Federal Reserve Bank Services: Notification of the 2021 Private Sector Adjustment Factor and 2021 Fee Schedules of Federal Reserve Priced Services and Electronic Access, 73037-73054 [2020-25176]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 85, Number 221 (Monday, November 16, 2020)]
[Notices]
[Pages 73037-73054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25176]



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FEDERAL RESERVE SYSTEM

[Docket No. OP-1730]


Federal Reserve Bank Services: Notification of the 2021 Private 
Sector Adjustment Factor and 2021 Fee Schedules of Federal Reserve 
Priced Services and Electronic Access

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notification of 2021 private sector adjustment factor and fee 
schedules.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
has approved the private sector adjustment factor (PSAF) for 2021 of 
$16.4 million and the 2021 fee schedules for Federal Reserve priced 
services and electronic access. These actions were taken in accordance 
with the Monetary Control Act of 1980, which requires that, over the 
long run, fees for Federal Reserve priced services be established on 
the basis of all direct and indirect costs, including the PSAF.

DATES: The new fee schedules become effective January 4, 2021.

FOR FURTHER INFORMATION CONTACT: For questions regarding the fee 
schedules: David C. Mills, Associate Director, (202) 530-6265; Jason 
Kim, Financial Institution Policy Analyst, (202) 475-6665; Dean 
Friedberg, Financial Institution Policy Analyst, (202) 425-3525; 
Division of Reserve Bank Operations and Payment Systems. For questions 
regarding the PSAF: Casey Clark, Assistant Director, (202) 912-7978; 
Grace Milbank, Lead Financial Institution Policy Analyst, (202) 263-
4828, Division of Reserve Bank Operations and Payment Systems. For 
users of Telecommunications Device for the Deaf (TDD) only, please call 
(202) 263-4869. Copies of the 2020 fee schedules for the check service 
are available from the Board, the Federal Reserve Banks, or the Reserve 
Banks' financial services website at www.frbservices.org.

SUPPLEMENTARY INFORMATION:

Private Sector Adjustment Factor, Priced Services Cost Recovery, and 
Overview of 2021 Price Changes

    A. Overview--Each year, as required by the Monetary Control Act of 
1980, the Reserve Banks set fees for priced services provided to 
depository institutions.\1\ 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 will have been earned if a private 
business firm provided the services. The imputed costs and imputed 
profit are collectively referred to as the private-sector adjustment 
factor (PSAF). From 2010 through 2019, the Reserve Banks recovered 
103.9 percent of their total expenses (including imputed costs) and 
targeted after-tax profits or return on equity (ROE) for providing 
priced services.\2\
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    \1\ On August 5, 2019, the Federal Reserve Board announced that 
the Reserve Banks will develop the FedNowSM Service, an 
interbank real-time gross settlement (RTGS) service with integrated 
clearing functionality, to support the provision of end-to-end 
faster payment services. The Board anticipates the FedNow Service 
will be available in 2023 or 2024. Following the introduction of the 
FedNow Service, the Board will regularly disclose the service's cost 
recovery and will monitor progress toward matching revenues and 
costs.
    \2\ 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 cumulative reduction in equity related to 
the priced services' benefit plans. Including this cumulative 
reduction in equity from 2010 to 2019 results in cost recovery of 
100.7 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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    The Board on July 21, 2020, announced its intent to maintain the 
current schedule of prices for most payment services that the Federal 
Reserve Banks provide to depository institutions (priced services) in 
2021, in light of the uncertainties created by the COVID-19 pandemic 
and to support the business planning of users and providers of payment 
services.\3\ Table 1 summarizes 2019 actual, 2020 estimated, and 2021 
budgeted cost recovery rates for all priced services. Cost recovery is 
estimated to be 101.4 percent in 2020 and budgeted to be 98.7 percent 
in 2021.
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    \3\ See https://www.federalreserve.gov/newsevents/pressreleases/other20200721a.htm.

                   Table 1--Aggregate Priced Services Pro Forma Cost and Revenue Performance a
                                              [Dollars in millions]
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                                                                                                  Recovery  rate
                                                                    Net income                         after
              Year                    Revenue      Total expense       (ROE)       Targeted ROE    targeted ROE
                                                                                                        (%)
                                             1 b             2 c               3             4 d           5 e f
                                                                           [1-2]                       [1/(2+4)]
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2019 (actual)...................          $444.1          $441.2            $2.9            $5.4            99.4
2020 (estimate).................           445.5           433.4            12.1             5.9           101.4
2021 (budget)...................           438.4           439.9            -1.5             4.4            98.7
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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 development of the FedNow Service.
b Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital
  requirements and, when combined with liabilities, exceeds total assets (attachment 1). For 2020, the projected
  revenue assumes implementation of the fee changes.
c The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses
  include taxes, Board of Governors' priced services expenses, the cost of float, and interest on imputed debt,
  if any. Credits or debits related to the accounting for pension plans under ASC 715 are also included.
d Targeted ROE is the after-tax ROE included in the PSAF.
e The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be
  recognized in accordance with ASC 715. Future gains or losses, and their effect on cost recovery, cannot be
  projected.
f For 2019 and 2020, credits or debits related to the accounting for pension plans under ASC 715 include service
  cost only with the adoption of ASU 2017-07 Improving the Presentation of Net Periodic Pension Cost and Net
  Periodic Postretirement Benefit Cost (Topic 715).

    Table 2 provides an overview of cost-recovery budgets, estimates, 
and performance for the 10-year period from 2010 to 2019, 2019 actual, 
2020 budget, 2020 estimate, and 2021 budget by priced service.

[[Page 73038]]



                                     Table 2--Priced Services Cost Recovery
                                                    [Percent]
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                                                                    2020 budget                     2021 budget
         Priced service              2010-2019      2019 actual         \a\        2020 estimate        \b\
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All services....................           103.9            99.4           101.7           101.4            98.7
Check...........................           109.0           104.0           104.3           102.4            97.7
FedACH..........................            98.6            97.6           100.6            97.6            97.4
Fedwire Funds and NSS...........           102.2            97.3           100.6           105.1           100.5
Fedwire Securities..............           102.5           100.3           102.8           101.9           100.9
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\a\ The 2020 budget figures reflect the final budgets as approved by the Board in December 2019.
\b\ The 2021 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks
  will submit final budget data to the Board in November 2020, for Board consideration in December 2020.

