debt, imputed long-term debt and imputed equity are the elements of
cost of capital, which contribute to the calculation of the PSAF.
\18\ If minimum equity constraints are not met after imputing
equity based on the capital structure observed in the market,
additional equity is imputed to meet these constraints. The long-
term funding need was met by imputing long-term debt and equity
based on the capital structure observed in the market (see Tables 4
and 6). In 2023, the amount of imputed equity met the minimum equity
requirements for risk-weighted assets.
\19\ Equity adjustment offsets are due to a shift of long-term
debt funding to equity in order to meet FDIC capital requirements
for well-capitalized institutions.
\20\ Additional equity in excess of that needed to fund priced
services assets is offset by an asset balance of imputed investments
in Treasury securities.
\21\ Imputed short-term debt and long-term debt are computed in
Table 4.
\22\ The 2024 ROE is equal to a risk-free rate plus a risk
premium (beta * market risk premium). The 2023 after-tax CAPM ROE is
calculated as 5.50% + (1.0 * 8.60%) = 14.11%. Using a tax rate of
18.8%, the after-tax ROE is converted into a pretax ROE, which
results in a pretax ROE of (14.11%/(1-18.8%)) = 17.38%. Calculations
may be affected by rounding.
\23\ If minimum equity constraints are not met after imputing
equity based on all other financial statement components, additional
equity is imputed to meet these constraints. Additional equity
imputed to meet minimum equity requirements is invested solely in
Treasury securities. The imputed investments are similar to those
for which rates are available on the Federal Reserve's H.15
statistical release, which can be located at <a href="http://www.federalreserve.gov/releases/h15/data.htm">http://www.federalreserve.gov/releases/h15/data.htm</a>.
\24\ The investments are imputed based on the amounts arising
from the collection of items before providing credit according to
established availability schedules.
---------------------------------------------------------------------------
Through August 2023, total commercial forward and total commercial
return check volumes were 6.7 percent lower and 3.9 percent greater,
respectively, than they were during the same period last year. For
full-year 2023, the Reserve Banks estimate that their total forward
check volume will decline 7.2 percent (compared with a budgeted decline
of 8.0 percent) and their total return check volume will increase 1.4
percent (compared with a budgeted decline of 6.0 percent) from 2022
levels. The Reserve Banks expect that check volumes will continue to
decline because of ongoing substitution away from checks to other
payment instruments.
2. 2024 Pricing--The Reserve Banks expect Check Services to recover
95.4 percent of total expenses and targeted ROE in 2024. The Reserve
Banks project revenue to be $106.1 million, a decline of $4.6 million,
or 4.1 percent from the 2023 forecast. Total expenses for Check
Services are projected to be $109.1 million, an increase of $1.0
million, or 1.0 percent, from 2023 forecasted expenses.
As check volumes continue to decline, the proposed pricing
increases are intended to help stabilize check revenues, to shift the
revenue mix toward fixed fees, and to continue a value-based pricing
strategy for financial institutions that use the service. To that end,
the Reserve Banks will increase the pricing tiers for the fixed monthly
participation and Reject Repair fees. These fee changes support the
cost of maintaining FRFS Check Services infrastructure as fewer checks
are written each year and follow the Check Services business line's
pricing strategy to increase the share of revenue collected from fixed
fees. Table 8 displayed below shows the 2024-tiered participation fees.
[[Page 82363]]
Table 8--Check 21 Participation Fee Structure
------------------------------------------------------------------------
Tier \25\ Monthly fee
------------------------------------------------------------------------
1....................................................... $425
2....................................................... 260
3....................................................... 165
4....................................................... 80
------------------------------------------------------------------------
The Reserve Banks will also increase Reject Repair fees for both
basic and premium users by $0.05. The Reserve Banks will also eliminate
forward check deposit deadlines--5:00 a.m. ET and 9:30 a.m. ET--and
implement a new deadline at 7:30 a.m. ET to further simplify the FRFS
Check Deposit structure. Removing the 9:30 a.m. ET deposit deadline and
instituting a 7:30 a.m. ET deadline will eliminate debit float and
provide customers two-and-a-half additional hours to deposit.\26\
---------------------------------------------------------------------------
\25\ This fee is charged to financial institutions that have
received any Check 21 electronic or substitute check volume (forward
or return) from the Reserve Banks during the month. The fee is
applied at the parent financial institution level, as defined in the
Reserve Banks' Global Customer Directory. Each financial
institution's tier assignment is determined by the criteria
described in the FedForward Standard Endpoint Tier Listing.
\26\ Because of FRFS' existing 8:00 a.m. ET Premium Delivery
service, there are items deposited between 7:30 a.m. and 9:30 a.m.
today that cannot be presented on a same-day basis and therefore are
held over until the following business day, thus the Federal Reserve
incurs debit float in the process.
---------------------------------------------------------------------------
The Standard Daily Fee B Image Cash Letter (ICL) Option will
consequently be eliminated as the deposit option only provides deposit
deadlines at the 5:30 a.m. ET and 7:30 a.m. ET deadlines the Reserve
Banks intend to terminate. The tables below outline the eliminated and
new deposit deadlines:
----------------------------------------------------------------------------------------------------------------
Eliminated pricing structure New pricing
-------------------------------- structure
Deadline ---------------
5:00 AM ET 9:30 AM ET 7:30 AM ET
----------------------------------------------------------------------------------------------------------------
Standard ICL Deposit Price Changes
----------------------------------------------------------------------------------------------------------------
Cash Letter Fee................................................. $8.50 $10.50 $10.50
Tier 1...................................................... 0.057 0.072 0.057
Tier 2...................................................... 0.067 0.082 0.067
Tier 3...................................................... 0.077 0.092 0.077
Tier 4...................................................... 0.087 0.102 0.087
Substitute Checks............................................... 0.200 0.200 0.200
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Eliminated pricing structure New pricing structure
Deadline ---------------------------------------------------------------
1:00 AM ET 9:30 AM ET 1:00 AM ET 7:30 AM ET
----------------------------------------------------------------------------------------------------------------
Standard Daily Fee A Deposit Option
----------------------------------------------------------------------------------------------------------------
Daily Fixed Fee................................. 225.00
225.00
---------------------------------------------------------------
Tier 1...................................... $0.003 $0.018 $0.003 $0.010
Tier 2...................................... 0.014 0.029 0.014 0.021
Tier 3...................................... 0.024 0.039 0.024 0.031
Tier 4...................................... 0.035 0.050 0.035 0.042
Substitute Checks............................... 0.200 0.200 0.200 0.200
----------------------------------------------------------------------------------------------------------------
Eliminate Standard Daily Fee B Deposit Option
----------------------------------------------------------------------------------------------------------------
In order to maintain volume stability, fixed fees across image cash
letter options and volume thresholds for some customers will decrease
in 2024. To that end, Daily Fixed Fees for FedForward [supreg] Services
Premium Daily B image cash letters will be reduced by $100, from $1,700
to $1,600, and for FedForward Premium Daily C image cash letters by
$250, from $3,400 to $3,150. Volume thresholds for Retail Payments
Premium Receivers will be reduced from 2 million to 1 million items for
Level 2 receivers and from 2 million to 1.5 million items for Level 3
receivers.
Finally, the Reserve Banks evaluate and set tier assignments every
other year based on changes in the volume of items received by
endpoints. These tier changes are designed to keep customers assigned
to the appropriate tier based on their volume, daily fixed fee
reductions, and volume threshold reductions that will allow customers
to qualify for discounts more often as the circulation of checks
decline. In 2024, the Reserve Banks will reassign the tier placement of
672 customers in FedForward Standard's tiers, 389 customers in
FedForward Premium Daily's tiers, 36 customers in the FedReturn[supreg]
Standard's tiers, and 36 customers in FedReturn Premium Daily's tiers.
Following these reassignments, the Reserve Banks will charge these
customer segments in accordance to their tier's participation fee.
From the above price changes, the Reserve Banks estimate all
customer segments will experience an average increase of 0.8 percent of
their total FRFS projected charges.
The Reserve Banks' primary risk to current projections for Check
Services is a greater than expected decline in check volume due to the
general reduction in check writing, substitution away from checks to
other payment instruments, and competition from correspondent banks,
aggregators, and direct exchanges, which would result in lower than
anticipated revenue.
