[Federal Register Volume 89, Number 229 (Wednesday, November 27, 2024)]
[Notices]
[Pages 93584-93602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27831]
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FEDERAL RESERVE SYSTEM
[Docket No. OP-1862]
Federal Reserve Bank Services
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice.
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SUMMARY: The Board of Governors of the Federal Reserve System (Board)
has approved the private-sector adjustment factor (PSAF) for 2025 of
$31.9 million and the 2025 fee schedules for Federal Reserve priced
services and electronic access. These actions were taken in
[[Page 93585]]
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 1, 2025.
FOR FURTHER INFORMATION CONTACT: For questions regarding the fee
schedules: Ian Spear, Deputy Associate Director, (202) 452-3959; Anjana
Ravi, Manager, (202) 530-6286; Division of Reserve Bank Operations and
Payment Systems. For questions regarding the PSAF: Casey Clark,
Associate Director, (202) 912-7978; Jamie Noonan, Assistant Director,
(202) 530-6296; Grace Milbank, Lead Financial Institution Policy
Analyst, (202) 263-4828; 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 2025 fee
schedules for Check Services are available from the Board, the Federal
Reserve Banks, or the Federal Reserve Financial Services (FRFS) website
at www.FRBservices.org.
SUPPLEMENTARY INFORMATION:
I. Private-Sector Adjustment Factor, Priced Services Cost Recovery, and
Overview of 2025 Price Changes
A. Overview--Each year, as required by the Monetary Control Act of
1980 (MCA), 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\ See 12 U.S.C. 248a. See also Principles for the Pricing of
Federal Reserve Bank Services, 46 FR 1338, 1339 (Jan. 6, 1981),
available at https://www.federalreserve.gov/paymentsystems/pfs_principles.htm. 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 $548.6 million cumulative reduction in
equity related to the priced services' benefit plans through 2023.
Including this cumulative reduction in equity from 2014 to 2023
results in cost recovery of 102.6 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 2014 through 2023, the Reserve Banks recovered 102.6 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, the
National Settlement Service (NSS), and the Fedwire[supreg] Securities
Service achieved full cost recovery. The FedACH[supreg] Service
achieved 99.0 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.\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.
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In its 2019 notice entitled Federal Reserve Actions to Support
Interbank Settlement of Instant Payments (``2019 Notice''), the Board
communicated 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 are not expected to initially have stable volumes, costs, and
revenues.\3\ Thus, FedNow 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, (Aug. 9,
2019).
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Table 1 summarizes 2023 actual, 2024 forecasted, and 2025 budgeted
annual cost recovery rates for all mature priced services. Cost
recovery is forecasted to be 108.8 percent in 2024 and budgeted to be
104.1 percent in 2025.
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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2023 (actual)................. 507.3 467.1 40.1 8.4 106.7
2024 (forecast)............... 520.9 468.9 52.0 9.7 108.8
2025 (budget)................. 531.7 499.8 31.9 10.8 104.1
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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. For 2025, the budgeted 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.
[[Page 93586]]
Table 2 provides an overview of cost recovery budgets, forecasts,
and performance for the 10-year period from 2014 to 2023, 2023 actual,
2024 budget, 2024 forecast, and 2025 budget by mature priced service.
Table 2--Mature Priced Services Cost Recovery
[Percent]
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2024 Budget 2025 Budget
Priced service 2014-2023 2023 Actual \a\ 2024 Forecast \b\
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All mature services............. 102.6 106.7 103.1 108.8 104.1
Check........................... 106.9 102.9 95.5 102.9 97.5
FedACH.......................... 99.0 108.8 106.0 109.4 106.0
Fedwire Funds and NSS........... 101.9 103.1 103.2 108.3 103.2
Fedwire Securities.............. 105.7 122.3 110.9 123.2 115.7
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\a\ The 2024 budget figures reflect the final budgets as approved by the Board in December 2023. See Board of
Governors of the Federal Reserve System, 2024 Federal Reserve Banks Budgets, https://www.federalreserve.gov/foia/files/2024ReserveBankBudgets.pdf.
\b\ The 2025 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 2024.
1. 2024 Forecasted Performance--The Reserve Banks forecast that
they will recover 108.8 percent of the costs of providing mature priced
services in 2024, including total expense and targeted ROE, compared
with a 2024 budgeted recovery rate of 103.1 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 $52.0 million, compared
with the targeted ROE of $9.7 million. The Reserve Banks forecast that
all mature services will achieve full cost recovery in 2024.
2. 2025 Private-Sector Adjustment Factor--The 2025 PSAF for Reserve
Bank mature priced services is $31.9 million.\4\ This amount represents
an increase of $2.7 million from the 2024 PSAF of $29.2 million. This
increase is attributable to a $2.1 million increase in the cost of
capital primarily driven by higher short-term debt and higher return on
equity and a $0.6 million increase in sales tax.
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\4\ The FedNow Service launched in July 2023. Inclusive of the
FedNow Service, the PSAF increases to $42.3 million for 2025. Per
its 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 2025.
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3. 2025 Projected Performance--The Reserve Banks project a mature
priced services cost recovery rate of 104.1 percent in 2025, with a net
gain of $31.9 million and targeted ROE of $10.8 million. The Reserve
Banks project that each of the individual mature service lines will
achieve full cost recovery in 2025 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. 2025 Pricing--The following summarizes the Reserve Banks'
changes to fee schedules for priced services in 2025. For the mature
services, these changes collectively are an average price increase of
2.8 percent. The price changes outlined below are in line with the
Reserve Banks' strategy to offset rising costs, diversify revenue
sources, and continue to reduce pricing volatility.
Check Services
The Reserve Banks will increase participation fees,
FedImage[supreg] fees, and certain forward paper and return paper fees.
These changes will increase fixed fee revenue stability in light of
declining check volumes.
FedACH Service
The Reserve Banks will increase participation fees, origination and
receipt minimum fees, and FedPayments Reporter[supreg] Service fees.
These changes will help address ongoing operational costs, provide
greater revenue stability, and account for the additional business
value provided by the service enhancements over the last several years.
Fedwire Funds Service
The Reserve Banks will increase the Fedwire Funds participation
fee, the transfer fee for all three tiers, and the FedPayments[supreg]
Manager Import/Export fee. These increases will account for projected
declining volume growth, coupled with ongoing technology enhancements
and higher operating costs.\5\ In addition, the Fedwire Funds Service
will introduce a new fixed fee that will serve to better align fees
with customer usage as well as address challenges associated with
revenue volatility.
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\5\ Historically, Fedwire Funds volume has evolved in line with
GDP forecasts.
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National Settlement Service
The Reserve Banks will increase the National Settlement Service
per-file and per-entry fees. These changes will help address rising
operational costs.
Fedwire Securities Service
The Reserve Banks will maintain prices at existing levels for all
Fedwire Securities priced services.
FedNow Service
The Reserve Banks will modify the Customer Credit Transfer,
Customer Credit Transfer Return, and Request for Payment fee components
of the FedNow Service to exclude ``on-us'' transactions sent from and
received at the same financial institution.\6\ This adjustment will
both align with prevailing market practices and reduce inefficient off-
network transaction activity. All other price points and discounts in
the FedNow Service's fee schedule from the previous year will be
maintained in 2025.
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\6\ These fee modifications will take place at the parent
financial institution level, as defined in the Reserve Banks' Global
Customer Directory. ``On-us'' transactions include those made by the
same financial institution, even if the financial institution uses
multiple Routing Transit Numbers (RTNs).
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FedLine[supreg] Solutions
The Reserve Banks will increase the monthly fees for the FedLine
Direct[supreg] Solution, FedLine Command[supreg] Solution, and
FedComplete[supreg] Packages. These price modifications account for
enhancements to services and rising operational costs. The Reserve
Banks are also discontinuing FedComplete Premier and FedLine
Exchange[supreg] to streamline the FedLine product suite in response to
a declining customer base and to simplify internal operating,
servicing, and billing processes. Lastly, the Reserve Banks are
preparing to
[[Page 93587]]
implement a fee structure for services offered via Application
Programming Interfaces (APIs) in 2025.
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.\7\ 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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\7\ 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.\8\
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\8\ The pension assets are netted with the pension liabilities
and reported as a net asset or net liability as required by ASC 715.