    1. 2020 Estimated Performance--The Reserve Banks estimate that they 
will recover 101.4 percent of the costs of providing priced services in 
2020, including total expense and targeted ROE, compared with a 2020 
budgeted recovery rate of 101.7 percent, as shown in table 2. Overall, 
the Reserve Banks estimate that they will fully recover actual and 
imputed costs and earn net income of $12.1 million, compared with the 
targeted ROE of $5.9 million. The Reserve Banks estimate that the Check 
Services, the Fedwire[supreg] Funds and National Settlement Services, 
and the Fedwire Securities Service will achieve full cost recovery; 
however, the Reserve Banks estimate that the FedACH[supreg] Service 
will not achieve full cost recovery in 2020. Consistent with recent 
years, the FedACH Service will not achieve full cost recovery because 
of investment costs associated with the multiyear technology initiative 
to modernize its processing platform.\4\ This investment is expected to 
enhance efficiency, the overall quality of operations, and the Reserve 
Banks' ability to offer additional services to depository institutions.
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    \4\ The Reserve Banks have been engaged in a multiyear 
technology initiative to modernize the FedACH processing platform 
capabilities.
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    2. 2021 Private-Sector Adjustment Factor--The 2021 PSAF for Reserve 
Bank priced services is $16.4 million. This amount represents a 
decrease of $2.5 million from the 2020 PSAF of $18.9 million. This 
decrease is primarily the result of a decrease in imputed return on 
equity and sales tax.
    3. 2021 Projected Performance--The Reserve Banks project a priced 
services cost recovery rate of 98.7 percent in 2021, with a net loss of 
$1.5 million and targeted ROE of $4.4 million. The Reserve Banks 
project that the price changes will result in a 2.7 percent average 
price increase for Check Services customers. The Reserve Banks project 
that each of the individual service lines, other than Check Services 
and FedACH, will fully recover their costs for 2021. The Check 
Services' underrecovery projections are largely driven by an 
anticipated decline in check volumes. FedACH is projected to 
underrecover because of the ongoing technology modernization project. 
The Fedwire Funds Service and Fedwire Securities Service are projected 
to recover more than 100 percent of costs in 2021. Check Services is 
projected to fully recover costs in the long run.\5\ Although FedACH is 
not budgeted to fully recover its costs in 2021, the Reserve Banks 
expect to fully recover costs in the long run once the modernization 
project is complete.
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    \5\ From 2012-2021, Check Service's projected 10-year average 
recovery rate is 108.6 percent.
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    The primary risks to the Reserve Banks' ability to achieve their 
targeted cost recovery rates are unanticipated volume and revenue 
reductions--which may be more likely than in other years because of the 
COVID-19 pandemic--and the potential for cost overruns from new and 
ongoing improvement initiatives such as the technology modernization 
for FedACH. In light of these risks, the Reserve Banks will continue to 
monitor the impacts of the pandemic and refine their business and 
operational strategies, which may include managing costs and adjusting 
prices as appropriate.
    4. 2021 Pricing--With the exception of an increase to the fixed 
monthly Check 21 participation fee, the Reserve Banks will keep prices 
at existing levels for all existing priced services fees in 2021. The 
following summarizes the Reserve Banks' changes in fee schedules for 
priced services in 2021:

Check

    The Reserve Banks will increase the fixed monthly Check 21 
participation fee per parent customer from a fixed $25 to a new tiered 
pricing structure with fees ranging from $40 to $135.

FedACH

    The Reserve Banks will keep prices at existing levels for all 
existing priced FedACH products.

Fedwire Funds

    The Reserve Banks will keep prices at existing levels for all 
existing priced Fedwire Funds products.

National Settlement Service (NSS)

    The Reserve Banks will keep prices at existing levels for all 
existing priced NSS products.

Fedwire Securities

    The Reserve Banks will keep prices at existing levels for all the 
existing priced Fedwire Securities products.

FedLine[supreg] Solutions

    The Reserve Banks will keep prices at existing levels for all the 
existing priced FedLine Solutions products.
    B. Private Sector Adjustment Factor--The imputed debt financing 
costs, targeted ROE, and effective tax rate are based on a U.S. 
publicly traded firm market model.\6\ The method for calculating the 
financing costs in the PSAF requires determining the appropriate 
imputed levels of debt and equity and then applying the applicable 
financing rates. In this process, a pro forma balance sheet using 
estimated assets and liabilities associated with the Reserve Banks' 
priced services is developed, and the remaining elements that would 
exist are imputed as if these priced services were provided by a 
private business firm. The same generally accepted accounting 
principles that apply to commercial-entity financial statements apply 
to the relevant elements in the priced services pro forma financial 
statements.
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    \6\ Data for U.S. publicly traded firms is from the Standard and 
Poor's Compustat[supreg] database. This database contains 
information on more than 6,000 U.S. publicly traded firms, which 
approximates information for the entirety of the U.S. market.
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    The portion of Federal Reserve assets that will be used to provide 
priced services during the coming year is determined using information 
about actual assets and projected disposals and acquisitions. The 
priced portion of these assets is determined based on the allocation of 
depreciation and