D. FedACH Services--Table 9 shows the 2022 actual, 2023 forecasted,
and 2024 budgeted cost-recovery performance for commercial FedACH
Services.
[[Page 82364]]
Table 9--FedACH Services Pro Forma Cost and Revenue Performance
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Year Revenue Total expense Net income Targeted roe after targeted
(roe) roe
1 2 3 [1-2] 4 5 [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2022 (actual)................... 174.0 169.5 4.5 1.6 101.7
2023 (forecast)................. 183.0 170.6 12.4 2.2 105.9
2024 (budget)................... 184.8 171.0 13.8 3.6 105.8
----------------------------------------------------------------------------------------------------------------
1. 2023 Forecast--The Reserve Banks forecast that FedACH Services
will recover 105.9 percent of total expenses and targeted ROE, compared
with a 2023 budgeted recovery rate of 99.0 percent.
Through August 2023, FedACH commercial origination and receipt
volume was 0.4 percent higher and 2.0 percent higher, respectively,
than they were during the same period last year. For full year 2023,
the Reserve Banks estimate that FedACH commercial origination and
receipt volume will increase 0.2 percent and 1.1 percent, respectively,
from 2022 levels, compared with a budgeted increase of 0.6 percent and
decline of 1.3 percent.
2. 2024 Pricing--The Reserve Banks expect FedACH Services to
recover 105.8 percent of total expenses and targeted ROE in 2024. The
Reserve Banks project revenue to be $184.8 million, an increase of $1.8
million, or 1.0 percent, from the 2023 forecast. Total expenses are
projected to be $171.0 million, an increase of $0.4 million, or 0.2
percent, from the 2023 forecast.
The Reserve Banks will increase the monthly ACH Settlement Fee from
$100 to $110 per RTN per month for receivers in Tier 2 and from $200 to
$250 per RTN per month for receivers in Tier 3.\27\ The price changes
are driven by ongoing operational costs and increased costs associated
with the continued introduction of additional intraday settlement
windows to the FedACH Service.
---------------------------------------------------------------------------
\27\ Premium Receivers, Tier 1, will be subject to a settlement
fee of $60 per RTN per month. Non-Premium Receivers with a volume
threshold of less than 1,500,000 items per month, Tier 2, will be
subject to a settlement fee of $110 per RTN per month. Non-Premium
Receivers with a volume threshold of more than 1,500,000 items per
month, Tier 3, will be subject to a settlement fee of $250 per RTN
per month.
---------------------------------------------------------------------------
The Reserve Banks will introduce a new FedACH receipt 5-year
discount program for FedACH customers with Premium Receiver status.\28\
Eligible customers (Premium Receivers) that choose to participate in
the program will receive the following discounts for a five-year period
as long as during that time they also maintain their existing Premium
Receiver status:
---------------------------------------------------------------------------
\28\ Premium Receivers are Receiving Depository Financial
Institutions (RDFIs) receiving through FedACH at least 90 percent of
their FedACH-originated items, but less than 90 percent of all of
their ACH items originated through any operator (Level One); or
RDFIs receiving through FedACH at least 90 percent of all of their
ACH items originated through any operator (Level Two).
---------------------------------------------------------------------------
<bullet> Customers with more than 30 million FedACH receipt items
per month:
[cir] $0.0002 per-item discount on all forward receipt items
received through FedACH for the full 5-year length of the agreement
[cir] 50 percent discount on the FedACH FedPayments Reporter
service (FPR) for two years at any point during participation in the
program
[cir] 100 percent discount on the FedACH Exception Resolution
Service (ERS) for two years at any point during their participation in
the program
[cir] 100 percent discount on the FedACH FedPayments Insights
service (FPI) for two years at any point during their participation in
the program
<bullet> Customers with between 5 and 30 million FedACH receipt
items per month
[cir] $0.0001 per-item discount on all forward receipt items
received through FedACH for the full 5-year length of the agreement
[cir] 25 percent discount on the FedACH FedPayments Reporter
service (FPR) for two years at any point during their participation in
the program
[cir] 50 percent discount on the FedACH Exception Resolution
Service (ERS) for two years at any point during their participation in
the program
[cir] 50 percent discount on the FedACH FedPayments Insights
service (FPI) for two years at any point during their participation in
the program
All of these discounts will be off of the price on the FedACH fee
schedule for which a customer would otherwise qualify if they didn't
participate in the program. Eligible customers that choose not to
participate in the program will continue to pay the existing fees for
which they qualify, as delineated on the FedACH fee schedule. If any
customer participating in the program violates the tenets of the
program at any time, i.e., drops below the 5 million FedACH receipt
items per month threshold and/or does not maintain the Premium Receiver
status (Level One or Two) they had as of the signing of the agreement,
they will be removed from the program and will be charged by FRFS for
all of the discounts they had accumulated since joining the program.
The Reserve Banks estimate the above price changes will result in a
0.3 percent average price decrease for FedACH customers.
In addition, the Reserve Banks expect to offer an ex-post Payment
Anomaly Service at some point in 2024 to identify unusual activity on
payments that have been cleared and settled through the FedACH Service.
Additional details will be forthcoming through normal Reserve Bank
channels.
The Reserve Banks' primary risks to current projections for the
FedACH Service are unanticipated cost overruns associated with
continued technology and resiliency investments, and lower-than-
projected volumes and growth due to the market and economic
environment.
E. Fedwire Funds Service and National Settlement Service--Table 10
shows the 2022 actual, 2023 forecasted, and 2024 budgeted cost-recovery
performance for the Fedwire Funds Service and the National Settlement
Service.
[[Page 82365]]
Table 10--Fedwire Funds Service and National Settlement Service Pro Forma Cost and Revenue Performance
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Year Revenue Total expense Net income Targeted roe after targeted
(roe) roe
1 2 3 [1-2] 4 5 [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2022 (actual)................... 157.3 160.8 (3.4) 4.3 95.3
2023 (forecast)................. 163.6 157.2 6.4 4.3 101.3
2024 (budget)................... 163.8 155.6 8.2 3.1 103.2
----------------------------------------------------------------------------------------------------------------
1. 2023 Forecast--The Reserve Banks forecast that the Fedwire Funds
Service and the National Settlement Service will recover 101.3 percent
of total expenses and targeted ROE, compared with a 2023 budgeted
recovery rate of 96.2 percent.
Through August 2023, Fedwire Funds Service online volume was 2.5
percent lower than it was during the same period last year. For full-
year 2023, the Reserve Banks estimate that Fedwire Funds Service online
volume will increase 0.1 percent from 2022 levels, compared with a
budgeted increase of 2.9 percent. Through August 2023, the National
Settlement Service settlement file volume was 3.0 percent lower than it
was during the same period last year, and settlement entry volume was
1.0 percent lower. For full-year 2023, the Reserve Banks estimate that
settlement file volume will decrease 3.5 percent (compared with a
budgeted decrease of 0.1 percent) and settlement entry volume will
decrease 0.8 percent (compared with a budgeted 0.4 percent increase)
from 2022 levels.
2. 2024 Pricing--The Reserve Banks expect the Fedwire Funds Service
and the National Settlement Service to recover 103.2 percent of total
expenses in 2024. Revenue is projected to be $163.8 million, an
increase of $0.2 million, or 0.2 percent from the 2023 forecast. The
Reserve Banks project total expenses to be $155.6 million, a decrease
of $1.6 million, or 1 percent, from the 2023 forecast. Although overall
expenses are decreasing, the largest technology initiative for the
Fedwire Funds Service is the transition to the ISO 20022 messaging
format.\29\ In addition, the National Settlement Service continues to
incur higher costs because of the expansion of its operating hours in
2022.\30\
---------------------------------------------------------------------------
\29\ In October 2021, the Board announced that the Federal
Reserve Banks will adopt the ISO 20022 message format for the
Fedwire[supreg] Funds Service. See New Message Format for the
Fedwire Funds Services, 86 FR 55600 (June 27, 2022). Available at
Federal Register Notice: New Message Format for the Fedwire Funds
Service.
\30\ The National Settlement Service expanded its hours to 21.5
hours per day in 2022, with a new 9:00 p.m. ET open for the next
business day.