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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 state income tax rates vary, and various
credits and deductions can apply at the federal or state level, 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.\9\ 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 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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\9\ The FDIC rule 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 (CPMI) and the Technical Committee of the
International Organization of Securities Commissions (IOSCO) known as
the Principles for Financial Market Infrastructures.\10\ 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 PSR policy,
consistent with relevant guidance and the requirements in the MCA.\11\
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.\12\ 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 2025
budget, six months of current operating expenses would be $71.7
million. In 2025, equity was sufficient to meet the FDIC capital
requirements and $6.7 million of equity was imputed to meet the PSR
policy requirement.
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\10\ See Board of Governors of the Federal Reserve System,
Federal Reserve Policy on Payment System Risk, https://www.federalreserve.gov/paymentsystems/files/psr_policy.pdf. See also
CPMI-IOSCO, Principles for Financial Market Infrastructures (April
2012), https://www.bis.org/cpmi/publ/d101a.pdf.
\11\ 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 section I.B.1.a of the PSR policy.
\12\ 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
[[Page 93588]]
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 2025 PSAF is $31.9 million, compared with $29.2 million in
2024. The increase of $2.7 million is attributable to a net $2.1
million increase in the cost of capital and a $0.6 million increase in
sales tax. The net $2.1 million increase in cost of capital is
primarily driven by a $1.3 million increase in ROE imputed to meet the
PSR policy requirements and higher short-term debt resulting in a $0.5
million increase in cost of debt.
The PSAF expense of $31.9 million, detailed in Table 5, includes
$19.8 million for capital funding, $7.6 million for Board of Governors'
expense, and $4.5 million in sales tax expense.
As shown in Table 3, 2025 total assets of $890.3 million increased
by $74.2 million from 2024. The net increase in total assets includes
an additional $90.7 million in imputed investments and short-term
assets partially offset by a $16.5 million decrease in long-term
assets.
The net increase of $90.7 million primarily consists of a $80.8
million increase in the imputed investments and a $9.9 million increase
driven by short-term assets, The imputed investment increase reflects a
$74 million increase from float \13\ and a $6.7 million increase to
comply with the PSR policy. The $9.9 million increase in short-term
assets is driven by an increase in prepaid expenses.
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\13\ 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.
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The $16.5 million decrease in the long-term assets is primarily
driven by a $38.0 million decrease in the net pension asset, partially
offset by a $20.3 million increase in premises, furniture and
equipment, and software and leasehold improvements.
The capital structure of the 2025 pro forma balance sheet, provided
in Table 4, is composed of equity of $71.7 million, or 12.6 percent of
the 2025 risk-weighted assets detailed in Table 6, and long-term debt
of $96.1 million. The 2025 capital structure aligns with that of 2024,
which was composed of $68.5 million of equity and $100.3 million of
long-term debt. As shown in Table 5, the 2025 initially imputed equity
required to fund assets and meet the publicly traded firm model capital
requirements is $65.0 million. As long-term assets are marginally
greater than long-term liabilities, long-term debt of $96.1 million was
imputed at the observed market ratio of 59.7 percent. The equity of
$65.0 million was adequate to meet the FDIC capital requirements for a
well-capitalized institution. Additional equity of $6.7 million was
imputed to satisfy PSR policy requirements.
The net accumulated other comprehensive loss is $563.3 million,
compared with $551.0 million in 2024. The $12.3 million increase is
primarily attributable to a lower 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.
Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Mature Priced Services a
[Millions of dollars--projected average for year]
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2025 2024 Change
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Short-term assets:
Receivables................................................. $ 44.3 $ 41.8 $ 2.5
Inventory................................................... 0.4 0.2 0.2
Prepaid expenses............................................ 34.2 24.0 10.2
Items in process of collection \13\......................... 58.0 61.0 (3.0)
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Total short-term assets................................. 136.9 127.0 9.9
Imputed investments: \14\ .............. .............. ..............
Imputed investment in Treasury securities................... 6.8 .............. 6.8
Imputed investment in Fed Funds............................. 293.0 219.0 74.0
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Total imputed investments............................... 299.8 219.0 80.8
Long-term assets: .............. .............. ..............
Premises \15\ *............................................. 105.3 99.4 5.9
Furniture and equipment..................................... 60.8 53.9 6.9
Software and leasehold improvements......................... 74.5 67.0 7.5
Net pension asset........................................... 82.4 120.4 (38.0)
Deferred tax asset.......................................... 130.6 129.4 1.2
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Total long-term assets.................................. 453.6 470.1 (16.5)
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Total assets........................................ 890.3 816.1 74.2
Short-term liabilities:
Deferred credit items....................................... 351.0 280.0 71.0
Short-term debt............................................. 42.2 32.7 9.5
Short-term payables......................................... 36.8 33.4 3.4
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Total short-term liabilities............................ 430.0 346.0 84.0
Long-term liabilities:
Postemployment/postretirement benefits and net pension 292.5 301.2 (8.7)
liabilities \16\...........................................
Long term debt.............................................. 96.1 100.3 (4.2)
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Total liabilities....................................... 818.6 747.6 71.0
Equity \17\*............................................ 71.7 68.5 3.2
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[[Page 93589]]
Total liabilities and equity........................ 890.3 816.1 74.2
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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. * Premises, postemployment/postretirement benefits and net pension liabilities, and
equity restated for 2024.
Table 4--Imputed Funding for Mature Priced-Services Assets \a\
[Millions of dollars]
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2025 2024
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A. Short-term asset financing: .............. ..............
Short-term assets to be financed:...
Receivables..................... $ 44.3 $ 41.8
Inventory....................... 0.4 0.2
Prepaid expenses................ 34.2 24.0
-------------------------------
Total short-term assets to 78.9 66.0
be financed................
Short-term payables............. 36.8 33.4
Net short-term assets to be financed 42.2 32.7
Imputed short-term debt financing 42.2 32.7
\18\...............................
B. Long-term asset financing:........... .............. ..............
Long-term assets to be financed:.... .............. ..............
Premises *...................... 105.3 99.4
Furniture and equipment......... 60.8 53.9
Software and leasehold 74.5 67.0
improvements...................
Net pension asset............... 82.4 120.4
Deferred tax asset.............. 130.6 129.4
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Total long-term assets to be 453.6 470.1
financed...................
Postemployment/postretirement 292.5 301.2
benefits and net pension
liabilities *..................
Net long-term assets to be 161.1 168.9
financed *.....................
Imputed long-term debt \21\..... 96.1 100.3
Imputed equity \21\............. 65.0 68.5
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Total long-term financing *. 161.1 168.9
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\a\ Excludes amounts related to the FedNow Service.
* Premises and postemployment/postretirement benefits and net pension
liabilities, net long-term assets to be financed and total long-term
financing restated for 2024.
Table 5--Derivation of the PSAF for Mature Priced Services \a\
[Dollars in millions]
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2025 2024
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Debt Equity Debt Equity
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A. Imputed long-term debt and equity:
Net long-term assets to finance......... $ 161.1 $ 161.0 $ 168.9 $ 168.9
Capital structure observed in market.... 59.7% 40.3% 59.4% 40.6%
Pre-adjusted long-term debt and equity.. $ 96.1 $ 65.0 $ 100.3 $ 68.5
Equity adjustments: \19\................ ................ .............. ................ ..............
Equity to meet capital requirements..... ................ $ 65.0 ................ $ 68.5
Adjustment to debt and equity funding given ................ .............. ................ ..............
capital requirements \20\..................
Adjusted equity balance..................... ................ $ 65.0 ................ $ 68.5
Equity to meet capital requirements \21\ ................ .............. ................ ..............
Total imputed long-term debt and 96.1 65.0 100.3 68.5
equity *...........................
B. Cost of capital: ................ .............. ................ ..............
Elements of capital costs:.............. ................ .............. ................ ..............
Short-term debt \22\.................... $ 42.2 x 5.4% = $ 2.3 $ 32.7 x 5.4% = $ 1.8
Long-term debt \22\..................... $ 96.1 x 4.4% = 4.2 $ 100.3 x 4.0% = $ 4.0
Equity \23\............................. $ 65.0 x 18.6% = $ 12.1 $ 68.5 x 17.4% = $ 11.9
C. Incremental cost of PSR policy: ................ .............. ................ ..............
Equity to meet policy................... $ 6.7 x 18.6% = $ 1.3 $ = x 17.4% = $ =
D. Other required PSAF costs: ................ .............. ................ ..............
Sales taxes............................. ................ $ 4.5 ................ $ 3.9
Board of Governors expenses............. ................ 7.6 ................ 7.6
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................ $ 12.1 ................ $ 11.5
E. Total PSAF: ................ $ 31.9 ................ $ 29.2
[[Page 93590]]
As a percent of assets.................. ................ 3.6% ................ 3.6%
As a percent of expenses................ ................ 3.4% ................ 3.6%
F. Tax rates ................ 18.91% ................ 18.84%
----------------------------------------------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.