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amortization expenses of each asset class. The priced portion of actual 
Federal Reserve liabilities consists of postemployment and 
postretirement benefits, accounts payable, and other liabilities. The 
priced portion of the actual net pension asset or liability is also 
included on the balance sheet.\7\
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    \7\ The pension assets are netted with the pension liabilities 
and reported as a net asset or net liability as required by ASC 715 
Compensation--Retirement Benefits.
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    The equity financing rate is the targeted ROE produced by the 
capital asset pricing model (CAPM). In the CAPM, the required rate of 
return on a firm's equity is equal to the return on a risk-free asset 
plus a market risk premium. The risk-free rate is based on the three-
month Treasury bill; the beta is assumed to be equal to 1.0, which 
approximates the risk of the market as a whole; and the market risk 
premium is based on the monthly returns in excess of the risk-free rate 
over the most recent 40 years. The resulting ROE reflects the return a 
shareholder would expect when investing in a private business firm.
    For simplicity, given that federal corporate income tax rates are 
graduated, state income tax rates vary, and various credits and 
deductions can apply, an actual income tax expense is not explicitly 
calculated for Reserve Bank priced services. Instead, the Board targets 
a pretax ROE that would provide sufficient income to fulfill the priced 
services' imputed income tax obligations. To the extent that 
performance results are greater or less than the targeted ROE, income 
taxes are adjusted using the effective tax rate.
    Capital structure. The capital structure is imputed based on the 
imputed funding need (assets less liabilities), subject to minimum 
equity constraints. Short-term debt is imputed to fund the imputed 
short-term funding need. Long-term debt and equity are imputed to meet 
the priced services long-term funding need at a ratio based on the 
capital structure of the U.S. publicly traded firm market. The level of 
equity must meet the minimum equity constraints, which follow the FDIC 
requirements for a well-capitalized institution. The priced services 
must maintain equity of at least 5 percent of total assets and 10 
percent of risk-weighted assets.\8\ Any equity imputed that exceeds the 
amount needed to fund the priced services' assets and meet the minimum 
equity constraints is offset by a reduction in imputed long-term debt. 
When imputed equity is larger than what can be offset by imputed debt, 
the excess is imputed as investments in Treasury securities; income 
imputed on these investments reduces the PSAF.
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    \8\ The FDIC rule, which was adopted as final on April 14, 2014, 
requires that well-capitalized institutions meet or exceed the 
following standards: (1) Total capital to risk-weighted assets ratio 
of at least 10 percent, (2) tier 1 capital to risk-weighted assets 
ratio of at least 8 percent, (3) common equity tier 1 capital to 
risk-weighted assets ratio of at least 6.5 percent, and (4) a 
leverage ratio (tier 1 capital to total assets) of at least 5 
percent. Because all of the Federal Reserve priced services' equity 
on the pro forma balance sheet qualifies as tier 1 capital, only 
requirements 1 and 4 are binding. The FDIC rule can be located at 
https://www.fdic.gov/news/board/2014/2014-04-08_notice_dis_c_fr.pdf.
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    Application of the 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 Payment and Settlement Systems and the Technical Committee 
of the International Organization of Securities Commissions in the 
Principles for Financial Market Infrastructures. The policy requires 
that the Fedwire Funds Service meet or exceed the applicable risk-
management standards. 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. In order 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.\9\ 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 2021 budget, six months of current 
operating expenses would be $47.5 million. In 2021, $26.6 million of 
equity was imputed to meet the FDIC capital requirements. No additional 
equity was necessary to meet the PSR policy requirement.
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    \9\ This requirement does not apply to the Fedwire Securities 
Service. There are no competitors to the Fedwire Securities Service 
that would face such a requirement, and 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 firm market over the past five years.
    Debt and equity financing. The imputed short- and long-term debt 
financing rates are derived from the nonfinancial commercial paper 
rates from the Federal Reserve Board's H.15 Selected Interest Rates 
release (AA and A2/P2) and the annual Merrill Lynch Corporate & High 
Yield Index rate, respectively. The equity financing rate is described 
above. The rates for debt and equity financing are applied to the 
priced services estimated imputed short-term debt, long-term debt, and 
equity needed to finance short- and long-term assets and meet equity 
requirements.
    The 2021 PSAF is $16.4 million, compared with $18.9 million in 
2020. The decrease of $2.5 million is attributable to a net $2.0 
million decrease in the cost of capital and a $0.5 million decrease in 
sales tax. The net $2.0 million decrease in cost of capital resulted 
from an incremental $1.0 million decrease in the return on equity 
imputed to satisfy the FDIC requirements for a well-capitalized 
institution and a $1.0 million decrease in return on imputed equity 
necessary for PSR policy compliance.
    The PSAF expense of $16.4 million, detailed in table 5, reflects 
$6.6 million for BOG expense, $5.9 million for capital funding, and 
$3.9 million in sales tax expense.
    As shown in table 3, 2021 total assets of $790.6 million decreased 
by $50.6 million from 2020. The net decrease in total assets reflects 
an $88.8 million decrease in short-term assets and imputed investments 
partially offset by a $38.2 million increase in long-term assets.
    The decrease in the short-term assets is primarily driven by a 
$67.0 million decrease in items in process of collection resulting from 
a reduction in high balances in the value of foreign transactions. The 
remaining net decreases in short-term assets reflect a $38.2 million 
decrease in the imputed investments in Treasury securities from imputed 
equity required to meet FDIC capital requirements for a well-
capitalized institution and to comply with the PSR policy, partially 
offset by a $16.5 million increase in imputed investments in Fed Funds.
    The net long-term asset increase of $38.2 million primarily 
consists of a $66.8 million increase in the net pension asset partially 
offset by a

[[Page 73040]]

combined $23.6 million decrease in Premises and in Leasehold 
improvements and long-term prepayments. The net pension asset increase 
reflects higher plan contributions over the past two years. The 
decreases in Premises and in Leasehold improvements and long-term 
prepayments are mainly due to a lower allocation of Reserve Bank assets 
to the Federal Reserve's priced services.
    The capital structure of the 2021 pro forma balance sheet, provided 
in table 4, is composed of equity of $51.8 million, or 10.0 percent of 
the 2021 risk-weighted assets detailed in table 6, and $9.1 million of 
long-term debt. The 2021 capital structure differs from that of 2020, 
which was composed of $56.0 million of equity and no long-term debt. 
Provided in table 5, the 2021 initially imputed equity required to fund 
assets and meet the publicly traded firm model capital requirements is 
$25.2 million. Long-term debt of $35.7 million was imputed at the 
observed market ratio of 58.7 percent. To meet the FDIC capital 
requirements for a well-capitalized institution, $26.6 million of 
imputed long-term debt was substituted for equity, and no additional 
equity was imputed. The resulting $51.8 million total level of equity 
was sufficient to satisfy the $47.5 million equity requirement for the 
PSR policy requirements.
    The net Accumulated Other Comprehensive loss is $628.2 million, 
compared with $625.2 million in 2020. The slight decrease is primarily 
attributable to a lower priced percentage and lower tax rate partially 
offset by a lower discount rate. AOCI is in a net loss position and 
does not reduce the total imputed equity required to fund priced 
services assets or fulfill the FDIC equity requirements for a well-
capitalized institution.
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    C. Check Service--Table 7 shows the 2019 actual, 2020 estimated, 
and 2021 budgeted cost-recovery performance for the commercial check 
service.
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    \10\ 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.
    \11\ Consistent with the Board's PSR policy, the Reserve Banks' 
priced services will hold and 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 $47.5 million. In 2021, 26.7 million of equity was 
imputed to meet the regulatory capital requirements.
    \12\ Includes the allocation of Board of Governors assets to 
priced services of $2.4 million for 2021 and $3.1 million for 2020.
    \13\ Includes the allocation of Board of Governors liabilities 
to priced services of $1.0 million for 2021 and $0.8 million for 
2020.
    \14\ Includes an accumulated other comprehensive loss of $628.2 
million for 2021 and $625.2 million for 2020, 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.
    \15\ 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.
    \16\ 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 2021, the amount of imputed equity met the minimum equity 
requirements for risk-weighted assets.
    \17\ 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.
    \18\ Additional equity in excess of that needed to fund priced 
services assets is offset by an asset balance of imputed investments 
in treasury securities.
    \19\ Imputed short-term debt and long-term debt are computed at 
table 4.
    \20\ The 2021 ROE is equal to a risk-free rate plus a risk 
premium (beta * market risk premium). The 2021 after-tax CAPM ROE is 
calculated as 0.13% + (1.0 * 8.36%) = 8.50%. Using a tax rate of 
20.8%, the after-tax ROE is converted into a pretax ROE, which 
results in a pretax ROE of (8.50%/(1 - 20.8%)) = 10.72%. 
Calculations may be affected by rounding.
    \21\ If minimum equity constraints are not met after imputing 
equity based on all other financial statement components, additional 
equity is imputed to meet these constraints. Additional equity 
imputed to meet minimum equity requirements is invested solely in 
Treasury securities. The imputed investments are similar to those 
for which rates are available on the Federal Reserve's H.15 
statistical release, which can be located at https://www.federalreserve.gov/releases/h15/data.htm.
    \22\ The investments are imputed based on the amounts arising 
from the collection of items before providing credit according to 
established availability schedules.

