|For immediate release|
The Federal Reserve Board on Thursday approved fee schedules for Federal Reserve Bank payment services, effective January 2, 2003.
Overall, the price level for Federal Reserve priced services will increase less than 1 percent in 2003 from 2002 levels. Because of fee reductions in electronic services in recent years, the overall price level has declined by about 2 percent since 1996.
In 2003, the Reserve Banks will reduce fees for their Fedwire funds transfer, Fedwire securities, and FedACH automated clearinghouse (ACH) services. These reductions will result in a 5 percent decline in overall fees for the Reserve Banks’ electronic payment services. The lower fees reflect continued efficiencies gained from consolidating the Federal Reserve’s electronic payment operations. Since 1996, prices for all electronic payment services have declined approximately 47 percent.
Check service fees will increase, on average, approximately 3 percent compared with current fees. The check service continues to invest in automation and electronic check technologies, which will improve operating efficiencies at the Reserve Banks and result in long-run cost savings.
The 2003 fee schedule for each of the priced services except the check service is included in the attached Federal Register notice. Fee schedules for all priced services will be available on the Federal Reserve Banks’ Financial Services web site at www.frbservices.org by November 5, 2002.
The Board also approved the 2003 private-sector adjustment factor (PSAF) for Reserve Bank priced services of $171.7 million. The PSAF is an allowance for taxes and other imputed expenses that would have to be paid and return on capital that would have to be earned if the Federal Reserve’s priced services were provided by a private business. The Monetary Control Act of 1980 requires the Federal Reserve to recover the costs of providing priced payment services, including the PSAF, over the long run, to promote competition between the Reserve Banks and private-sector service providers.
During the period 1992 to 2001, the Reserve Banks recovered 99.8 percent of priced services costs, including operating costs, imputed costs, and targeted return on equity (ROE, or net income). The Reserve Banks estimate that they will recover 92.2 percent of all their priced services costs in 2002 and project that they will recover 94.4 percent of these costs in 2003. The Reserve Banks project revenues of $933.7 million and costs of $883.9 million, for a net income of $49.8 million, compared with a targeted ROE of $104.7 million.
The Board's notice is attached.