* Total imputed long-term debt restated for 2024.
Table 6--Computation of 2025 Capital Adequacy for Federal Reserve Mature Priced Services \a\
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Weighted
Assets Risk weight assets
----------------------------------------------------------------------------------------------------------------
Imputed investments: .............. .............. ..............
1-Year Treasury securities \24\............................. $ 6.7 0.0 $ =
Federal funds \25\.......................................... 293.0 0.2 58.6
-----------------------------------------------
Total imputed investments............................... 299.8 .............. 58.9
Receivables................................................. 44.3 0.2 8.9
Inventory................................................... 0.4 1.0 0.4
Prepaid expenses............................................ 34.2 1.0 34.2
Items in process of collection.............................. 58.0 0.2 11.6
Premises.................................................... 105.3 1.0 105.3
Furniture and equipment..................................... 60.8 1.0 60.8
Software and leasehold improvements......................... 74.5 1.0 74.5
Pension asset............................................... 82.4 1.0 82.4
Deferred tax asset.......................................... 130.6 1.0 130.6
-----------------------------------------------
Total................................................... 890.3 .............. 567.6
Imputed equity: .............. .............. ..............
Capital to risk-weighted assets............................. 12.6% .............. ..............
Capital to total assets..................................... 8.1% .............. ..............
----------------------------------------------------------------------------------------------------------------
\a\ Excludes amounts related to the FedNow Service.
C. Check Services--Table 7 shows the 2023 actual, 2024 forecasted,
and 2025 budgeted cost-recovery performance for commercial check
services.
Table 7--Check 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)]
---------------------------------------------------------------------------------
2023 (actual)................. 111.8 107.4 4.4 1.3 102.9
2024 (forecast)............... 110.2 105.0 5.2 2.1 102.9
2025 (budget)................. 107.1 107.8 (0.7) 2.1 97.5
----------------------------------------------------------------------------------------------------------------
1. 2024 Forecast--The Reserve Banks forecast that Check Services
will recover 102.9 percent of total expenses and targeted ROE, compared
with a 2024 budgeted recovery rate of 95.5 percent.
Through August 2024, total commercial forward and total commercial
return check volumes were 6.8 percent lower and 2.9 percent greater,
respectively, than they were during the same period last year. For
full-year 2024, the Reserve Banks estimate that their total forward
check volume will decline 6.3 percent (compared with a budgeted decline
of 8.0 percent), and their total return check volume will increase 1.6
percent (compared with a budgeted decline of 7.0 percent) from 2023
levels. The Reserve Banks expect that check volumes will continue to
decline because of ongoing substitution away from checks to other
payment instruments.
2. 2025 Pricing--The Reserve Banks expect Check Services to recover
97.5 percent of total expenses and targeted ROE in 2025. The Reserve
Banks project revenue to be $107.1 million, a decline of $3.1 million,
or 2.8 percent from the 2024 forecast. Total expenses for Check
Services are projected to be $107.8 million, an increase of $2.8
million, or 2.7 percent, from 2024 forecasted expenses.
As check volumes continue to decline, the pricing increases are
intended to help stabilize check revenues, to shift the revenue mix
[[Page 93591]]
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 fees. For the participation fees, Tier 1 will increase by
$125, Tier 2 will increase by $80, Tier 3 will increase by $50, and
Tier 4 will increase by $10. 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 through fixed fees.
Table 8 displayed below shows the 2025-tiered participation fees.
Table 8--Check 21 Participation Fee Structure
------------------------------------------------------------------------
Tier \26\ Monthly fee
------------------------------------------------------------------------
1................................................... $550
2................................................... 340
3................................................... 215
4................................................... 90
------------------------------------------------------------------------
The Reserve Banks will also increase the fees for each of the
services in the FedImage suite by approximately 10% and merge the Back
File Conversion and Electronic On-Us services with the FedImage
Enhanced Truncation service into a single service at the new FedImage
Enhanced Truncation price point. These changes will better reflect the
value of services provided to customers and help simplify the services
in the face of declining volumes. Table 9 below shows the 2025 FedImage
services fees.
---------------------------------------------------------------------------
\14\ Consistent with the 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
$71.7 million. In 2025, $6.7 million of additional equity was
imputed to meet PSR policy requirements.
\15\ Includes the allocation of Board of Governors assets to
priced services of $5.2 million for 2025 and $3.5 million for 2024.
\16\ Includes the allocation of Board of Governors liabilities
to priced services of $1.4 million for 2025 and $1.2 million for
2024.
\17\ Includes an accumulated other comprehensive loss of $563.3
million for 2025 and $551.0 million for 2024, 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.
\18\ 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.
\19\ 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 2025, the amount of imputed equity met the minimum equity
requirements for risk-weighted assets.
\20\ 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.
\21\ Additional equity in excess of that needed to fund priced
services assets is offset by an asset balance of imputed investments
in Treasury securities.
\22\ Imputed short-term debt and long-term debt are computed in
Table 4.
\23\ The 2025 ROE is equal to a risk-free rate plus a risk
premium (beta * market risk premium). The 2025 after-tax CAPM ROE is
calculated as 5.52% + (1.0 * 9.54%) = 15.06%. Using a tax rate of
18.9%, the after-tax ROE is converted into a pretax ROE, which
results in a pretax ROE of (15.06%/(1-18.9%)) = 18.57%. Calculations
may be affected by rounding.
\24\ 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, available at https://www.federalreserve.gov/releases/h15/.
\25\ The investments are imputed based on the amounts arising
from the collection of items before providing credit according to
established availability schedules.
\26\ 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.
\27\ The 2025 fees are not listed for Back File Conversion and
Electronic On-Us given their consolidation into a single service at
the new FedImage Enhanced Truncation price point.
Table 9--2025 FedImage Services Fees \27\
----------------------------------------------------------------------------------------------------------------
2024 Fees 2025 Fees
FedImage Services ---------------------------------------------------------------
Fixed/CL Item Fixed/CL Item
----------------------------------------------------------------------------------------------------------------
Image Archive:
30 business day archive..................... .............. $ 0.0013 .............. $ 0.0014
60 business day archive..................... .............. 0.0015 .............. 0.0017
7 Year archive/11 year archive.............. .............. 0.0024 .............. 0.0026
Extended RAID Storage:
61 days to 6 months......................... .............. 0.0012 .............. 0.0013
61 days to 12 months........................ .............. 0.0029 .............. 0.0032
61 days to 24 months........................ .............. 0.0074 .............. 0.0081
Image Retrievals:
Subscription Retrieval...................... .............. 0.0032 .............. 0.0035
Manual FedImage Requests.................... .............. 8.80 .............. 10.00
Back File Conversion........................ 5.17 0.0146 .............. ..............
Electronic On-Us Service........................ 5.17 0.0146 8.80 ..............
Truncation:
FedImage Enhanced Truncation................ 7.98 0.0132 8.80 0.0145
Return Retrieval............................ .............. 1.54 .............. 1.70
Custom Sort Fee............................. 192.50 .............. 212.00 ..............
----------------------------------------------------------------------------------------------------------------
Additionally, the Reserve Banks will increase certain forward paper
fees. Specifically, the Reserve Banks will increase the Canadian cash
letter fees for U.S. and Canadian funds by $2.00, the Canadian Amount
Encoding per-
[[Page 93592]]
item fee by $0.50, and the Mixed Forward Products (domestic paper
checks) cash letter fee by $2.00 and per-item fee by $0.50. Table 10
below shows the 2025 forward paper fees.