[[Page 73044]]



                          Table 7--Check Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
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                                                                                                  Recovery  rate
                                                                    Net income                         after
              Year                    Revenue      Total expense       (ROE)       Targeted ROE    targeted ROE
                                                                                                        (%)
                                               1               2               3               4               5
                                                                           [1-2]                       [1/(2+4)]
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2019 (actual)...................          $128.2          $121.9            $6.3            $1.4           104.0
2020 (estimate).................           114.4           110.4             4.0             1.3           102.4
2021 (budget)...................           107.1           108.5            -1.5             1.1            97.7
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    1. 2020 Estimate--The Reserve Banks estimate that the check service 
will recover 102.4 percent of total expenses and targeted ROE, compared 
with a 2020 budgeted recovery rate of 104.3 percent.
    Through August, total commercial forward and total commercial 
return check volumes were 14.9 percent and 24.6 percent lower, 
respectively, than they were during the same period last year. 
Consistent with anticipated fourth-quarter declines and combined with 
the uncertainties created by COVID-19, for full-year 2020, the Reserve 
Banks estimate that their total forward check volume will decline 13.6 
percent (compared with a budgeted decline of 8.9 percent) and their 
total return check volume will decline 27.1 percent (compared with a 
budgeted decline of 8.7 percent) from 2019 levels.\23\ The Reserve 
Banks expect that check volumes will continue to decline, although 
uncertainty remains as to the rate of decline into 2021. In particular, 
the Reserve Banks' check volumes are expected to decline because of 
substitution away from checks to other payment instruments. While these 
volume declines will affect budgeted total revenue, the Reserve Banks 
estimate that total expenses will also be lower given the continued 
realization of operational efficiencies.
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    \23\ Total Reserve Bank forward check volumes are expected to be 
3.8 billion in 2020. Total Reserve Bank return check volumes are 
expected to be 19.8 million in 2020.
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    2. 2021 Pricing--The Reserve Banks expect Check Services to recover 
97.7 percent of total expenses and targeted ROE in 2021. The Reserve 
Banks project revenue to be $107.1 million, a decline of 6.4 percent 
from the 2020 estimate. Total expenses for Check Services are projected 
to be $108.5 million, a decrease of $1.9 million, or 1.7 percent, from 
2020 expenses, primarily because of reduced operating costs.
    The Reserve Banks will increase the fixed monthly participation fee 
and introduce a new tiered pricing structure. The tier structure will 
align with the structure and volume thresholds of the existing 
FedForward[supreg] Standard Endpoint Tier Listing. In light of the 
ongoing volume declines, the changes are intended to continue to 
support revenue stability through fixed fees while minimizing the 
impact of fee increases on smaller institutions, taking into account 
higher network capacity costs associated with higher volumes from 
larger institutions. Table 8 shows the 2021 tiered participation fees.
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    \24\ 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 (GCD). Each financial 
institution's tier assignment is determined by the criteria 
described in the FedForward Standard Endpoint Tier Listing.

              Table 8--Check 21 Participation Fee Structure
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                        Tier \24\                           Monthly fee
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1.......................................................         $135.00
2.......................................................           90.00
3.......................................................           60.00
4.......................................................           40.00
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    The primary risks to the Reserve Banks' ability to achieve budgeted 
2021 cost recovery for Check Services include greater-than-expected 
declines in check volume due to the general reduction in check writing 
and competition from correspondent banks, aggregators, and direct 
exchanges, which would result in lower-than-anticipated revenue.
    D. FedACH Service--Table 9 shows the 2019 actual, 2020 estimate, 
and 2021 budgeted cost-recovery performance for the commercial FedACH 
service.

                         Table 9--FedACH Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
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                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                       rate ROE  (%)
                                               1               2               3               4               5
                                                                           [1-2]                       [1/(2+4)]
----------------------------------------------------------------------------------------------------------------
2019 (actual)...................          $153.1          $154.8           $-1.7            $2.0            97.6
2020 (estimate).................           158.1           160.2            -2.1             1.9            97.6
2021 (budget)...................           159.6           162.3            -2.7             1.6            97.4
----------------------------------------------------------------------------------------------------------------

    1. 2020 Estimate--The Reserve Banks estimate that the FedACH 
service will recover 97.6 percent of total expenses and targeted ROE, 
compared with a 2020 budgeted recovery rate of 100.6 percent.
    Through August, FedACH commercial origination and receipt volume 
was 4.6 percent higher than it was during the same period last year. 
For full-year 2020, the Reserve Banks estimate that FedACH commercial 
origination and

[[Page 73045]]

receipt volume will increase 4.8 percent from 2019 levels, compared 
with a 2020 budgeted increase of 4.1 percent. However, investment costs 
associated with a multiyear technology initiative to modernize the 
FedACH processing platform continue to drive the overall underrecovery 
rate. Although FedACH is estimated to not fully recover its costs in 
2020, the Reserve Banks are expected to fully recover FedACH costs 
following the finalization of the FedACH technology modernization 
project.
    2. 2021 Pricing--The Reserve Banks expect the FedACH service to 
recover 97.4 percent of total expenses and targeted ROE in 2021. The 
Reserve Banks project revenue to be $159.6 million, an increase of 0.9 
percent from the 2020 estimate. Total expenses are projected to be 
$162.3 million, an increase of 1.3 percent from 2020 expenses.
    The Reserve Banks will not change existing FedACH fees. This 
approach is consistent both with a multiyear strategy of providing 
price stability for customers over the period of modernizing the FedACH 
processing platform and the more recent uncertainties due to COVID-19. 
Given the continued costs associated with the FedACH technology 
modernization project, the Reserve Banks project to under recover costs 
in 2021 at 97.4 percent. Following implementation of the FedACH 
technology modernization, the Reserve Banks expect to fully recover 
costs related to the provision of FedACH services.
    The primary risks to the Reserve Banks' ability to achieve budgeted 
2021 cost recovery for the FedACH service are unanticipated cost 
overruns associated with the FedACH technology modernization project 
and unanticipated volume reductions due to economic conditions.
    E. Fedwire Funds and National Settlement Services--Table 10 shows 
the 2019 actual, 2020 estimate, and 2021 budgeted cost-recovery 
performance for the Fedwire Funds and National Settlement Services.