---------------------------------------------------------------------------
The Reserve Banks will increase all three of the gross origination
and receipt tiered fees. The tier 1 fee will increase from $0.92 to
$0.94, the tier 2 fee will increase from $0.285 to $0.29, and the tier
3 fee will increase from $0.18 to $0.19. In addition, the Fedwire Funds
Service participation fee will increase from $100 to $115, alongside a
FedPayments Manger Import/Export fee increase of $50 to $60. The
Reserve Banks will change National Settlement Service fees for 2024.
The per file fee will increase from $30 to $35, and the per entry fee
will increase from $1.50 to $1.70. The Reserve Banks estimate the above
price changes will result in a 5 percent average price increase for
customers. In addition to addressing the rising expenses noted above,
these fee increases serve to balance additional costs incurred by the
National Settlement Service since their last fee increase in 2014. In
particular, ongoing maintenance and personnel costs largely related to
the expansion of operating hours, which are subject to inflationary
pressures, have increased considerably in the interim.
In addition, these fee increases will help address diminishing
fixed fee revenue from the Fedwire Funds Service as fee revenue has
become increasingly dependent on variable resources. To note, the
percentage of fixed fee revenue has decreased from 12 percent in 2014
to 7 percent in 2023. This has resulted in larger variances in fee
revenue as volume moves higher or lower. The proposed fee increases
will bolster the percentage of fixed fee revenue to approximately 8
percent in 2024.
The Reserve Banks' primary risk to current projections for these
services is uncertainty about the economic outlook for 2024, which
complicates the accuracy of 2024 volume projections. Historically,
Fedwire Funds Service volume has reflected market conditions, and a
broader downturn in 2024 would likely result in a decrease in Fedwire
Funds Service volume.\31\ Separately, unexpected increases in 2024
technology costs would likely result in reduced cost recovery for the
year.
---------------------------------------------------------------------------
\31\ Fedwire Funds Service volume growth reflects economic
growth. For example, its volume has grown every year except for 2008
and 2009, when it contracted 2.5 percent and 5.0 percent,
respectively, during the Great Recession. For historical Fedwire
Funds Service volume data, see <a href="http://frbservices.org">frbservices.org</a>, ``Fedwire Funds
Service--Annual Statistics. Available at: <a href="https://www.frbservices.org/resources/financial-services/wires/volume-value-stats/annual-stats.html">https://www.frbservices.org/resources/financial-services/wires/volume-value-stats/annual-stats.html</a>.
---------------------------------------------------------------------------
F. Fedwire Securities Service--Table 11 shows the 2022 actual, 2023
forecast, and 2024 budgeted cost-recovery performance for the Fedwire
Securities Service.\32\
---------------------------------------------------------------------------
\32\ The Reserve Banks provide transfer services for securities
issued by the U.S. Treasury, federal government agencies,
government-sponsored enterprises, and certain international
institutions. Prior to 2023, the priced component of this service
consisted of revenues, expenses, and volumes associated with the
transfer of all non-Treasury securities. Starting in 2023, the
revenues, expenses, and volumes associated with the transfer of
Treasury securities are also included in the priced component of
this service.
[[Page 82366]]
Table 11--Fedwire Securities Service Pro Forma Cost and Revenue Performance
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Year Revenue Total expense Net income Targeted roe after targeted
(roe) roe
1 2 3 [1-2] 4 5 [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2022 (actual)................... 24.9 22.9 2.0 0.2 107.6
2023 (forecast)................. 47.7 39.7 8.1 0.5 118.9
2024 (budget)................... 46.8 41.4 5.4 0.8 110.9
----------------------------------------------------------------------------------------------------------------
1. 2023 Forecast--The Reserve Banks forecast that the Fedwire
Securities Service will recover 118.9 percent of total expenses and
targeted ROE, compared with a 2023 budgeted recovery rate of 106.5
percent.
Through August 2023, Treasury security transfer volume was 24.3
percent higher than it was during the same period last year. For full-
year 2023, the Reserve Banks estimate that Treasury security transfer
volume will increase 17.7 percent from 2022 levels, compared with a
budgeted increase of 1.0 percent. Through August 2023, Agency security
transfer volume was 11.1 percent lower than it was during the same
period last year. For full-year 2023, the Reserve Banks estimate that
Agency security transfer volume will decrease 9.4 percent from 2022
levels, compared with a budgeted decrease of 9.2 percent.
Through August 2023, account maintenance volume was 1.9 percent
lower than it was during the same period last year. For full-year 2023,
the Reserve Banks estimate that account maintenance volume will decline
1.4 percent from 2022 levels, compared with a budgeted decline of 3.3
percent. Through August 2023, the number of agency issues maintained
was 2.0 percent higher than it was during the same period last year.
For full-year 2023, the Reserve Banks estimate that the number of
agency issues maintained will increase 1.3 percent from 2022 levels,
compared with a budgeted decline of 0.1 percent.
2. 2024 Pricing--The Reserve Banks expect the Fedwire Securities
Service to recover 110.9 percent of total expenses and targeted ROE in
2024. Revenue is projected to be $46.8 million, a decrease of $0.9
million, or 2.0 percent, from the 2023 revenue forecast. The Reserve
Banks also project that 2024 expenses will be $41.4 million, an
increase of $1.7 million, or 4.3 percent from the 2023 forecast.
The Reserve Banks will leave fee schedules for the Fedwire
Securities Service unchanged in 2024. The Reserve Banks project that
agency transfer volume will remain relatively stable compared with
previous years, with no notable changes that could potentially have a
significant impact on agency transfers. The volume of Treasury security
transfers is projected to decrease due to the moderation of higher than
expected Treasury security transfer volume in 2023. The volume of
accounts maintained are expected to decrease 2.5 percent, consistent
with recent trends and primarily driven by a reduction in joint custody
accounts. The volume of agency issues maintained is expected to remain
relatively flat, driven by the expecting slowing of net issuance of
Agency MBS. Claim adjustment volume is expected to remain relatively
stable consistent with recent trends.
The Reserve Banks' primary risks to current projections for the
Fedwire Securities Service include variations in technology costs and
product volume forecasts stemming from an uncertain economic outlook.
G. FedNow Service
1. Cost to Introduce the FedNow Service--Following the FedNow
Service launch in July 2023 and in alignment with its 2019 Federal
Register Notice announcing its decision to introduce the service, the
Board is publishing total cost to bring the FedNow Service to
market.\33\ From August 2019 through July 2023, costs to introduce the
FedNow Service totaled $545 million. These costs include efforts to
develop key FedNow Service features and functionality, as well as
activities to support financial institutions as they leverage the
service to provide innovative instant payments solutions to individuals
and businesses. This figure includes costs related to delivery of a
secure and resilient payments infrastructure that leverages cloud-first
design, and implementation of 24x7 operations to support processing
around the clock. Additionally, costs include efforts to integrate the
FedNow Service into existing Reserve Bank technology (for example,
FedLine Solutions), implementation of a new seven-day accounting regime
by the Federal Reserve, and education and readiness activities to
prepare stakeholders across the payments ecosystem for adoption of the
FedNow Service.
---------------------------------------------------------------------------
\33\ See ``Federal Reserve Actions to Support Interbank
Settlement of Instant Payments,'' (August 9, 2019). Available at
2019-17027.pdf (<a href="http://govinfo.gov">govinfo.gov</a>). Per its 2019 Notice, the Board
committed to disclosing costs related to development of the service
beginning the year the service is available to participating banks.
---------------------------------------------------------------------------
2. 2024 Pricing--The Reserve Banks will maintain the previous
year's fee schedule, inclusive of discounts.\34\ With these discounts,
the FedNow Service participation fee will be $0.00 in recognition of
the limited network reach, and customer credit transfers (CCTs) under a
threshold of 2,500 per month will be $0.00.\35\ The discount for a
limited number of CCTs is intended to support institutions of all sizes
as they validate processing capabilities in production through regular
test transactions with partners as well as acclimate to 24x7
operations. In addition, to encourage the onboarding of customers, new
FedLine Advantage channel connections or upgrades from existing FedLine
Solutions to FedLine Advantage will be discounted to $0.00 for a
rolling 12-month period following initiation.