Table 10--2025 Forward Paper Check Clearing Fees
------------------------------------------------------------------------
Forward paper check Fixed/CL Item
------------------------------------------------------------------------
Canadian--US Funds...................... $ 19.00 $ 6.50000
Canadian--Canadian Funds................ 19.00 6.50000
Canadian Amount Encoding................ .............. 2.50000
Mixed Paper Deposits.................... 19.00 5.00000
------------------------------------------------------------------------
The Reserve Banks will increase certain return fees and will
implement a new tiered fee structure for the Large Dollar Return Item
Notification (LDRIN) via the FedLine Web[supreg] Solution. The fees for
the new LDRIN via FedLine Web tiers will be $3.50 for Tier 1, for
customers with greater than 5,000 monthly items, and $5.00 for Tier 2,
for customers with less than 5,000 monthly items. Additionally, the
Return Item Reclear cash letter fee will increase by $1.00 and the per-
item fee will increase by $0.10. The Qualified and Unqualified Return
Item cash letter fee will increase by $2.00 and the per-item fee will
increase by $0.50. Lastly, the return Item Qualification per-item fee
will increase by $1.00. Table 11 below shows the 2025 return fees and
new LDRIN via FedLine Web tiers.
Table 11--2025 Return Legacy/Paper Fees
------------------------------------------------------------------------
Return paper check Fixed/CL Item
------------------------------------------------------------------------
LDRIN via FedLine for the Web:
Tier 1 (Greater than 5,000 monthly). .............. $ 3.50
Tier 2 (Less than 5,000 monthly).... .............. 5.00
Return Item Reclear: .............. ..............
Level 1 (Items valued up to $100)... $12.00 0.85
Level 2 (Items valued up to $250)... 12.00 0.95
Level 3 (Items valued up to $500)... 12.00 1.05
Level 4 (Items valued up to $1,000). 12.00 1.15
Qualified Return Items.................. 19.00 8.50
Unqualified Return Items................ 19.00 8.50
Unencoded Qualification................. .............. 11.00
------------------------------------------------------------------------
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 could result in lower than
anticipated revenue. The Reserve Banks estimate these cumulative price
changes will result in a 2.8 percent average increase for Check
Services customers.
D. FedACH Services--Table 12 shows the 2023 actual, 2024
forecasted, and 2025 budgeted cost-recovery performance for commercial
FedACH Services.
Table 12--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)]
----------------------------------------------------------------------------------------------------------------
2023 (actual)................. 183.8 166.5 17.1 2.3 108.8
2024 (forecast)............... 189.0 169.0 20.0 3.7 109.4
2025 (budget)................. 194.4 179.7 14.7 3.7 106.0
----------------------------------------------------------------------------------------------------------------
1. 2024 Forecast--The Reserve Banks forecast that FedACH Services
will recover 109.4 percent of total expenses and targeted ROE, compared
with a 2024 budgeted recovery rate of 106.0 percent.
Through August 2024, FedACH commercial origination and receipt
volume were 7.7 percent higher and 5.3 percent higher, respectively,
than they were during the same period last year. For full-year 2024,
the Reserve Banks estimate that FedACH commercial origination and
receipt volume will increase 6.7 percent and 4.7 percent, respectively,
from 2023 levels, compared with a budgeted increase of 3.5 percent for
both commercial origination and receipt.
2. 2025 Pricing--The Reserve Banks expect FedACH Services to
recover 106.0 percent of total expenses and targeted ROE in 2025. The
Reserve Banks project revenue to be $194.4 million, an increase of $5.4
million, or 2.9 percent, from the 2024 forecast. Total expenses are
projected to be $179.8 million, an increase of $10.8
[[Page 93593]]
million, or 6.4 percent, from the 2024 forecast.
The Reserve Banks will increase the monthly ACH Participation fee
from $75 to $80 per RTN. The Reserve Banks will also increase the
monthly ACH Origination Minimum fee from $50 to $55 and Receipt Minimum
fee from $40 to $45 per RTN.\28\ The ACH Participation and Minimum Fee
price changes are driven by ongoing operational costs and a continued
focus on growing fixed fee revenue generation.
---------------------------------------------------------------------------
\28\ The FedACH Minimum Fee applies to any RTN that has
originated or received a FedACH transaction during a calendar month.
The customer is charged their normal item fees plus a variable
amount that closes the gap to the minimum. For example, an RTN
originating 10K items in a month pays $35 in item fees (10K items
times $0.0035 per item) and $15 in minimum fees so that their total
origination fees are $50. Another RTN paying $51 in item fees would
be charged an effective minimum fee of $0. Only one minimum
threshold applies in any given period, with RTNs subject to the
Receipt Minimum fee only if they did not originate any items.
---------------------------------------------------------------------------
In addition, the Reserve Banks will increase the FedACH FedPayments
Reporter Service fees from 6 to 11 percent as shown in Table 13.\29\
The FedPayments Reporter Service has continued to evolve and improve
with enhanced features such as new intraday generation capabilities for
select reports and the integration of an upgraded Electronic Data
Interchange (EDI) parser. These efforts have increased both the costs
of providing the FedPayments Reporter Service and the value it offers
to customers.
---------------------------------------------------------------------------
\29\ The FedPayments Reporter Service for the FedACH Services
provides financial institutions and their customers with reports of
their ACH transactions processed by FedACH including valuable
business information.
Table 13--FedACH FedPayments Reporter Service Fees
------------------------------------------------------------------------
Tiers 2025 Monthly fee
------------------------------------------------------------------------
Tier 1--Up to 50 reports............................ $50
Tier 2--From 51 to 150 reports...................... 72
Tier 3--From 151 to 500 reports..................... 133
Tier 4--From 501 to 1,000 reports................... 245
Tier 5--From 1,001 to 1,500 reports................. 355
Tier 6--From 1,501 to 2,500 reports................. 555
Tier 7--From 2,501 to 3,500 reports................. 775
Tier 8--From 3,501 to 4,500 reports................. 990
Tier 9--From 4,501 to 5,500 reports................. 1,200
Tier 10--From 5,501 to 7,000 reports................ 1,460
Tier 11--From 7,001 to 8,500 reports................ 1,700
Tier 12--From 8,501 to 10,000 reports............... 1,930
Tier 13--Over 10,000 reports........................ 2,100
------------------------------------------------------------------------
The Reserve Banks estimate these cumulative price changes will
result in a 1.4 percent average increase for FedACH customers.
The Reserve Banks' primary risk to current projections for the
FedACH Service are lower-than-projected volumes and growth due to
potential customer attrition.
E. Fedwire Funds Service and National Settlement Service--Table 14
shows the 2023 actual, 2024 forecasted, and 2025 budgeted cost-recovery
performance for the Fedwire Funds Service and the National Settlement
Service.
Table 14--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)]
----------------------------------------------------------------------------------------------------------------
2023 (actual)................. 162.5 153.4 9.1 4.3 103.1
2024 (forecast)............... 169.2 153.1 16.1 3.0 108.3
2025 (budget)................. 174.4 164.9 9.5 4.1 103.2
----------------------------------------------------------------------------------------------------------------
1. 2024 Forecast--The Reserve Banks forecast that the Fedwire Funds
Service and the National Settlement Service will recover 108.3 percent
of total expenses and targeted ROE, compared with a 2024 budgeted
recovery rate of 103.2 percent.
Through August 2024, Fedwire Funds Service online volume has been
5.9 percent higher than it was during the same period last year. The
Reserve Banks expect volume to remain near this level through the
remainder of 2024. Through August 2024, the National Settlement Service
settlement file volume was 0.3 percent higher than it was during the
same period last year, and settlement entry volume was 0.5 percent
higher. For full-year 2024, the Reserve Banks estimate that settlement
file volume will decrease 0.3 percent (compared with a budgeted
decrease of 0.1 percent) and settlement entry volume will increase 0.4
percent (compared with a budgeted 0.4 percent increase) from 2023
levels.
2. 2025 Pricing--The Reserve Banks expect the Fedwire Funds Service
and the National Settlement Service to recover 103.2 percent of total
expenses in 2025. The Reserve Banks project revenue to be $174.4
million, an increase of $5.2 million, or 3.1 percent from the 2024
forecast. The Reserve Banks project total expenses to be $164.9
million, an increase of 11.8
[[Page 93594]]
million, or 7.7 percent, from the 2024 forecast. Rising costs are
primarily driven by the Fedwire Funds Service's ongoing transition to
the ISO[supreg] 20022 messaging format.\30\ In addition, the National
Settlement Service continues to incur higher costs because of the
expansion of its operating hours in 2022.\31\
---------------------------------------------------------------------------
\30\ In October 2021, the Board announced that the Federal
Reserve Banks will adopt the ISO 20022 message format for the
Fedwire Funds Service. See New Message Format for the Fedwire Funds
Service, 86 FR 55600 (Oct. 6, 2021).