         Table 10--Fedwire Funds and National Settlement Services Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                  Recovery  rate
                                                                    Net income                         after
              Year                    Revenue      Total expense       (ROE)       Targeted ROE    targeted ROE
                                                                                                        (%)
                                               1               2               3               4               5
                                                                           [1-2]                       [1/(2+4)]
----------------------------------------------------------------------------------------------------------------
2019 (actual)...................          $135.6          $137.7           $-2.1            $1.6            97.3
2020 (estimate).................           144.3           134.9             9.4             2.4           105.1
2021 (budget)...................           145.7           143.5             2.1             1.4           100.5
----------------------------------------------------------------------------------------------------------------

    1. 2020 Estimate--The Reserve Banks estimate that the Fedwire Funds 
and National Settlement Services will recover 105.1 percent of total 
expenses and targeted ROE, compared with a 2020 budgeted recovery rate 
of 100.6 percent.
    Through August, Fedwire Funds Service online volume was 6.8 percent 
higher than it was during the same period last year. For full-year 
2020, the Reserve Banks estimate that Fedwire Funds Services online 
volume will increase 5.4 percent from 2019 levels, compared with the 
1.0 percent volume decrease that had been budgeted. Through August, the 
National Settlement Service (NSS) settlement file volume was 7.2 
percent lower than it was during the same period last year, and 
settlement entry volume was 0.2 percent higher. For the full year, the 
Reserve Banks estimate that settlement file volume will decrease 5.3 
percent (slightly more than the budgeted decrease of 4.3 percent) and 
settlement entry volume will increase 0.7 percent from 2019 levels 
(compared with a budgeted 0.7 percent decrease).
    2. 2021 Pricing--The Reserve Banks expect the Fedwire Funds and 
National Settlement Services to recover 100.5 percent of total expenses 
and targeted ROE. Revenue is projected to be $145.7 million, an 
increase of 1.0 percent from the 2020 estimate. The Reserve Banks 
project total expenses to be roughly $8.6 million higher than 2020.The 
Reserve Banks will not change existing Fedwire Funds and National 
Settlement Service fees for 2021. This approach is consistent with the 
Reserve Banks' 2021 strategy of providing price stability for customers 
in light of uncertainties due to COVID-19.
    The primary risk to the Reserve Banks' ability to achieve budgeted 
2021 cost recovery for the Fedwire Funds and National Settlement 
Service is higher-than-anticipated operating costs associated with 
technology and resiliency initiatives.
    F. Fedwire Securities Service--Table 11 shows the 2019 actual, 2020 
estimate, and 2021 budgeted cost-recovery performance for the Fedwire 
Securities Service.\25\
---------------------------------------------------------------------------

    \25\ The Reserve Banks provide transfer services for securities 
issued by the U.S. Treasury, federal government agencies, 
government-sponsored enterprises, and certain international 
institutions. The priced component of this service, reflected in 
this memorandum, consists of revenues, expenses, and volumes 
associated with the transfer of all non-Treasury securities. For 
Treasury securities, the U.S. Treasury assesses fees for the 
securities transfer component of the service. The Reserve Banks 
assess a fee for the funds settlement component of a Treasury 
securities transfer; this component is not treated as a priced 
service.

[[Page 73046]]



                   Table 11--Fedwire Securities Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                  Recovery  rate
                                                                    Net income                         after
              Year                    Revenue      Total expense       (ROE)       Targeted ROE    targeted ROE
                                                                                                        (%)
                                               1               2               3               4               5
                                                                           [1-2]                       [1/(2+4)]
----------------------------------------------------------------------------------------------------------------
2019 (actual)...................           $27.1           $26.7            $0.4            $0.3           100.3
2020 (estimate).................            28.7            27.9             0.8             0.3           101.9
2021 (budget)...................            26.1            25.5             0.5             0.3           100.9
----------------------------------------------------------------------------------------------------------------

    1. 2020 Estimate--The Reserve Banks estimate that the Fedwire 
Securities Service will recover 101.9 percent of total expenses and 
targeted ROE, compared with a 2020 budgeted recovery rate of 102.8 
percent. The Reserve Banks estimate revenue to be $26.6 million, an 
increase of 0.8 percent from the 2019 budget. Total expenses are 
projected to be $27.1 million for full-year 2019, a decrease of 1.5 
percent from the 2019 budget.
    Through August, Fedwire Securities Service online agency transfer 
volume was 50.9 percent higher than it was during the same period last 
year. For full-year 2020, the Reserve Banks estimate that Fedwire 
Securities Service online agency transfer volume will increase 38.3 
percent from 2019 levels, compared with a budgeted increase of 3.4 
percent. The volatility in online agency transfer volume is attributed 
to a combination of uncertainties generated by COVID-19, and the low 
interest rate environment spurring incentives to refinance mortgages.
    For full-year 2020, volumes for two of the top three Fedwire 
Securities' largest revenue-generating services--account maintenance 
and issue maintenance--are expected to decline from 2019 levels. 
Through August, account maintenance volume was 3.6 percent lower than 
it was during the same period last year. For full-year 2020, the 
Reserve Banks estimate that account maintenance volume will decline 3.6 
percent from 2019 levels, compared with a budgeted decline of 2.1 
percent. Through August, the number of agency issues maintained was 3.3 
percent lower than it was during the same period last year. For full-
year 2020, the Reserve Banks estimate that the number of agency issues 
maintained will decline 3.5 percent from 2019 levels, compared with a 
budgeted decline of 1.0 percent.
    2. 2021 Pricing--The Reserve Banks expect the Fedwire Securities 
Service to recover 100.9 percent of total expenses and targeted ROE in 
2021. Revenue is projected to be $26.1 million, a decrease of 9.05 
percent from the 2020 estimate. The Reserve Banks also project that 
2021 expenses will decrease by $2.4 million from the 2020 estimate.
    The Reserve Banks will not change Fedwire Securities Service fees 
for 2021. This approach is consistent with the Reserve Banks' 2021 
strategy of providing price stability for customers in light of 
uncertainties due to COVID-19.
    The primary risk to the Reserve Banks' ability to achieve budgeted 
2021 cost recovery for these services is higher than anticipated 
operating costs associated with technology and resiliency initiatives. 
In addition, market volatility related to COVID-19 could introduce 
further uncertainty in forecasting revenue associated with online 
agency transfers.
    G. FedLine Solutions--The Reserve Banks charge fees for the 
electronic connections that depository institutions use to access 
priced services and allocate the costs and revenues associated with 
this electronic access to the priced services.\26\ There are currently 
six FedLine channels through which customers can access the Reserve 
Banks' priced services: FedMail[supreg], FedLine Exchange[supreg], 
FedLine Web[supreg], FedLine Advantage[supreg], FedLine Command[supreg] 
and FedLine Direct[supreg].\27\ The Reserve Banks bundle these channels 
into eleven FedLine packages, described below, that are supplemented by 
a number of premium (or [agrave] la carte) access and accounting 
information options. In addition, the Reserve Banks offer FedComplete 
packages, which are bundled offerings of FedLine connections and a 
fixed number of FedACH, Fedwire Funds, and Check 21-enabled 
transactions.
---------------------------------------------------------------------------