---------------------------------------------------------------------------
\34\ This pricing is set to recover costs associated with mature
volume estimates, when the service has relatively stable costs and
revenues. This approach, which is in alignment with how the Reserve
Banks have set fees for new services in the past, should limit
prohibitively high or unnecessarily volatile pricing as the service
matures. For instance, in establishing fees for the Federal
Reserve's ACH service, the Board allowed fees to be set to recover
costs associated with mature volume estimates instead of current
costs. See Board of Governors of the Federal Reserve System,
``Adoption of Fee Schedules and Pricing Principles for Federal
Reserve Bank Services,'' 46 FR 1338, 1343 (Jan. 6, 1981). Available
at: <a href="https://cdn.loc.gov/service/ll/fedreg/fr046/fr046003/fr046003.pdf">https://cdn.loc.gov/service/ll/fedreg/fr046/fr046003/fr046003.pdf</a>.
\35\ The participation fee will only be charged to RTNs that are
able to receive CCTs (Send & Receive or Receive-only participation
types). The participation fee will not be charged to Liquidity
Management Transfer (LMT) only and Settlement-only participation
types in 2024. The discount for CCT results from offsetting the fees
for the first 2,500 CCTs (per month) and will be applied per RTN
enrolled in the FedNow Service.
---------------------------------------------------------------------------
H. FedLine Solutions--The Reserve Banks charge fees for the
electronic
[[Page 82367]]
connections that financial institutions use to access priced services
and allocate the costs and revenues associated with this electronic
access to the priced services.\36\ There are six FedLine Solutions
channels through which customers can access the Reserve Banks' priced
services: FedMail, FedLine Exchange[supreg], FedLine Web, FedLine
Advantage, FedLine Command[supreg] and FedLine Direct[supreg].\37\ The
Reserve Banks bundle these channels into 12 FedLine Solutions packages,
described below, that are supplemented by a number of premium (or
[agrave] la carte) access and accounting information options. In
addition, the Reserve Banks offer FedComplete[supreg] packages, which
are bundled offerings of FedLine connections and a fixed number of
FedACH Services, Fedwire Funds Service, and Check 21-enabled
transactions.\38\ FedLine Solutions packages offer attended or
unattended access to critical payment and information services.
FedMail, FedLine Exchange, FedLine Web, and FedLine Advantage packages
offer attended or manual access via a web-based interface.\39\ In
addition, FedLine Advantage offers attended access to the FedNow
Service since its launch in July 2023. FedLine Command and FedLine
Direct packages are computer-to-computer, internet protocol-based
interfaces that support unattended access. The FedLine Command package
offers an unattended connection to FedACH, most accounting information
services, and the FedNow Service. FedLine Direct packages allow for
unattended connections at multiple connection speeds to Check, FedACH,
Fedwire Funds, and Fedwire Securities transactional and information
services and to most accounting information services. In addition,
FedLine Direct packages also allow for unattended connection to the
FedNow Service.
---------------------------------------------------------------------------
\36\ FedLine Solutions provide customers with access to Reserve
Bank priced services. As a result, FedLine costs and revenue are
allocated to the Reserve Banks' priced services on an expense ratio
basis.
\37\ FedMail, FedLine Exchange, FedLine Web, FedLine Advantage,
FedLine Command, and FedLine Direct are registered trademarks of the
Federal Reserve Banks.
\38\ The Reserve Banks are preparing to deliver services to the
industry via Application Programming Interfaces (API). APIs are a
set of protocols for connecting software systems programmatically,
enabling system-to-system interoperability. Communication will be
forthcoming on timing, availability, and pricing of initial APIs.
\39\ Attended packages require manual processes compared to
automation of payment and information services offered by unattended
packages. The Reserve Banks will continue to update pricing to
differentiate the value proposition offered by attended and
unattended packages.
---------------------------------------------------------------------------
In order to continue to support FedMail Services, the Reserve Banks
will increase the monthly fees for the FedMail Email Service from $85
to $100 and increase the monthly fee for the FedMail Service from $85
to $100. The FedMail Email Service is available [agrave] la carte only
for FedLine Web or higher packages. FedMail is a legacy service, and
the fee increases are to incentivize customers to migrate to more
contemporary, online solutions such as FedLine Web. This is part of the
Reserve Banks' multiyear effort to provide highly secure, modern access
solutions, and value-added services not available on legacy technology.
The FedLine Web solution offers access to core information services
as well as check payment services. The Reserve Banks will create a new
pricing tier for FedLine Web called FedLine Web Premier for a monthly
fee of $200. Automation of payments and informational services is
available through FedLine Command and FedLine Direct packages, so
credentialing a customer who desires check payment automation via
FedLine Web requires a manual exception process by the FRFS Support
Center. The Reserve Banks proposed the new pricing tier to reflect the
cost of credentialing users and the value check files automation
technology provides to payment services not offered by attended
services such as FedLine Web and FedLine Web Plus.
The introduction of the FedNow Service requires multiple
enhancements, such as 7-Day Accounting, that have been made to the
Accounting Information Services (AIS). The Reserve Banks will increase
prices for the AIS to reflect the enhancement value as well as to
incent customers toward automated channels that better address their
needs. Specifically, the Reserve Banks will increase the following
fees:
Table 12--Accounting Information Services Fee Schedule
------------------------------------------------------------------------
Electronic Access Service Fee (per month)
------------------------------------------------------------------------
End-of-Day Financial Institution from $150 to $200.
Reconcilement Data (FIRD) File.
Statement of Account Spreadsheet File from $150 to $200.
(SASF).
Intra-day Download Search Results in from $150 to $200.
Spreadsheet Format (with Accounting
Management Information (AMI)).
CMS Plus Own Report--Up to 12 files with no from $60 to $75.
OSRTN, Respondent or Subaccount activity.
CMS Plus Own Report plus OSRTN, Respondents from $125 to $150.
and Subaccounts--Up to 12 files with up to
nine OSRTNs, Respondents and Subaccounts.
CMS Plus Own Report plus OSRTN, Respondents from $250 to $300.
and Subaccounts--Up to 12 files with 10-50
OSRTNs, Respondents and Subaccounts.
CMS Plus Own Report plus OSRTN, Respondents from $500 to $600.
and Subaccounts--Up to 12 files with 51-
100 OSRTNs, Respondents and Subaccounts.
CMS Plus Own Report plus OSRTN, Respondents from $750 to $900.
and Subaccounts--Up to 12 files with 101-
500 OSRTNs, Respondents and Subaccounts.
CMS Plus Own Report plus OSRTN, Respondents from $1,000 to $1,200.
and Subaccounts--Up to 12 files with over
500 OSRTNs, Respondents and Subaccounts.
------------------------------------------------------------------------
The Reserve Banks estimate that the above price changes will result
in an average 2.7 percent price increase for customers.
II. Analysis of Competitive Effect
All operational and legal changes considered by the Board that have
a substantial effect on payment system participants are subject to the
competitive impact analysis described in the March 1990 policy ``The
Federal Reserve in the Payments System.'' \40\ Under this policy, the
Board assesses whether changes would have a direct and material adverse
effect on the ability of other service providers to
[[Page 82368]]
compete effectively with the Federal Reserve in providing similar
services because of differing legal powers or constraints or because of
a dominant market position deriving from such legal differences. If any
proposed changes create such an effect, the Board must further evaluate
the changes to assess whether the benefits associated with the
changes--such as contributions to payment system efficiency, payment
system integrity, or other Board objectives--can be achieved while
minimizing the adverse effect on competition.
---------------------------------------------------------------------------
\40\ Federal Reserve Regulatory Service (FRRS) 9-1558.
---------------------------------------------------------------------------
The 2024 fees, fee structures, and changes in service will not have
a direct and material adverse effect on the ability of other service
providers to compete effectively with the Reserve Banks in providing
similar services. When conducting the competitive effect analysis for
the FedNow Service, the Federal Reserve assessed whether its pricing
strategy as a new service, including discounts, would have a material,
adverse effect on the ability of other service providers to compete
effectively with the Reserve Banks due to differing legal powers or a
dominate market position as a result of such differing legal powers.
The Board concluded that the pricing strategy, including discounts,
followed general market practice for new services and could similarly
be implemented by private sector providers unrelated to any differing
legal powers. Therefore, the Reserve Banks' pricing does not have a
material adverse effect on the ability of other service providers to
compete effectively with the Reserve Banks in providing similar
services.
The Reserve Banks expect to continue to achieve aggregate long-run
cost recovery across all mature priced services.