\31\ 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 the Fedwire Funds Service
participation fee from $115 to $120. In addition, all three of the
gross origination and receipt tiered fees will be increased. The tier 1
fee will increase from $0.94 to $0.97, the tier 2 fee will increase
from $0.29 to $0.30, and the tier 3 fee will increase from $0.19 to
$0.195. Correspondingly, the volume-based incentive discount fee will
increase for all three tiers. The tier 1 discount fee will increase
from $0.188 to $0.194, the tier 2 discount fee will increase from
$0.058 to $0.060, and the tier 3 discount fee will increase from $0.038
to $0.039. Finally, the FedPayments Manager Import/Export fee will
increase from $60 to $65. The Reserve Banks will also change National
Settlement Service fees for 2025. The per-file fee will increase from
$35 to $40, and the per-entry fee will increase from $1.70 to $1.95.
In addition to these changes, the Reserve Banks will introduce a
new volume-based fixed fee for the Fedwire Funds Service.\32\ The
introduction of this fee will serve to reconcile challenges associated
with volatility stemming from variable revenues sources while ensuring
a fee structure that is better aligned with customer usage. This fee is
based on the volume tier thresholds.\33\ The new volume-based fixed fee
is one price point assessed at the parent level and is based on the
highest volume tier of its associated affiliates.\34\ This differs from
the existing participation fee in that the participation fee is
assessed at the sub-account level for any ABA with at least one
origination or receipt transaction during the month.\35\ The proposed
price points for the volume-based fixed fees are as follows:
---------------------------------------------------------------------------
\32\ Volume-based pricing for Fedwire Funds was introduced in
1999. The analysis that led to volume-based pricing showed that
Fedwire Funds can benefit from charging different prices to
different areas of the market based on customer volume. When
considering ways to increase fixed revenue, the Board re-examined
this analysis and has concluded that establishing fixed revenue
sources based on customer volume will benefit the Fedwire Funds
service in a similar fashion to volume-based pricing for gross
origination and receipt fees.
\33\ Tiers are based on monthly total volume (send and receive)
at the master account level: 0-14,000 messages (Tier 1); 14,001-
90,000 (Tier 2), and all volume above 90,000 messages (Tier 3).
\34\ For example, if a parent customer has affiliates in the
Tier 2 and Tier 3 volume thresholds, the parent will be assessed the
corresponding $500 Tier 3 monthly fee.
\35\ The new Monthly Fixed Fee will not be applicable to
customers in the Tier 1 volume level.
Table 15--Fedwire Funds Service Volume-Based Fixed Fee Tiers
------------------------------------------------------------------------
Fixed fee level Volume tier Monthly fee
------------------------------------------------------------------------
Tier 2......................... Tier 2................. $250
Tier 3......................... Tier 3................. 500
------------------------------------------------------------------------
As noted above, this fee will serve to reconcile challenges
associated with volatility stemming from variable revenues sources
while ensuring a fee structure that is better aligned with customer
usage. Fedwire Funds Service fee revenue has become increasingly
dependent on variable sources and this growing exposure to uncertain
fee fluctuations undermines annual revenue stability. This fee will
address this uncertainty by increasing the percentage of fixed fee
revenue. Further, the fee is intended to be commensurate with customer
usage and structured so that smaller customers are not
disproportionally impacted. In addition, this fee, alongside the other
fee increases noted above, serves to help balance increases in ongoing
operational costs incurred by the National Settlement Service for the
period between 2014 and 2023, when fees did not increase.
The Reserve Banks' primary risk to current projections for these
services is lower than-projected-volumes and growth due to the market
and economic environment given that historically, Fedwire Funds Service
volume has reflected market conditions.\36\ The Reserve Banks estimate
these cumulative price changes will result in a 5.7 percent average
price increase for Fedwire Funds and National Settlement Service
customers.
---------------------------------------------------------------------------
\36\ 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 FRBservices.org, Fedwire Funds
Service--Annual Statistics, https://www.frbservices.org/resources/financial-services/wires/volume-value-stats/annual-stats.html.
---------------------------------------------------------------------------
F. Fedwire Securities Service--Table 16 shows the 2023 actual, 2024
forecast, and 2025 budgeted cost-recovery performance for the Fedwire
Securities Service.\37\
---------------------------------------------------------------------------
\37\ 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.
Table 16--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)]
----------------------------------------------------------------------------------------------------------------
2023 (actual)................. 49.1 39.7 9.4 0.5 122.3
2024 (forecast)............... 52.5 41.8 10.7 0.8 123.2
2025 (budget)................. 55.7 47.3 8.4 0.9 115.7
----------------------------------------------------------------------------------------------------------------
[[Page 93595]]
1. 2024 Forecast--The Reserve Banks forecast that the Fedwire
Securities Service will recover 123.2 percent of total expenses and
targeted ROE, compared with a 2024 budgeted recovery rate of 110.9
percent.
Through August 2024, Treasury security transfer volume was 15.9
percent higher than it was during the same period last year. For full-
year 2024, the Reserve Banks estimate that Treasury security transfer
volume will increase 4.0 percent from 2023 levels, compared with a
budgeted decrease of 7.3 percent. Through August 2024, Agency security
transfer volume was 3.8 percent lower than it was during the same
period last year. For full-year 2024, the Reserve Banks estimate that
Agency security transfer volume will decrease 2.6 percent from 2023
levels, compared with a budgeted increase of 1.3 percent.
Through August 2024, account maintenance volume was 0.7 percent
lower than it was during the same period last year. For full-year 2024,
the Reserve Banks estimate that account maintenance volume will decline
1.0 percent from 2023 levels, compared with a budgeted decline of 2.6
percent. Through August 2024, the volume of Agency issues maintained
was 0.5 percent lower than it was during the same period last year. For
full-year 2024, the Reserve Banks estimate that the volume of Agency
issues maintained will decrease 0.4 percent from 2023 levels, compared
with a budgeted change of 0.0 percent.
2. 2025 Pricing--The Reserve Banks expect the Fedwire Securities
Service to recover 115.7 percent of total expenses and targeted ROE in
2025. Revenue is projected to be $55.7 million, an increase of $3.2
million, or 6.0 percent, from the 2024 revenue forecast. The Reserve
Banks also project that 2025 expenses will be $47.3 million, an
increase of $5.5 million, or 13.1 percent from the 2024 forecast.
The Reserve Banks will leave fee schedules for Fedwire Securities
priced services unchanged in 2025. This decision considers the benefits
of maintaining consistent customer pricing in the face of rising costs
and higher than expected volatility in transfer volumes.
Regarding volumes, the Reserve Banks project that monthly
maintenance products will maintain relatively stable volumes throughout
2025 with Issue Maintenance volume to increase slightly at 0.2 percent
and Account Maintenance volume to decrease 0.6 percent in 2025.
Treasury transfer volume is slated to continue its record growth trend
with an anticipated 9.4 percent increase. Agency transfers are
projected to increase by 0.5 percent in 2025.
The Reserve Banks project that Agency transfer volume will increase
moderately compared with previous years, as interest rates fall,
encouraging home-buying and mortgage refinancing. As detailed in the
figures above, the volume of Treasury security transfers is projected
to continue its record growth trend due primarily to debt issuance by
the Treasury. 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 and 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 macroeconomic
outlook and market conditions.
G. FedNow Service--
1. 2024 Forecast--The Reserve Banks forecast that the FedNow
Service will generate a total of $244.9 million in expenses in 2024.
The number of transactions processed by the FedNow Service in 2024
is modest and consistent with the Federal Reserve's expectations for a
new service line. From January through August 2024, the transaction
volume of the FedNow Service totaled 414,827 transactions, with the
number of participants growing from 400 to just under 1,000 financial
institutions during this time period. Broad adoption of the FedNow
Service across an industry with more than 9,000 financial institutions
will be a gradual journey, similar to other new payment services like
FedACH in the 1970s and 1980s. As a result, the Board has adopted a
long-term outlook in evaluating the development of the FedNow Service.
The Board anticipates acceleration in volume over time as more
financial institutions join the network and as the Reserve Banks
release new service features on an ongoing basis.\38\
---------------------------------------------------------------------------
\38\ For quarterly FedNow Service transaction data, see Board of
Governors of the Federal Reserve System, FedNow Service, https://www.federalreserve.gov/paymentsystems/fednow_about.htm.