    \26\ FedLine Solutions provide customers with access to Reserve 
Bank priced services. As such, FedLine costs and revenue are 
allocated to the Reserve Banks' priced services on an expense ratio 
basis.
    \27\ FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, 
FedLine Command, and FedLine Direct are registered trademarks of the 
Federal Reserve Banks.
---------------------------------------------------------------------------

    Eight attended access packages offer manual access to critical 
payment and information services via a web-based interface. The FedMail 
package provides access to basic information services via email, while 
the two FedLine Exchange packages are designed to provide certain 
services, such as the E-Payments Routing Directory, to customers that 
otherwise do not use FedLine for any payment services. The two FedLine 
Web packages offer online attended access to a range of services, 
including cash services, FedACH information services, and Check 
services. Three FedLine Advantage packages expand upon the FedLine Web 
packages and offer attended access to critical transactional services: 
FedACH, Fedwire Funds, and Fedwire Securities.
    Three unattended access packages are computer-to-computer, internet 
Protocol (IP)-based interfaces. The FedLine Command package offers an 
unattended connection to FedACH as well as to most accounting 
information services. The two remaining options are FedLine Direct 
packages, which 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 Reserve Banks will not change FedLine Solutions packages for 
2021. This approach is consistent with the Reserve Banks' 2021 strategy 
of providing price stability for customers in light of uncertainties 
due to COVID-19.

II. Analysis of Competitive Effect

    All operational and legal changes considered by the Board that have 
a substantial effect on payment system participants are subject to the 
competitive impact analysis described in the March 1990 policy ``The 
Federal Reserve in the Payments System.'' \28\ Under this policy, the 
Board assesses

[[Page 73047]]

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 because of differing 
legal powers or constraints or because of a dominant market position 
deriving from such legal differences. If any proposed changes create 
such an effect, the Board must further evaluate the changes to assess 
whether the benefits associated with the changes--such as contributions 
to payment system efficiency, payment system integrity, or other Board 
objectives--can be achieved while minimizing the adverse effect on 
competition.
---------------------------------------------------------------------------

    \28\ Federal Reserve Regulatory Service (FRRS) 9-1558.
    \29\ Any ODFI incurring less than $50 for the following fees 
will be charged a variable amount to reach the minimum: Forward 
value and non-value item origination fees, and FedGlobal ACH 
origination surcharges.
    \30\ Any RDFI not originating forward value and non-value items 
and incurring less than $40 in receipt fees will be charged a 
variable amount to reach the minimum. Any RDFI that originates 
forward value and nonvalue items incurring less than $50 in forward 
value and nonvalue item origination fees will only be charged a 
variable amount to reach the minimum monthly origination fee.
    \31\ 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.
    \32\ The fee includes the item and addenda fees in addition to 
the conversion fee.
    \33\ 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.
    \34\ Origination volumes at these levels qualify for a waterfall 
discount which includes all FedACH origination items.
    \35\ 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.
    \36\ RDFIs receiving through FedACH less than 90 percent of 
their FedACH-originated items.
    \37\ This per-item discount is a reduction to the standard 
receipt fees listed in this fee schedule.
    \38\ Receipt volumes at these levels qualify for a waterfall 
discount which includes all FedACH receipt items.
    \39\ 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.
    \40\ RDFIs receiving through FedACH at least 90 percent of all 
of their ACH items originated through any operator.
    \41\ To qualify for the discount, a financial institution must 
meet all of the following criteria in a given month: (1) Be charged 
the minimum monthly fee--forward origination (57208); (2) subscribe 
to FedLine Web Plus or any higher FedLine[supreg] access solution; 
and (3) subscribe to the FedPayments Reporter service, the FedACH 
RDFI Alert service, or the FedACH Risk Origination Monitoring 
service.
    \42\ 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 $35 monthly package fee.
    \43\ Premier reports generated on demand are subject to the 
package/tiered fees plus a surcharge.
    \44\ 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.
    \45\ 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.
    \46\ 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.
    \47\ Fee will be assessed only when automated NOCs are 
generated.
    \48\ Limited services are offered in contingency situations.
    \49\ 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.
    \50\ The international fees and surcharges vary from country to 
country as these are negotiated with each international gateway 
operator.
    \51\ A single monthly fee based on total FedGlobal ACH Payments 
origination volume.
    \52\ This per-item surcharge is in addition to the standard 
domestic origination fees listed in this fee schedule.
    \53\ This per-item surcharge is in addition to the standard 
domestic receipt fees listed in this fee schedule.
    \54\ Any financial institution that opens at least 1,000 
Exception Resolution Service cases in a given month will receive a 
50% discount on its Exception Resolution Service fixed fees for that 
month.
    \55\ The per case fees are rolled up to the parent RTN, such 
that a customer that opens a total of 100 cases per month under two 
separate RTNs would pay a total of $112.50 ($1.25 for the first 50 
cases and $1.00 for the next 50 cases) in addition to the fixed 
fees.
    \56\ A depository 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.
---------------------------------------------------------------------------

    The 2021 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. The Reserve Banks may experience overrecovery or 
underrecovery in the short run because of the unpredictability of 
COVID-19 and its implications for volumes. Broadly, holding prices flat 
offers price stability for customers facing unique challenges in 2021 
and provides for full cost recovery over the long run.