III. 2024 Fee Schedules
FedACH[supreg] Services 2024 Fee Schedule
[Effective January 2, 2024. Bold indicates changes from 2023 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedACH minimum monthly fee: ................................
Originating depository financial $50.00.
institution (ODFI) \41\.
Receiving depository financial 40.00.
institution (RDFI) \42\.
Origination (per item or record): ................................
Forward or return items........... 0.0035.
SameDay Service--forward item \43\ 0.0010 surcharge.
Addenda record.................... 0.0015.
FedLine Web-originated returns and 0.50.
notification of change (NOC) \44\.
Facsimile Exception Return/NOC 45.00.
\45\.
SameDay Exception Return.......... 45.00.
Automated NOC..................... 0.20.
Volume discounts (based on monthly ................................
billed origination volume) \46\ per
item when origination volume is
750,001 to 1,500,000 items per 0.0008.
month discount.
more than 1,500,000 items per 0.0010.
month discount.
Volume discounts (based on monthly ................................
billed receipt volume) \47\ per
item when receipt volume is.
10,000,001 to 15,000,000 items 0.0002.
per month discount.
more than 15,000,000 items per 0.0003.
month discount.
Receipt (per item or record):......... ................................
Forward Item...................... 0.0035.
Return Item....................... 0.0075.
Addenda record.................... 0.0015.
Volume discounts:................. ................................
Non-Premium Receivers \48\ per item ................................
when volume is
750,001 to 12,500,000 0.0017 discount.
items per month \49\.
more than 12,500,000 items 0.0019 discount.
per month \50\.
Premium Receivers, Level One \51\ per ................................
item when volume is
750,001 to 1,500,000 items 0.0017 discount.
per month \52\.
1,500,001 to 2,500,000 0.0017 discount.
items per month \53\.
2,500,001 to 12,500,000 0.0018 discount.
items per month \53\.
12,500,001 to 30,000,000 0.0020 discount.
items per month \53\.
more than 30,000,000 items 0.0023 discount.
per month \53\.
Premium Receivers, Level Two \54\ per ................................
item when volume is
750,001 to 1,500,000 items 0.0017 discount.
per month \55\.
1,500,001 to 2,500,000 0.0017 discount.
items per month \56\.
2,500,001 to 12,500,000 0.0019 discount.
items per month \56\.
12,500,001 to 30,000,000 0.0021 discount.
items per month \56\.
more than 30,000,000 items 0.0024 discount.
per month \56\.
FedACH Risk Management Services: \57\ ................................
Monthly Package Fee (a single fee ................................
based on total number of criteria
sets):
For up to 5 criteria sets..... 45.00.
For 6 through 11 criteria sets 85.00.
For 12 through 23 criteria 150.00.
sets.
For 24 through 47 criteria 180.00.
sets.
For 48 through 95 criteria 300.00.
sets.
For 96 through 191 criteria 510.00.
sets.
For 192 through 383 criteria 810.00.
sets.
For 384 through 584 criteria 1,025.00.
sets.
For more than 584 criteria 1,325.00.
sets.
Batch/Item Monitoring (based on total ................................
monthly volume):
For 1 through 100,000 batches 0.007.
(per batch).
For more than 100,000 batches 0.0035.
(per batch).
[[Page 82369]]
FedPayments Insights Service: \58\ ................................
Monthly Fee (a single fee based on ................................
commercial receipt volume):
0-50,000 items per month...... 75.00.
50,001-100,000 items per month 120.00.
100,001-500,000 items per 180.00.
month.
500,001-1,000,000 items per 260.00.
month.
1,000,001-5,000,000 items per 340.00.
month.
5,000,001-10,000,000 items per 450.00.
month.
10,000,001-25,000,000 items 550.00.
per month.
25,000,001-60,000,000 items 625.00.
per month.
Over 60,000,000 items per 700.00.
month.
Monthly FedPayments Reporter Service: ................................
FedPayments Reporter Service monthly ................................
package includes the following
reports:
ACH Received Entries Detail--Customer ................................
and Depository Financial Institution
ACH Return Reason Report--Customer ................................
and Depository Financial Institution
ACH Originated Entries Detail-- ................................
Customer and Depository Financial
Institution
ACH Volume Summary by SEC Code-- ................................
Customer
ACH Customer Transaction Activity ................................
ACH Death Notification ................................
ACH International (IAT) ................................
ACH Notification of Change ................................
ACH Payment Data Information File ................................
ACH Remittance Advice Detail ................................
ACH Remittance Advice Summary ................................
ACH Return Item Report and File ................................
ACH Return Ratio ................................
ACH Social Security Beneficiary ................................
ACH Originator Setup ................................
ACH Report Delivery via FedLine ................................
Solution
On Demand Report Surcharge 1.00.
\59\.
Monthly Package Fee (counts reflect ................................
reports generated as well as
delivered via a FedLine Solution):
For up to 50 reports.............. 45.00.
For 51 through 150 reports........ 65.00.
For 151 through 500 reports....... 120.00.
For 501 through 1,000 reports..... 220.00.
For 1,001 through 1,500 reports... 320.00.
For 1,501 through 2,500 reports... 505.00.
For 2,501 through 3,500 reports... 705.00.
For 3,501 through 4,500 reports... 900.00.
For 4,501 through 5,500 reports... 1,095.00.
For 5,501 through 7,000 reports... 1,350.00.
For 7,001 through 8,500 reports... 1,585.00.
For 8,501 through 10,000 reports.. 1,815.00.
For more than 10,000 reports...... 1,980.00.
Premier reports (per report ................................
generated): \60\.
ACH Volume Summary by SEC Code ................................
Report--Depository Financial
Institution:
For 1 through 5 reports... 10.00.
For 6 through 10 reports.. 6.00.
For 11 or more reports.... 1.00.
On Demand Surcharge....... 1.00.
ACH Routing Number Activity Report: ................................
For 1 through 5 reports... 10.00.
For 6 through 10 reports.. 6.00.
For 11 or more reports.... 1.00.
On Demand Surcharge....... 1.00.
ACH Originated Batch Report ................................
(monthly):
For 1 through 5 reports... 10.00.
For 6 through 10 reports.. 6.00.
For 11 or more reports.... 1.00.
On Demand Surcharge....... 1.00.
ACH Originated Batch Report (daily): ................................
Scheduled Report.......... 0.65.
On Demand Surcharge....... 1.00.
On-us inclusion: ................................
Participation (monthly fee per 10.00.
RTN).
Per-item...................... 0.0030.
Per-addenda................... 0.0015.
Report delivery via encrypted 0.20.
email (per email).
Other Fees and Discounts: ................................
Monthly fee (per RTN): ................................
FedACH Participation Fee \61\. 75.00.
[[Page 82370]]
Same Day Service Origination 10.00.
Participation Fee \62\.
FedACH Settlement Fee \63\ ................................
Premium Receivers, Level One 60.00.
and Level Two.
Non-Premium Receivers when 110.
volume is less than 1,500,000
items per month, Tier 2.
Non-Premium Receivers when 250.00.
volume is more than 1,500,000
items per month, Tier 3.
FedACH Information File Extract 180.00.
Fee.
IAT Output File Sort Fee.......... 150.00.
Fixed Participation Fee--Automated 5.00.
NOCs \64\.
Non-Electronic Input/Output fee: \65\ ................................
CD/DVD (CD or DVD)............ 50.00.
Paper (file or report)........ 50.00.
Fees and Credits Established by ................................
Nacha: \66\
Nacha Same-Day Entry fee (per 0.052.
item).
Nacha Same-Day Entry credit 0.052 (credit).
(per item).
Nacha Unauthorized Entry fee 4.50.
(per item).
Nacha Unauthorized Entry 4.50 (credit).
credit (per item).
Nacha Admin Network fee 28.67.
(monthly fee per RTN) \67\.
Nacha Admin Network fee (per 0.000185.
entry).
FedGlobal[supreg] ACH Payments: \68\ ................................
Fixed Monthly Fee (per RTN): \69\ ................................
Monthly origination volume 185.00.
more than 500 items.
Monthly origination volume 60.00.
between 161 and 500 items.
Monthly origination volume 20.00.
less than 161 items.
Per-item Origination Fee for Monthly ................................
Volume more than 500 Items
(surcharge): \70\
Mexico service................ 0.55.