---------------------------------------------------------------------------
2. 2025 Pricing--In 2025, the Reserve Banks project total operating
expenses to be $245.5 million, which will be an increase of $0.6
million or 0.2 percent from the 2024 forecast.\39\
---------------------------------------------------------------------------
\39\ During the time in 2023 when the FedNow Service was in
production, expenses (including imputed costs) totaled $99.7
million.
---------------------------------------------------------------------------
The Reserve Banks will modify the Customer Credit Transfer,
Customer Credit Transfer Return, and Request for Payment fee components
of the FedNow Service to exclude ``on-us'' transactions sent from and
received at the same financial institution.\40\ This adjustment will
both align with prevailing market practices and reduce inefficient off-
network transaction activity. All other components of the previous
year's fee schedule, inclusive of discounts, will be maintained by the
Reserve Banks in 2025.\41\
---------------------------------------------------------------------------
\40\ The modifications will take place at the parent financial
institution level, as defined in the Reserve Banks' Global Customer
Directory. ``On-us'' transactions include those made by the same
financial institution, even if the financial institution uses
multiple RTNs.
\41\ These maintained fees and discounts include the FedLine
connectivity discount. The FedLine connectivity discount program
consists of providing credits for upgrade fees from a FedMail or
FedLine Web connection to FedLine Advantage and new FedLine
Advantage connection fees for the FedNow Service to qualifying
institutions. Credits will be for 12 months from FedLine Advantage
billing eligibility. Customers that have received discounts
throughout the 2024 program will see FedLine connectivity discounts
roll off in 2025 following the completion of the 12-month term.
---------------------------------------------------------------------------
H. FedLine Solutions--There are currently six FedLine Solutions
channels through which customers can access the Reserve Banks' priced
services: FedMail[supreg], FedLine Exchange, FedLine Web, FedLine
Advantage[supreg], FedLine Command and FedLine Direct.\42\ The Reserve
Banks bundle these channels into 12 FedLine Solutions packages that are
supplemented by a number of premium (or [agrave] la carte) access and
accounting information options.
---------------------------------------------------------------------------
\42\ The Reserve Banks charge fees for the electronic
connections that financial institutions use to access priced
services and allocate the costs and revenues associated with this
electronic access to the priced services. As a result, FedLine costs
and revenue are allocated to the Reserve Banks' priced services on
an expense ratio basis.
---------------------------------------------------------------------------
The Reserve Banks also offer FedComplete[supreg] Packages, which
are bundled offerings of FedLine connections and a fixed number of
FedACH Services, Fedwire Funds Services, and Check 21-enabled
transactions. In 2025, the Reserve Banks will increase the monthly fees
for FedComplete 100A Plus from $900 to $1,150 and FedComplete 200A Plus
from $1,425 to $1,725. The price increases reflect the rising fees and
enhancements of the package's underlying services. To simplify the
FedComplete Packages and create internal efficiencies, FedComplete 100A
[[Page 93596]]
Premier and 200A Premier will be discontinued. Additionally, the
Reserve Banks plan to discontinue the FedLine Exchange service to
streamline FedLine Solution products and create internal efficiencies
that simplify operating, servicing, and billing processes.\43\
---------------------------------------------------------------------------
\43\ The FedLine Exchange service provides access to the E-
Payments Routing Directory, which is also available to plus level
customers across the FedLine channels. 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.
---------------------------------------------------------------------------
The Reserve Banks will increase the monthly fees for FedLine
Command Plus from $1,035 to $1,185, FedLine Direct Plus from $5,500 to
$5,750, and FedLine Direct Premier from $10,500 to $11,000 per month.
Price changes for the FedLine Command and FedLine Direct packages are
in response to enhancements for the FedNow Service and account for the
price increases from the End-of-Day Financial Institution Reconcilement
Date (FIRD) File and Statement of Account Spreadsheet File (SASF)
offerings.\44\ FedLine Direct had additional operational costs
associated with a new network vendor and hardware upgrades that have
contributed to these price increases.
---------------------------------------------------------------------------
\44\ 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. The FedLine Command package
offers a computer-to-computer, internet protocol-based interfaces
that supports an unattended connection to FedACH, most accounting
information services, and the FedNow Service.
---------------------------------------------------------------------------
In 2025, the Reserve Banks are prepared to add API functionality
for certain services and products.\45\ The Reserve Banks are developing
an initial pricing menu for priced APIs. Upon launch, each API would be
assigned a core pricing scenario. Communication will be forthcoming on
the timing, availability, and pricing scenarios for initial APIs.
---------------------------------------------------------------------------
\45\ APIs are a set of protocols for connecting software systems
programmatically, enabling system-to-system interoperability.
---------------------------------------------------------------------------
The Reserve Banks estimate these cumulative price changes will
result in a 4.8 percent average price increase for FedLine 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 Board's policy, The
Federal Reserve in the Payments System. \46\ Under this policy, the
Board assesses whether changes would have a direct and material adverse
effect on the ability of other service providers to compete effectively
with the Federal Reserve in providing similar services due to differing
legal powers or constraints or due to 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.
---------------------------------------------------------------------------
\46\ See Board of Governors of the Federal Reserve System,
Policies: The Federal Reserve in the Payments System, https://www.federalreserve.gov/paymentsystems/pfs_frpaysys.htm.
---------------------------------------------------------------------------
The Board has conducted this analysis and concluded that the 2025
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 Board 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. 2025 Fee Schedules
FedACH Services 2025 Fee Schedule
[Effective January 1, 2025. Bold indicates changes from 2024 prices]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedACH minimum monthly fee:
Originating depository financial $55.00.
institution (ODFI) \47\.
Receiving depository financial $45.00.
institution (RDFI) \48\.
Origination (per item or record):
Forward or return items......... $0.0035.
SameDay Service--forward item $0.0010 surcharge.
\49\.
Addenda record.................. $0.0015.
FedLine Web-originated returns $0.50.
and notification of change
(NOC) \50\.
Facsimile Exception Return/NOC $45.00.
\51\.
SameDay Exception Return........ $45.00.
Automated NOC................... $0.20.
Volume discounts (based on ..................................
monthly billed origination
volume) \52\ per item when
origination volume is
750,001 to 1,500,000 items $0.0008.
per month discount.
more than 1,500,000 items $0.0010.
per month discount.
Volume discounts (based on ..................................
monthly billed receipt volume)
\53\ per item when receipt
volume is
10,000,001 to 15,000,000 $0.0002.
items per month discount.
more than 15,000,000 items $0.0003.
per month discount.
Receipt (per item or record): ..................................
Forward Item.................... $0.0035.
Return Item..................... $0.0075.
Addenda record.................. $0.0015.
Volume discounts: ..................................
Non-Premium Receivers \54\ ..................................
per item when volume is.
750,001 to 12,500,000 $0.0017 discount.
items per month \55\.
[[Page 93597]]
more than 12,500,000 $0.0019 discount.
items per month \56\.
Premium Receivers, Level One ..................................
\57\ per item when volume
is.
750,001 to 1,500,000 $0.0017 discount.
items per month \58\.
1,500,001 to 2,500,000 $0.0017 discount.
items per month \59\.
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 $0.0023 discount.
items per month \53\.
Premium Receivers, Level Two ..................................
\60\ per item when volume
is.
750,001 to 1,500,000 $0.0017 discount.
items per month \61\.
1,500,001 to 2,500,000 $0.0017 discount.
items per month \62\.
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 $0.0024 discount.
items per month \56\.
FedACH Risk Management Services: ..................................
\63\
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 $85.00.
sets.
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 $0.007.
batches (per batch).
For more than 100,000 $0.0035.
batches (per batch).
FedPayments Insights Service: \64\ ..................................
Monthly Fee (a single fee based ..................................
on commercial receipt volume):
0-50,000 items per month.... $75.00.
50,001-100,000 items per $120.00.
month.
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 $340.00.
per month.
5,000,001-10,000,000 items $450.00.
per 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.
\65\.
Monthly Package Fee (counts reflect
reports generated as well as
delivered via a FedLine Solution):
For up to 50 reports............ $50.00.
For 51 through 150 reports...... $72.00.
For 151 through 500 reports..... $133.00.
For 501 through 1,000 reports... $245.00.
For 1,001 through 1,500 reports. $355.00.
For 1,501 through 2,500 reports. $555.00.
For 2,501 through 3,500 reports. $775.00.
For 3,501 through 4,500 reports. $990.00.
