As plenty of analysts point out, the value and legality of FedNow should be called into serious question. After all, the Monetary Control Act states that the central bank should not get involved unless other providers cannot get the job done, and the private sector version already works well.
Nevertheless, for better or worse, the program is moving forward. So, it’s no surprise that Big Tech companies like Google are looking to flex their influence over FedNow’s implementation.
On December 15, 2019, The Economic Times reported that Google penned a letter to the U.S. Federal Reserve Board, offering its “advice” for the creation of a government real-time payments system. Only, upon closer examination, Google’s so-
And yet, in its message to the Fed, Google not only lauded UPI’s credentials as a tool for real-time payments, it actively pitched the platform as a model for FedNow to imitate. But why would Google advocate that the Federal Reserve emulate an obscure India-based RTP system? Because Google served a pivotal role in UBI’s creation, of course.
Google worked very closely with the National Payments Corporation of India in creating UPI and managed to integrate
If the tech company manages to integrate its Google Pay technology into the Fed’s RTP system, the search engine giant will achieve tremendous
Over the years, Google has shown an alarming degree of carelessness regarding the security of its users’ personal information. In 2018 alone, the company exposed user data from 52.6 million accounts. That incident, coupled with a 2014 scandal in which five million passwords were stolen and leaked, demonstrates that data security isn’t Google’s strong suit.
There is a reason Google Pay and other tech companies’ RTP transfer systems do not currently have direct access to the Federal Reserve and must go through chartered banks, which must adhere to stricter security measures than companies like Google, to complete processing transactions.
No private bank or credit card company would make the gamble of playing fast and loose with users’ data like this. Unfortunately, however, the Feds – not needing to face the same market consequences for poor decisions – often take higher risks.
Washington should learn from the lessons of India and recognize that the private sector – not the government – is best suited to tackle the real-time payments industry. However, if the Fed makes the mistake of interceding in the affairs of the private sector by moving forward with FedNow, it should resist the urge to integrate Google Pay code and systems. With FedNow, the stakes are far too high to make a mistake; the security of millions of Americans’ personal financial information is at stake.
Drew Johnson is a columnist and government watchdog who serves as a senior fellow at the National Center for Public Policy Research.