Panama service................ 0.60.
Per-item Origination Fee for Monthly ................................
Volume between 161 and 500 items
(surcharge): \70\
Mexico service................ 0.80.
Panama service................ 0.85.
Per-item Origination Fee for Monthly ................................
Volume less than 161 items
(surcharge): \70\
Mexico service................ 1.05.
Panama service................ 1.10.
Other FedGlobal ACH Payments Fees: ................................
Mexico service: ................................
Return received from 0.91 (surcharge).
Mexico \71\.
Item trace \72\........... 13.50.
Foreign currency to 0.67 (surcharge).
foreign currency (F3X)
item originated to Mexico
\70\.
Panama service: ................................
Return received from 1.00 (surcharge).
Panama \71\.
Item trace \72\........... 7.00.
NOC....................... 0.72.
Exception Resolution Service: ................................
Monthly Fees (applies to cases only ................................
at the parent RTN): \73\
Up to 5 cases................. 20.00.
6-25 cases.................... 40.00.
26-50 cases................... 60.00.
51-100 cases.................. 100.00.
101-1,000 cases............... 250.00.
1,001-5,000 cases............. 400.00.
5,001 cases and above......... 500.00.
Offline Service Participant--Case ................................
Fees: \74\
Case Open Fee................. 5.00.
Case Response Fee............. 5.00.
FedACH Receipt Discount Program ................................
Introduced in 2024\75\
Customers with more than 30 million ................................
FedACH receipt items per month:
Per-item discount on all 0.0002
forward receipt items
received through FedACH for
the full five-year length of
the agreement.
Percentage discount on the 50 percent.
FedACH FedPayments[supreg]
Reporter service (FPR) for
two years at any point during
participation in the program.
Percentage discount on the 100 percent.
FedACH Exception Resolution
Service (ERS) for two years
at any point during their
participation in the program.
Percentage discount on the 100 percent.
FedACH FedPayments[supreg]
Insights service (FPI) for
two years at any point during
their participation in the
program.
Customers with between 5 and 30 ................................
million FedACH receipt items per
month:
Per-item discount on all forward 0.0001.
receipt items received through
FedACH for the full 5-year length
of the agreement.
Percentage discount on the FedACH 25 percent.
FedPayments Reporter service
(FPR) for two years at any point
during their participation in the
program.
Percentage discount on the FedACH 50 percent.
Exception Resolution Service
(ERS) for two years at any point
during their participation in the
program.
[[Page 82371]]
Percentage discount on the FedACH 50 percent.
FedPayments Insights service
(FPI) for two years at any point
during their participation in the
program.
------------------------------------------------------------------------
Fedwire[supreg] Funds Service and National Settlement Service 2024 Fee
Schedules
[Effective January 2, 2024. Bold indicates changes from 2023 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Fedwire[supreg] Funds Service
------------------------------------------------------------------------
Monthly Participation Fee............. $115.00
Basic volume-based pre-incentive
transfer fee (originations and
receipts)--per transfer for
Tier 1: The first 14,000 transfers 0.940
per month.
Tier 2: Additional transfers up to 0.290
90,000 per month.
Tier 3: Every transfer over 90,000 0.190
per month.
Volume-based transfer fee with the
incentive discount (originations and
receipts)--per eligible transfer for
\76\
Tier 1: The first 14,000 transfers 0.188
per month.
Tier 2: Additional transfers 0.058
14,001 to 90,000 per month.
Tier 3: Every transfer over 90,000 0.038
per month.
Surcharge for Offline Transfers 75.00
(Originations and Receipt).
Surcharge for End-of-Day Transfer 0.26
Originations \77\.
Monthly FedPayments Manager Import/ 60.00
Export fee \78\.
Surcharge on transfers >$10 million 0.14
Origination and Receipt.
Surcharge on transfers >$100 million 0.36
Origination and Receipt.
Surcharge for Payment Notification:
Origination Surcharge \79\........ 0.01
Receipt Volume \79\ \80\.......... N/A
Delivery of Reports--Hard Copy Reports 50.00
to On-Line Customers.
Special Settlement Arrangements 150.00
(charge per settlement day) \81\.
------------------------------------------------------------------------
National Settlement Service
------------------------------------------------------------------------
Basic:
Settlement Entry Fee.............. 1.70
Settlement File Fee............... 35.00
Surcharge for Offline File Origination 45.00
\82\.
Minimum Monthly Fee \83\.............. 60.00
------------------------------------------------------------------------
Fedwire[supreg] Securities Service 2024 Fee Schedule
[Effective January 2, 2024. Bold indicates changes from 2023 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Basic Transfer Fee: 84 85
Agency Securities: Transfer or reversal originated $0.61
or received........................................
Treasury Securities: Transfer or reversal originated 0.61
or received........................................
Surcharge: \86\
Agency Securities: Offline origination & receipt 80.00
surcharge..........................................
Treasury Securities: Offline origination & receipt 80.00
surcharge..........................................
Monthly Maintenance Fees: \87\
Agency Securities: Account maintenance (per account) 57.50
\88\...............................................
Agency Securities: Issue maintenance (per issue/per 0.61
account) \89\......................................
Treasury Securities: Account maintenance (per None
account) \90\......................................
Treasury Securities: Issue maintenance (per issue/ None
per account) \91\..................................
ACAP Fees: 92 93
Claims Adjustment Fee............................... 1.00
Tracking Indicators Fee............................. 0.10
Position Maintenance Fee (per position maintained/ 0.03
per business day) 94 95............................
GNMA Serial Note Stripping or Reconstitution Fee \96\... 9.00
Joint Custody Origination Surcharge 97 98............... 46.00
Delivery of Reports--Hard Copy Reports to On-Line 50.00
Customers \99\.........................................
------------------------------------------------------------------------
[[Page 82372]]
FedNow[supreg] Service 2024 Fee Schedule
[Effective January 2, 2024. Bold indicates changes from 2023 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Customer Credit Transfer (per item) $0.045.
PACS.008 Origination.
Customer Credit Transfer Returns (per 0.045.
item) PACS.004 Origination.
Liquidity Management Transfer (LMT) 1.00.
(per-item) PACS.009 Origination.
Request for Payment (RFP) (per-item) 0.01.
PAIN.013.
PACS.008 Origination Discount........ -$0.045 per item for up to 2,500
customer credit transfers per
month (in 2024).
Participation Fee--General (per $25.00, discounted to $0.00 in
month). 2024.
------------------------------------------------------------------------
FedLine[supreg] 2024 Fee Schedule
[Effective January 2, 2024. Bold indicates changes from 2023 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedComplete Packages (monthly) 100 101
------------------------------------------------------------------------
FedComplete 100A Plus \102\.......... $900.00.
FedComplete 100A Premier............. 975.00.
includes:
FedLine Advantage Premier package
Volumes included in the
FedComplete 100A Plus package.
FedComplete 200A Plus................ 1,425.00.
FedComplete 200A Premier............. 1,500.00.
includes:
FedLine Advantage Premier package
Volumes included in the
FedComplete 200A Plus package.
FedComplete Excess Volume and Receipt
Surcharge: \103\
FedForward \104\................. 0.03700/item.
FedReturn........................ 0.82000/item.
FedReceipt....................... 0.00005/item.
Fedwire Funds Origination........ 0.94000/item.
Fedwire Funds Receipt............ 0.09400/item.
FedACH Origination............... 0.00350/item.
FedACH Receipt................... 0.00035/item.
FedComplete credit adjustment........ various.
FedComplete debit adjustment......... various.
------------------------------------------------------------------------
FedLine Solutions (monthly)
------------------------------------------------------------------------
FedMail \105\........................ $100.00.
FedLine Exchange \105\............... 40.00.
includes:
E-Payments Directory (via manual
download).
FedLine Exchange Premier \105\....... 125.00.
includes:
FedLine Exchange package.........
E-Payments Directory (via
automated download).
FedLine Web \106\.................... 110.00.
FedLine Web Plus \106\............... 160.00.
FedLine Web Premier \106\............ 200.00
includes:
Services included in the FedLine
Web Plus package.
Check File Automation............
FedLine Advantage 106 107............ 415.00.
FedLine Advantage Plus 106 107....... 460.00.
FedLine Advantage Premier 106 107.... 570.00.
Includes:
FedLine Advantage Plus package...