For 4,501 through 5,500 reports. $1,200.00.
For 5,501 through 7,000 reports. $1,460.00.
For 7,001 through 8,500 reports. $1,700.00.
For 8,501 through 10,000 reports $1,930.00.
For more than 10,000 reports.... $2,100.00.
Premier reports (per report ..................................
generated): \66\
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.
[[Page 93598]]
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 $10.00.
per 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 $80.00.
\67\.
Same Day Service Origination $10.00.
Participation Fee \68\.
FedACH Settlement Fee \69\
Premium Receivers, Level One $60.00.
and Level Two.
Non-Premium Receivers when $110.
volume is 1,500,000 items
or less 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-- $5.00.
Automated NOCs \70\.
Non-Electronic Input/Output fee:
\71\
CD/DVD (CD or DVD).......... $50.00.
Paper (file or report)...... $50.00.
Fees and Credits Established by
Nacha: \72\
Nacha Same-Day Entry fee $0.052.
(per 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 $30.50.
(monthly fee per RTN).
Nacha Admin Network fee (per $0.000185.
entry).
FedGlobal[supreg] ACH Payments: \73\
Fixed Monthly Fee (per RTN):
\74\
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): \75\
Mexico service.............. $0.55.
Panama service.............. $0.60.
Per-item Origination Fee for
Monthly Volume between 161 and
500 items (surcharge): \79\
Mexico service.............. $0.80.
Panama service.............. $0.85.
Per-item Origination Fee for
Monthly Volume less than 161
items (surcharge): \79\
Mexico service.............. $1.05.
Panama service.............. $1.10.
Other FedGlobal ACH Payments
Fees:
Mexico service:
Return received from $0.91 (surcharge).
Mexico \76\.
Item trace \77\......... $13.50.
Foreign currency to $0.67 (surcharge).
foreign currency (F3X)
item originated to
Mexico \79\.
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): \78\
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: \79\
Case Open Fee............... $5.00.
Case Response Fee........... $5.00.
FedACH Receipt Discount Program
Introduced in 2024: \80\
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 Reporter
Service for two years at
any point during
participation in the
program.
Percentage discount on the 100 percent.
FedACH Exception Resolution
Service for two years at
any point during their
participation in the
program.
Percentage discount on the 100 percent.
FedACH FedPayments[supreg]
Insights Service for two
years at any point during
their participation in the
program.
[[Page 93599]]
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 25 percent.
FedACH FedPayments Reporter
Service for two years at any
point during their
participation in the program.
Percentage discount on the 50 percent.
FedACH Exception Resolution
Service for two years at any
point during their
participation in the program.
Percentage discount on the 50 percent.
FedACH FedPayments Insights
Service for two years at any
point during their
participation in the program.
------------------------------------------------------------------------
Fedwire Funds Service and National Settlement Service 2025 Fee Schedules
[Effective January 1, 2025. Bold indicates changes from 2024 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Fedwire Funds Service
------------------------------------------------------------------------
Monthly Participation Fee............................... $120.00
Basic volume-based pre-incentive transfer fee
(originations and receipts)--per transfer for
Tier 1: The first 14,000 transfers per month........ 0.970
Tier 2: Additional transfers up to 90,000 per month. 0.300
Tier 3: Every transfer over 90,000 per month........ 0.195
Monthly Fixed Fee:
Tier 2 Monthly Fixed Fee \81\....................... 250.00
Tier 3 Monthly Fixed Fee \82\....................... 500.00
Volume-based transfer fee with the incentive discount
(originations and receipts)--per eligible transfer for
\83\
Tier 1: The first 14,000 transfers per month........ 0.194
Tier 2: Additional transfers 14,001 to 90,000 per 0.060
month..............................................
Tier 3: Every transfer over 90,000 per month........ 0.039
Surcharge for Offline Transfers (Originations and 75.00
Receipt) \84\..........................................
Surcharge for End-of-Day Transfer Originations \85\..... 0.26
Monthly FedPayments Manager Import/Export fee \86\...... 65.00
Surcharge on transfers >$10 million Origination and 0.14
Receipt................................................
Surcharge on transfers >$100 million Origination and 0.36
Receipt................................................
Surcharge for Payment Notification:
Origination Surcharge \87\.......................... 0.01
Receipt Volume \88\................................. N/A
Delivery of Reports--Hard Copy Reports to On-Line 50.00
Customers..............................................
Special Settlement Arrangements (charge per settlement 150.00
day) \89\..............................................
------------------------------------------------------------------------
National Settlement Service
------------------------------------------------------------------------
Basic:
Settlement Entry Fee................................ 1.95
Settlement File Fee................................. 40.00
Surcharge for Offline File Origination \90\............. 45.00
Minimum Monthly Fee \91\................................ 60.00
------------------------------------------------------------------------
Fedwire Securities Service 2025 Fee Schedule
[Effective January 1, 2025. Bold indicates changes from 2024 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Basic Transfer Fee: 92 93 ..............
Agency Securities: Transfer or reversal originated 0.61
or received........................................
Treasury Securities: Transfer or reversal originated 0.61
or received........................................
Surcharge: \94\ ..............
Agency Securities: Offline origination & receipt 80.00
surcharge..........................................
Treasury Securities: Offline origination & receipt 80.00
surcharge..........................................
Monthly Maintenance Fees: \95\ ..............
Agency Securities: Account maintenance (per account) 57.50
\96\...............................................
Agency Securities: Issue maintenance (per issue/per 0.61
account) \97\......................................
Treasury Securities: Account maintenance (per None
account) \98\......................................
Treasury Securities: Issue maintenance (per issue/ None
per account) \99\..................................
ACAP Fees: 100 101 ..............
Claims Adjustment Fee............................... $1.00
Tracking Indicators Fee............................. 0.10
Position Maintenance Fee (per position maintained/ 0.03
per business day) 102 103..........................
GNMA Serial Note Stripping or Reconstitution Fee \104\.. 9.00
Joint Custody Origination Surcharge 105 106............. 46.00
Delivery of Reports--Hard Copy Reports to On-Line 50.00
Customers \107\........................................
------------------------------------------------------------------------
[[Page 93600]]
FedNow Service 2025 Fee Schedule
[Effective January 1, 2025. Bold indicates changes from 2024 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Customer Credit Transfer (per item) $0.045.
PACS.008 Origination.
PACS.008 Origination--On-Us................ $0.000.
Customer Credit Transfer Returns (per item) $0.045.
PACS.004 Origination.
PACS.004 Origination--On-Us................ $0.000.
Liquidity Management Transfer (LMT) (per- $1.00.
item) PACS.009 Origination.
Request for Payment (RFP) (per-item) $0.01.
PAIN.013.
PAIN.013--On-Us............................ $0.000.
PACS.008 Origination Discount.............. -$0.045 per item for up to
2,500 customer credit
transfers per month (in
2025).
Participation Fee--General (per month)..... $25.00, discounted to $0.00
in 2025.
------------------------------------------------------------------------
FedLine 2025 Fee Schedule
[Effective January 1, 2025. Bold indicates changes from 2024 prices.]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedComplete Packages (monthly) 108 109
------------------------------------------------------------------------
FedComplete 100A Plus \110\......... $1,150.00.
FedComplete 200A Plus............... $1,725.00.
FedComplete Excess Volume and ..................................
Receipt Surcharge: \111\
FedForward[supreg] \112\........ $0.03700/item.
FedReturn[supreg]............... $0.82000/item.
FedReceipt...................... $0.00005/item.
Fedwire Funds Origination....... $0.97000/item.
Fedwire Funds Receipt........... $0.09700/item.
FedACH Origination.............. $0.00350/item.
FedACH Receipt.................. $0.00035/item.
FedComplete credit adjustment....... various.
FedComplete debit adjustment........ various.
------------------------------------------------------------------------
FedLine Solutions (monthly)
------------------------------------------------------------------------
FedMail \113\....................... $100.00.
FedLine Web \114\................... $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 106 115........... $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................ $1,185.00.
FedLine Direct Plus \116\........... $5,750.00.
FedLine Direct Premier \108\........ $11,000.00.
Includes: ..................................
Services included in the FedLine ..................................
Direct Plus package.
Two 2 Mbps dedicated WAN ..................................
Connections.
One Network Diversity........... ..................................
Two VPN devices................. ..................................
