WASHINGTON--With check volume declining, the Federal Reserve still should not discontinue check services. In a comment letter to the Federal Reserve Check Services, America’s Credit Unions pointed out that allowing the services to languish or become increasingly expensive for institutions processing check payments would likely have a disproportionately negative effect on credit unions, particularly those that are small and based in rural or underserved communities.
Sent Monday, the letter addresses future needs.
“We do not support the Reserve Banks pursuing a complete exit from check services. However, we do support the Board continuing to develop with industry input a strategy for managing costs, maintaining operational reliability, and ensuring that credit unions continue to have access to check services even as check volume declines,” the letter states.
Additionally, America’s Credit Unions recommended offering more detailed information about what price increases or decreases should be expected based on projected future check volume, in conjunction with the cost of servicing specific check-related product lines.
The Federal Reserve should also consider modernizing Regulation CC, especially provisions related to delaying funds availability when there is “reasonable cause to doubt collectability,” as those changes would help credit unions “mitigate check fraud and offset operational risks associated with a cost minimization strategy for check services,” ACU added.