Two VPN devices..................
Fedwire Funds FedPayments Manager
Import/Export (more than 250
Fedwire transactions or more
than one routing number in a
given month).
FedTransaction Analyzer (more
than 250 Fedwire transactions or
more than one routing number per
month).
FedLine Command Plus................. 1,035.00.
FedLine Direct Plus \108\............ 5,500.00.
FedLine Direct Premier \108\......... 10,500.00.
includes:
Services included in the FedLine
Direct Plus package.
[[Page 82373]]
Two 2 Mbps dedicated WAN
Connections.
One Network Diversity............
Two VPN devices..................
------------------------------------------------------------------------
A la carte options (monthly) \109\
------------------------------------------------------------------------
Electronic Access:
FedMail--FedLine Exchange 25.00.
Subscribers--Pack of 5.
FedLine Subscribers--Pack of 5... 100.00.
Additional VPNs \110\............ 100.00.
Additional 2 Mbps WAN connection 3,000.00.
\108\.
WAN Connection Upgrade
10 Mbps \111\................ 1,700.00.
30 Mbps \111\................ 3,000.00.
50 Mbps \111\................ 4,000.00.
100 Mbps \111\............... 7,000.00.
200 Mbps \111\............... 11,000.00.
FedLine International Setup (one- 5,000.00.
time fee).
FedLine Custom Implementation Fee 2,500-5,000.
(one-time fee) \112\.
Network Diversity................ 2,500.00.
FedMail Email (for customers with 100.00
FedLine Web and above) \113\.
VPN Device Modification (one-time 200.00.
fee).
VPN Device Missed Activation 175.00.
Appointment (one-time fee).
VPN Device Expedited Hardware 100.00.
Surcharge (one-time fee).
VPN Device Replacement or Move 300.00.
(one-time fee).
E-Payments Automated Download 75.00/month.
Codes (Add'l Codes--Pack of 5)
\114\.
E-Payments Automated Download 150.00/month.
Codes (Add'l Codes--Pack of 20)
\114\.
E-Payments Automated Download 300.00/month.
Codes (Add'l Codes--Pack of 50)
\114\.
E-Payments Automated Download 500.00/month.
Codes (Add'l Codes--Pack of 100)
\114\.
E-Payments Automated Download 1,000.00/month.
Codes (Add'l Codes--Pack of 250)
\114\.
E-Payments Automated Download 2,000.00/month.
Codes (Add'l Codes-->250) \114\.
Daily Statement of Account Activity
and Monthly Statement of Service
Charges (monthly): 115 116
End-of-Day Financial Institution 200.00.
Reconcilement Data (FIRD) File.
Statement of Account Spreadsheet 200.00.
File (SASF).
Cash Management Service (CMS) Plus
and Intra-day Service (monthly):
Cash Management System (CMS)
Plus--Own report--up to 12 files
with \117\.
no OSRTN, respondent/sub- 75.00.
account activity.
Up to nine OSRTNs, 150.00.
respondents and/or sub-
accounts.
10-50 OSRTNs, respondents and/ 300.00.
or sub-accounts.
51-100 OSRTNs, respondents 600.00.
and/or sub-accounts.
101-500 OSRTNs, respondents 900.00.
and/or sub-accounts.
<ls-thn-eq>500 OSRTNs, 1,200.00.
respondents and/or sub-
accounts.
Intra-day Download Search Results 200.00.
in Spreadsheet Format (with AMI)
\118\.
Other:
Replacement Copies \119\.........
Daily Statement of Account... 10.00/copy.
Monthly Statement of Service 10.00/copy.
Charges.
Vendor Pass-Through Fee.......... various.
Electronic Access Credit various.
Adjustment.
Electronic Access Debit various.
Adjustment.
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\41\ Any ODFI incurring less than $50 for the following fees
will be charged a variable amount to reach the minimum: Forward
value and non-value item origination fees, and FedGlobal ACH
origination surcharges.
\42\ Any RDFI not originating forward value and non-value items
and incurring less than $40 in receipt fees will be charged a
variable amount to reach the minimum. Any RDFI that originates
forward value and non-value items incurring less than $50 in forward
value and nonvalue item origination fees will only be charged a
variable amount to reach the minimum monthly origination fee.
\43\ This surcharge is assessed on all forward items that
qualify for same-day processing and settlement and is incremental to
the standard origination item fee.
\44\ The fee includes the item and addenda fees in addition to
the conversion fee.
\45\ The fee includes the item and addenda fees in addition to
the conversion fee. Reserve Banks also assess a $45 fee for every
government paper return/NOC they process.
\46\ Origination volumes at these levels qualify for a waterfall
discount that includes all FedACH origination items.
\47\ Origination discounts based on monthly billed receipt
volume apply only to those items received by FedACH receiving points
and are available only to Premium Receivers.
\48\ RDFIs receiving through FedACH less than 90 percent of
their FedACH-originated items.
\49\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\50\ Receipt volumes at these levels qualify for a waterfall
discount that includes all FedACH receipt items.
\51\ RDFIs receiving through FedACH at least 90 percent of their
FedACH-originated items, but less than 90 percent of all of their
ACH items originated through any operator.
\52\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\53\ Receipt volumes at these levels qualify for a waterfall
discount which includes all FedACH receipt items.
\54\ RDFIs receiving through FedACH at least 90 percent of all
of their ACH items originated through any operator.
\55\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\56\ Receipt volumes at these levels qualify for a waterfall
discount which includes all FedACH receipt items.
\57\ Criteria may be set for both the Origination Monitoring
Service and the RDFI Alert Service. Subscribers with no criteria set
up will be assessed the $45 monthly package fee.
\58\ Monthly commercial receipt volume is calculated based on
combined volume of subscribed RTNs in an account family.
\59\ Premier reports generated on demand are subject to the
package/tiered fees plus a surcharge.
\60\ Premier reports generated on demand are subject to the
package/tiered fees plus a surcharge.
\61\ The fee applies to RTNs that have received or originated
FedACH transactions during a month. Institutions that receive only
U.S. government transactions or that elect to use a private-sector
operator exclusively are not assessed the fee.
\62\ This surcharge is assessed to any RTN that originates at
least one item meeting the criteria for same-day processing and
settlement in a given month.
\63\ The fee is applied to any RTN with activity during a month,
including RTNs of institutions that elect to use a private-sector
operator exclusively but also have items routed to or from customers
that access the ACH network through FedACH. This fee does not apply
to RTNs that use the Reserve Banks for only U.S. government
transactions.
\64\ Fee will be assessed only when automated NOCs are
generated.
\65\ Limited services are offered in contingency situations.
\66\ The fees and credits listed are collected from the ODFI and
credited to Nacha (admin network) or to the RDFI (same-day entry and
unauthorized entry) in accordance with the ACH Rules.
\67\ Nacha's monthly network administration fee for 2023 was
misstated in the Federal Register Notice published on November 3,
2022. As announced by Nacha on September 22, 2022, effective January
1, 2023, Nacha is increasing the monthly network administration fee
that the Federal Reserve collects on its behalf to $28.67/RTN/month
($344/RTN/year), as correctly stated on this fee schedule.
\68\ The international fees and surcharges vary from country to
country as these are negotiated with each international gateway
operator.
\69\ A single monthly fee based on total FedGlobal ACH Payments
origination volume.
\70\ This per-item surcharge is in addition to the standard
domestic origination fees listed in this fee schedule.
\71\ This per-item surcharge is in addition to the standard
domestic receipt fees listed in this fee schedule.
\72\ U.S. ODFIs are responsible for any investigation fees
should they be assessed by foreign RDFIs or downstream payment
participants.
\73\ The monthly fee is rolled up to the parent DI level, such
that a DI that opts into the FedACH Exception Resolution Service
under two separate RTNs would pay a single monthly fee based on the
total number of cases opened for their two RTNs combined.
\74\ A financial institution may enroll in the Service as an
Offline Service Participant by designating the Reserve Bank to
access and use the functionality of the application on behalf of the
Offline Participant.
\75\ Federal Reserve Financial Services offers a five-year
discount program to financial institutions that receive at least 5
million items per month through FedACH and meet the qualifications
for Premium Receiver Level One or Level Two status.