III. 2021 Fee Schedules

                    FedACH Service 2021 Fee Schedule
  [Effective January 4, 2021. Bold indicates changes from 2020 prices.]
------------------------------------------------------------------------
                                                      Fee
------------------------------------------------------------------------
FedACH minimum monthly fee:
    Originating depository financial   $50.00.
     institution (ODFI) \29\.
    Receiving depository financial     $40.00.
     institution (RDFI) \30\.
Origination (per item or record):
    Forward or return items..........  $0.0035.
    SameDay Service--forward item      $0.0010 surcharge.
     \31\.
    Addenda record...................  $0.0015.
    FedLine Web-originated returns     $0.35.
     and notification of change (NOC)
     \32\.
    Facsimile Exception Return/NOC     $45.00.
     \33\.
    SameDay Exception Return.........  $45.00.
    Automated NOC....................  $0.20.
    Volume discounts (based on
     monthly billed origination
     volume) \34\ per item when
     origination volume is:
        750,001 to 1,500,000 items     $0.0008 discount.
         per month.
        more than 1,500,000 items per  $0.0010 discount.
         month.
    Volume discounts (based on
     monthly billed receipt volume)
     \35\ per item when receipt
     volume is:
        10,000,001 to 15,000,000       $0.0002 discount.
         items per month.
        more than 15,000,000 items     $0.0003 discount.
         per month.
Receipt (per item or record):
    Forward Item.....................  $0.0035.
    Return Item......................  $0.0075.
    Addenda record...................  $0.0015.

[[Page 73048]]

 
    Volume discounts:
    Non-Premium Receivers \36\ per
     item when volume is:
        750,001 to 12,500,000 items    $0.0017 discount.
         per month \37\.
        more than 12,500,000 items     $0.0019 discount.
         per month \38\.
    Premium Receivers, Level One \39\
     per item when volume is:
        750,001 to 1,500,000 items     $0.0017 discount.
         per month \37\.
        1,500,001 to 2,500,000 items   $0.0017 discount.
         per month \38\.
        2,500,001 to 12,500,000 items  $0.0018 discount.
         per month \38\.
        more than 12,500,000 items     $0.0020 discount.
         per month \38\.
    Premium Receivers, Level Two \40\
     per item when volume is:
        750,001 to 1,500,000 items     $0.0017 discount.
         per month \37\.
        1,500,001 to 2,500,000 items   $0.0017 discount.
         per month \38\.
        2,500,001 to 12,500,000 items  $0.0019 discount.
         per month \38\.
        more than 12,500,000 items     $0.0021 discount.
         per month \38\.
FedACH Bundled Package Pricing
 Discount:
    Monthly Bundled Service Package    $20.00 discount.
     Discount \41\.
FedACH Risk[supreg] Management
 Services: \42\
    Monthly Package Fee (a single fee
     based on total number of
     criteria sets):
        For up to 5 criteria sets....  $35.00.
        For 6 through 11 criteria      $70.00.
         sets.
        For 12 through 23 criteria     $125.00.
         sets.
        For 24 through 47 criteria     $150.00.
         sets.
        For 48 through 95 criteria     $250.00.
         sets.
        For 96 through 191 criteria    $425.00.
         sets.
        For 192 through 383 criteria   $675.00.
         sets.
        For 384 through 584 criteria   $850.00.
         sets.
        For more than 584 criteria     $1,100.00.
         sets.
    Batch/Item Monitoring (based on
     total monthly volume):
        For 1 through 100,000 batches  $0.007.
         (per batch).
        For more than 100,000 batches  $0.0035.
         (per batch).
Monthly FedPayments[supreg] 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.
         \43\.
Monthly Package Fee (counts reflect
 reports generated as well as
 delivered via a FedLine Solution):
    For up to 50 reports.............  $40.00.
    For 51 through 150 reports.......  $60.00.
    For 151 through 500 reports......  $110.00.
    For 501 through 1,000 reports....  $200.00.
    For 1,001 through 1,500 reports..  $285.00.
    For 1,501 through 2,500 reports..  $460.00.
    For 2,501 through 3,500 reports..  $640.00.
    For 3,501 through 4,500 reports..  $820.00.
    For 4,501 through 5,500 reports..  $995.00.
    For 5,501 through 7,000 reports..  $1,225.00.
    For 7,001 through 8,500 reports..  $1,440.00.
    For 8,501 through 10,000 reports.  $1,650.00.
    For more than 10,000 reports.....  $1,800.00.
Premier reports (per report
 generated): \43\
    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.

[[Page 73049]]

 
        For 6 through 10 reports.....  $6.00.
        For 11 or more reports.......  $1.00.
        On Demand Surcharge..........  $1.00.
    ACH Originated Batch Report
     (monthly):
        For 1 through 5 reports......  $10.00.
        For 6 through 10 reports.....  $6.00.
        For 11 or more reports.......  $1.00.
        On Demand Surcharge..........  $1.00.
    ACH Originated Batch Report
     (daily):
        Scheduled Report.............  $0.65.
        On Demand Surcharge..........  $1.00.
    On-us inclusion:
        Participation (monthly fee     $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 \44\  $65.00.
        SameDay Service Origination    $10.00.
         Participation Fee \45\.
        FedACH Settlement Fee \46\...  $55.00.
        FedACH Information File        $150.00.
         Extract Fee.
        IAT Output File Sort Fee.....  $75.00.
        Fixed Participation Fee--      $5.00.
         Automated NOCs \47\.
    Non-Electronic Input/Output fee:
     \48\
        CD/DVD (CD or DVD)...........  $50.00.
        Paper (file or report).......  $50.00.
    Fees and Credits Established by
     NACHA: \49\
        NACHA Same Day Entry fee (per  $0.052.
         item).
        NACHA Same Day Entry credit    $0.052 (credit).
         (per item).
        NACHA Unauthorized Entry fee   $4.50.
         (per item).
        NACHA Unauthorized Entry       $4.50 (credit).
         credit (per item).
        NACHA Admin Network fee        $22.00.
         (monthly fee per RTN).
        NACHA Admin Network fee (per   $0.000185.
         entry).
FedGlobal[supreg] ACH Payments: \50\
    Fixed Monthly Fee (per RTN): \51\
        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): \52\
        Canada service...............  $0.50.
        Mexico service...............  $0.55.
        Panama service...............  $0.60.
        Europe service...............  $1.13.
    Per-item Origination Fee for
     Monthly Volume between 161 and
     500 items (surcharge): \52\
        Canada service...............  $0.75.
        Mexico service...............  $0.80.
        Panama service...............  $0.85.
        Europe service...............  $1.38.
    Per-item Origination Fee for
     Monthly Volume less than 161
     items (surcharge): \52\
        Canada service...............  $1.00.
        Mexico service...............  $1.05.
        Panama service...............  $1.10.
        Europe service...............  $1.63.
Other FedGlobal ACH Payments Fees:
    Canada service:
        Return received from Canada    $0.99 (surcharge).
         \53\.
        Trace of item at receiving     $5.50.
         gateway.
        Trace of item not at           $7.00.
         receiving gateway.
    Mexico service:
        Return received from Mexico     $0.91 (surcharge).
         \53\.
        Item trace...................  $13.50.
        Foreign currency to foreign    $0.67 (surcharge).
         currency (F3X) item
         originated to Mexico \52\.
    Panama service:
        Return received from Panama    $1.00 (surcharge).
         \53\.
        Item trace...................  $7.00.
        NOC..........................  $0.72.
    Europe service:
        F3X item originated to Europe  $1.25 (surcharge).
         \52\.
        Return received from Europe    $1.35 (surcharge).
         \53\.
        Item trace...................  $7.00.