------------------------------------------------------------------------
A la carte options (monthly) \117\
------------------------------------------------------------------------
Electronic Access: ..................................
FedMail--Pack of 5.............. $25.00.
FedLine Subscribers--Pack of 5.. $100.00.
Additional VPNs \118\........... $100.00.
Additional 2 Mbps WAN connection $3,000.00.
\108\.
WAN Connection Upgrade: ..................................
10 Mbps \119\............... $1,700.00.
30 Mbps \111\............... $3,000.00.
50 Mbps \120\............... $4,000.00.
100 Mbps \120\.............. $7,000.00.
200 Mbps \120\.............. $11,000.00.
FedLine International Setup (one- $5,000.00.
time fee).
FedLine Custom Implementation $2,500-$5,000.
Fee (one-time fee) \120\.
Network Diversity............... $2,500.00.
FedMail Email (for customers $100.00.
with FedLine Web and above)
\121\.
VPN Device Modification (one- $200.00.
time fee).
VPN Device Missed Activation $175.00.
Appointment (one-time fee).
VPN Device Expedited Hardware $100.00.
Surcharge (one-time fee).
[[Page 93601]]
VPN Device Replacement or Move $300.00.
(one-time fee).
E-Payments Automated Download $75.00/month.
Codes (Add'l Codes-Pack of 5)
\122\.
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)
\123\.
E-Payments Automated Download $500.00/month.
Codes (Add'l Codes-Pack of 100)
\123\.
E-Payments Automated Download $1,000.00/month.
Codes (Add'l Codes-Pack of 250)
\123\.
E-Payments Automated Download $2,000.00/month.
Codes (Add'l Codes- >250) \123\.
Daily Statement of Account Activity ..................................
and Monthly Statement of Service
Charges (monthly): 123 124
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: \125\
no OSRTN, respondent/sub- $75.00.
account activity.
Up to nine OSRTNs, $150.00.
respondents and/or sub-
accounts.
10-50 OSRTNs, respondents $300.00.
and/or sub-accounts.
51-100 OSRTNs, respondents $600.00.
and/or sub-accounts.
101-500 OSRTNs, respondents $900.00.
and/or sub-accounts.
>500 OSRTNs, respondents and/ $1,200.00.
or sub-accounts.
Intra-day Download Search $200.00.
Results in Spreadsheet Format
(with AMI) \126\.
Other: ..................................
Replacement Copies: \127\ ..................................
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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\47\ Any ODFI incurring less than $55 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.
\48\ Any RDFI not originating forward value and non-value items
and incurring less than $45 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 $55 in forward
value and nonvalue item origination fees will only be charged a
variable amount to reach the minimum monthly origination fee.
\49\ 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.
\50\ The fee includes the item and addenda fees in addition to
the conversion fee.
\51\ 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.
\52\ Origination volumes at these levels qualify for a waterfall
discount that includes all FedACH origination items.
\53\ 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.
\54\ RDFIs receiving through FedACH less than 90 percent of
their FedACH-originated items.
\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 that includes all FedACH receipt items.
\57\ 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.
\58\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\59\ Receipt volumes at these levels qualify for a waterfall
discount which includes all FedACH receipt items.
\60\ RDFIs receiving through FedACH at least 90 percent of all
of their ACH items originated through any operator.
\61\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\62\ Receipt volumes at these levels qualify for a waterfall
discount which includes all FedACH receipt items.
\63\ 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.
\64\ Monthly commercial receipt volume is calculated based on
combined volume of subscribed RTNs in an account family.
\65\ Premier reports generated on demand are subject to the
package/tiered fees plus a surcharge.
\66\ Premier reports generated on demand are subject to the
package/tiered fees plus a surcharge.
\67\ 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.
\68\ 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.
\69\ 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.
\70\ Fee will be assessed only when automated NOCs are
generated.
\71\ Limited services are offered in contingency situations.
\72\ 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.
\73\ The international fees and surcharges vary from country to
country as these are negotiated with each international gateway
operator.
\74\ A single monthly fee based on total FedGlobal ACH Payments
origination volume.
\75\ This per-item surcharge is in addition to the standard
domestic origination fees listed in this fee schedule.
\76\ This per-item surcharge is in addition to the standard
domestic receipt fees listed in this fee schedule.
\77\ U.S. ODFIs are responsible for any investigation fees
should they be assessed by foreign RDFIs or downstream payment
participants.
\78\ 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.
\79\ 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.
\80\ 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. View code
details and text on the FedACH Receipt Discount Program page.
\81\ This fee applies at the parent level to any bank which has
at least 1 unit of volume in the Tier 2 Pre-Incentive Discount range
and no volume in the Tier 3 Pre-Incentive Discount range.
\82\ This fee applies at the parent level to any bank which has
at least 1 unit of volume in the Tier 3 Pre-Inventive Discount
range.
\83\ 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.
\84\ The offline service, which was originally scheduled to be
discontinued as of December 31, 2024, will be extended to no later
than February 2025 to accommodate financial institutions' readiness.
\85\ This surcharge applies to originators of transfers that are
processed by the Reserve Banks after 5:00 p.m. ET.
\86\ 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.
\87\ Payment Notification and End-of-Day Origination surcharges
apply to each Fedwire funds transfer message.
\88\ Provided on billing statement for informational purposes
only.
\89\ This charge is assessed to settlement arrangements that use
the Fedwire 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.
\90\ 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 [email protected].
\91\ Any settlement arrangement that accrues less than $60
during a calendar month will be assessed a variable amount to reach
the minimum monthly fee.
\92\ 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.
\93\ These fees are set by the Federal Reserve Banks.
\94\ This surcharge is set by the Federal Reserve Banks. It is
in addition to any basic transfer or reversal fee.
\95\ 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.
\96\ These fees are set by the Federal Reserve Banks.
\97\ These fees are set by the Federal Reserve Banks.
\98\ 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.
\99\ 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.
\100\ These fees are set by the Federal Reserve Banks.
\101\ 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: https://www.frbservices.org/resources/financial-services/securities/acap.
\102\ 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.
\103\ 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: https://www.frbservices.org/resources/financial-services/securities/acap/.
\104\ This fee is set by and remitted to the Government National
Mortgage Association (GNMA).
\105\ The Federal Reserve Banks charge participants a Joint
Custody Origination Surcharge for both Agency and Treasury
securities.
\106\ These fees are set by the Federal Reserve Banks.
\107\ These fees are set by the Federal Reserve Banks.
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\108\ FedComplete Packages are all-electronic service options
that bundle payment services with an access solution for one monthly
fee.
\109\ FedComplete customers that use the email service would be
charged the FedMail Email a la carte fee and for all FedMail
Subscriber 5-packs.
\110\ Packages with an ``A'' include the FedLine Advantage
channel.
\111\ Per-item surcharges are in addition to the standard fees
listed in the applicable priced services fee schedules.
\112\ 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.
\113\ FedMail package does 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 Subscriber 5-pack.
\114\ 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.
\115\ Qualifying institutions who upgrade from FedMail or
FedLine Web to FedLine Advantage or establish a new FedLine
Advantage connection for the FedNow Service will receive 12 months
of credits from FedLine Advantage billing eligibility.
\116\ Early termination fees and/or expedited order fees may
apply to all FedLine Direct packages and FedLine Direct [agrave] la
carte options.
\117\ These add-on services can be purchased only with a FedLine
Solution.
\118\ Additional VPNs are available for FedLine Advantage,
FedLine Command, and FedLine Direct packages only.
\119\ Fee is in addition to the FedLine Direct package fees or
Additional 2Mbps WAN Connection fee.
\120\ The FedLine Custom Implementation Fee is $2,500 or $5,000
based on the complexity of the setup.
\121\ Available only to customers with a priced FedLine package
and does 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 Subscriber 5-pack.
\122\ Five download codes are included at no cost in all Plus
and Premier packages.
\123\ 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.
\124\ The End of Day Financial Institution Reconcilement Data
(FIRD) and Statement of Account Spreadsheet File (SASF) are
available for Master accounts only.
\125\ Available with FedLine Plus and Premier packages.
\126\ Available for FedLine Web Plus and Premier packages.
Available for no extra fee in FedLine Advantage and higher packages.
\127\ Charging the $10 Replacement Copy Fee is at the discretion
of Reserve Banks.
By order of the Board of Governors of the Federal Reserve
System.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2024-27831 Filed 11-26-24; 8:45 am]
BILLING CODE 6210-01-P