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\76\ The incentive discounts apply to the volume that exceeds 60
percent of a customer's historic benchmark volume. Historic
benchmark volume is based on a customer's average daily activity
over the previous five calendar years. If a customer has fewer than
five full calendar years of previous activity, its historic
benchmark volume is based on its daily activity for as many full
calendar years of data as are available. If a customer has less than
one year of past activity, then the customer qualifies automatically
for incentive discounts for the year. The applicable incentive
discounts are as follows: $0.752 for transfers up to 14,000; $0.232
for transfers 14,001 to 90,000; and $0.152 for transfers over
90,000.
\77\ This surcharge applies to originators of transfers that are
processed by the Reserve Banks after 5:00 p.m. ET.
\78\ This fee is charged to any Fedwire Funds participant that
originates a transfer message via the FedPayments Manager Funds tool
and has the import/export processing option setting active at any
point during the month.
\79\ Payment Notification and End-of-Day Origination surcharges
apply to each Fedwire funds transfer message.
\80\ Provided on billing statement for informational purposes
only.
\81\ This charge is assessed to settlement arrangements that use
the Fedwire[supreg] Funds Service to affect the settlement of
interbank obligations (as opposed to those that use the National
Settlement Service). With respect to such special settlement
arrangements, other charges may be assessed for each funds transfer
into or out of the accounts used in connection with such
arrangements.
\82\ An organization that is a settlement agent may be able to
use the National Settlement Service offline service if it is
experiencing an operational event that prevents the transmission of
settlement files via its electronic connection to the Federal
Reserve Banks. The Federal Reserve Banks have limited capacity to
process offline settlement files. As a result, while the Federal
Reserve Banks use best efforts to process offline settlement file
submissions, there is no guarantee that an offline settlement file,
in particular one that is submitted late in the operating day or
that contains a large number of entries, will be accepted for
processing. Only those persons identified as authorized individuals
on the National Settlement Service 04 Agent Contact Form may submit
offline settlement files. For questions related to the National
Settlement Service offline service, please contact National
Settlement Service Central Support Service Staff (CSSS) at 800-758-
9403, or via email at <a href="/cdn-cgi/l/email-protection#375444444419444356515177594e1951455519584550"><span class="__cf_email__" data-cfemail="30534343431e4344515656705e491e5642521e5f4257">[email protected]</span></a>.
\83\ Any settlement arrangement that accrues less than $60
during a calendar month will be assessed a variable amount to reach
the minimum monthly fee.
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\84\ Restricted Securities Accounts maintained by the Reserve
Banks under the Loans and Discounts program and the 31 CFR part 202
program are not assessed for monthly account maintenance fees or
fees for Transfers of Book-Entry Securities to or from such
Restricted Securities Accounts. Restricted Securities Accounts
maintained by the Reserve Banks under the 31 CFR part 225 program
are subject to monthly account maintenance fees but not fees for
Transfers of Book-Entry Securities to or from such Restricted
Securities Accounts.
\85\ These fees are set by the Federal Reserve Banks.
\86\ This surcharge is set by the Federal Reserve Banks. It is
in addition to any basic transfer or reversal fee.
\87\ Restricted Securities Accounts maintained by the Reserve
Banks under the Loans and Discounts program and the 31 CFR part 202
program are not assessed for monthly account maintenance fees or
fees for Transfers of Book-Entry Securities to or from such
Restricted Securities Accounts. Restricted Securities Accounts
maintained by the Reserve Banks under the 31 CFR part 225 program
are subject to monthly account maintenance fees but not fees for
Transfers of Book-Entry Securities to or from such Restricted
Securities Accounts.
\88\ These fees are set by the Federal Reserve Banks.
\89\ These fees are set by the Federal Reserve Banks.
\90\ The U.S. Department of the Treasury absorbs the cost of
monthly account maintenance for securities accounts that contain
only Treasury securities and reimburses the Federal Reserve Banks.
\91\ The U.S. Department of the Treasury absorbs the cost of
monthly issue maintenance for custody holdings of Treasury
securities and reimburses the Federal Reserve Banks.
\92\ These fees are set by the Federal Reserve Banks.
\93\ Automated Claim Adjustment Process (ACAP) fees apply to all
ACAP-eligible security types. Phase 2 of the ACAP enhancement
project will include expanding ACAP tracking to all coupon-paying
securities issued over the Fedwire Securities Service and adding
securities lending as a transaction type. For information about the
ACAP enhancement project, please visit: <a href="https://www.frbservices.org/resources/financial-services/securities/acap">https://www.frbservices.org/resources/financial-services/securities/acap</a>.
\94\ Participants are charged the Repo Position Maintenance Fee
for both a Repo-Out balance and a Repo-In balance. These fees will
be assessed every business day.
\95\ Participants are charged the Securities Lending Position
Maintenance Fee for both a Securities Borrowed balance and a
Securities Lent balance. These fees will be assessed every business
day. Securities lending positions will be available when Phase 2 of
the ACAP enhancement project is implemented. For information about
the ACAP enhancement project, please visit: <a href="https://www.frbservices.org/resources/financial-services/securities/acap/">https://www.frbservices.org/resources/financial-services/securities/acap/</a>.
\96\ This fee is set by and remitted to the Government National
Mortgage Association (GNMA).
\97\ The Federal Reserve Banks charge participants a Joint
Custody Origination Surcharge for both Agency and Treasury
securities.
\98\ These fees are set by the Federal Reserve Banks.
\99\ These fees are set by the Federal Reserve Banks.
[[Page 82375]]
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By order of the Board of Governors of the Federal Reserve
System.
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\100\ FedComplete packages are all-electronic service options
that bundle payment services with an access solution for one monthly
fee.
\101\ FedComplete customers that use the email service would be
charged the FedMail Email a la carte fee and for all FedMail-FedLine
Exchange Subscriber 5-packs.
\102\ Packages with an ``A'' include the FedLine Advantage
channel.
\103\ Per-item surcharges are in addition to the standard fees
listed in the applicable priced services fee schedules.
\104\ FedComplete customers will be charged $4 for each
FedForward cash letter over the monthly package threshold. This
activity will appear under billing code 51998 in Service Area 1521
on a month-lagged basis.
\105\ FedMail and FedLine Exchange packages do not include user
credentials, which are required to access priced services and
certain informational services. Credentials are sold separately in
packs of five via the FedMail-FedLine Exchange Subscriber 5-pack.
\106\ FedLine Web and Advantage packages do not include user
credentials, which are required to access priced services and
certain informational services. Credentials are sold separately in
packs of five via the FedLine Subscriber 5-pack.
\107\ FedLine Solutions package fees associated with
establishing a new connection or upgrading a current connection to
FedLine Advantage[supreg] for the FedNow[supreg] Service will be
credited up to twelve months.
\108\ Early termination fees and/or expedited order fees may
apply to all FedLine Direct packages and FedLine Direct [agrave] la
carte options.
\109\ These add-on services can be purchased only with a FedLine
Solution.
\110\ Additional VPNs are available for FedLine Advantage,
FedLine Command, and FedLine Direct packages only. All customers
will need to replace their existing VPN device with the new VPN
device. Effective October 1, 2023, customers who have not started
migration will be assessed a $400 monthly fee under billing code
22411 until migration is complete.
\111\ Fee is in addition to the FedLine Direct package fees or
Additional 2Mbps WAN Connection fee.
\112\ The FedLine Custom Implementation Fee is $2,500 or $5,000
based on the complexity of the setup.
\113\ Available only to customers with a priced FedLine package.
\114\ Five download codes are included at no cost in all Plus
and Premier packages.
\115\ Available for FedLine Web Plus, FedLine Web Premier,
FedLine Advantage Plus, and FedLine Advantage Premier packages. It
is also available for no extra fee in FedLine Command Plus and
Direct packages.
\116\ The End of Day Financial Institution Reconcilement Data
(FIRD) and Statement of Account Spreadsheet File (SASF) are
available for Master accounts only.
\117\ Available with FedLine[supreg] Plus and Premier packages.
\118\ Available for FedLine Web Plus and Premier packages.
Available for no extra fee in FedLine Advantage and higher packages.
\119\ Charging the $10 Replacement Copy Fee is at the discretion
of Reserve Banks.
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Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023-25925 Filed 11-22-23; 8:45 am]
BILLING CODE 6210-01-P
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</html>Indexed from Federal Register on November 24, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.