[[Page 73050]]

 
Exception Resolution Service:
    Fixed Fee per RTN \54\ (monthly):
        Self-Managed Cases...........  $10.00.
        Agent-Managed Cases..........  $10.00.
        Offline Service Participant..  $60.00.
    Variable Case Open Monthly Fees
     per Case (applies to self-
     managed and agent-managed cases
     only at the parent RTN): \55\
        1-50 cases...................  $1.25.
        51-100 cases.................  $1.00.
        101-500 cases................  $0.75.
        501-1,000 cases..............  $0.50.
        1,001-5,000 cases............  $0.25.
        5,001-10,000 cases...........  $0.20.
        10,001-99,999,999 cases......  $0.10.
    Offline Service Participant--Case
     Fees: \56\
        Case Open Fee................  $5.00.
        Case Response Fee............  $5.00
------------------------------------------------------------------------


    Fedwire Funds and National Settlement Services 2021 Fee Schedule
  [Effective January 4, 2021. Bold indicates changes from 2020 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
                          Fedwire Funds Service
------------------------------------------------------------------------
Monthly Participation Fee............................             $95.00
Basic volume-based pre-incentive transfer fee
 (originations and receipts)--per transfer for:
    Tier 1: The first 14,000 transfers per month.....             $0.840
    Tier 2: Additional transfers up to 90,000 per                  0.250
     month...........................................
    Tier 3: Every transfer over 90,000 per month.....              0.165
Volume-based transfer fee with the incentive discount
 (originations and receipts)--per eligible transfer
 for: \57\
    Tier 1: The first 14,000 transfers per month.....              0.168
    Tier 2: Additional transfers up to 90,000 per                  0.050
     month...........................................
    Tier 3: Every transfer over 90,000 per month.....              0.033
Surcharge for Offline Transfers (Originations and                  65.00
 Receipt)............................................
Surcharge for End-of-Day Transfer Originations \58\..               0.26
Monthly FedPayments Manager Import/Export fee \59\...              50.00
Surcharge for high-value payments:
    >$10 million.....................................               0.14
    >$100 million....................................               0.36
Surcharge for Payment Notification:
    Origination Surcharge \60\.......................               0.01
    Receipt Volume 60 61.............................                N/A
Delivery of Reports--Hard Copy Reports to On-Line                  50.00
 Customers...........................................
Special Settlement Arrangements (charge per                       150.00
 settlement day) \62\................................
------------------------------------------------------------------------
                       National Settlement Service
------------------------------------------------------------------------
Basic:
    Settlement Entry Fee.............................               1.50
    Settlement File Fee..............................              30.00
Surcharge for Offline File Origination \63\..........              45.00
Minimum Monthly Fee \64\.............................              60.00
------------------------------------------------------------------------


 Fedwire Securities Service 2021 Fee Schedule (Non-Treasury Securities)
  [Effective January 4, 2021. Bold indicates changes from 2020 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
Basic Transfer Fee: \65\
    Transfer or reversal originated or received......              $0.98
Surcharge: \66\
    Offline origination & receipt surcharge..........              80.00
Monthly Maintenance Fees: \65\
    Account maintenance (per account)................              57.50
    Issue maintenance (per issue/per account)........              $0.77
Claims Adjustment Fee 65 67..........................               1.00
GNMA Serial Note Stripping or Reconstitution Fee \68\               9.00

[[Page 73051]]

 
Joint Custody Origination Surcharge 65 69............              46.00
Delivery of Reports--Hard Copy Reports to On-Line                  50.00
 Customers \65\......................................
------------------------------------------------------------------------


                        FedLine 2021 Fee Schedule
  [Effective January 4, 2021. Bold indicates changes from 2020 prices.]
------------------------------------------------------------------------
                                                      Fee
------------------------------------------------------------------------
                  FedComplete Packages (Monthly) 70 71
------------------------------------------------------------------------
FedComplete 100A Plus \72\ includes..  $825.00.
    FedLine Advantage Plus package...
    FedLine subscriber 5-pack........
    7,500 FedForward transactions....
    46 FedForward Cash Letter items..
    70 FedReturn transactions........
    14,000 FedReceipt[supreg]
     transactions.
    35 Fedwire Funds origination
     transfers.
    35 Fedwire Funds receipt
     transfers.
    Fedwire monthly participation fee
    1,000 FedACH origination items...
    FedACH monthly minimum fee--
     Forward Origination.
    7,500 FedACH receipt items.......
    FedACH monthly minimum fee--
     Receipt.
    10 FedACH web-originated return/
     NOC.
    500 FedACH addenda record
     originated.
    1,000 FedACH addenda record
     received.
    100 FedACH SameDay Service
     origination items.
    FedACH Participation Fee.........
    FedACH settlement fee............
    FedACH SameDay Service
     origination participation fee.
FedComplete 100A Premier includes....  $900.00.
    FedLine Advantage Premier package
    Volumes included in the
     FedComplete 100A Plus package.
FedComplete 100C Plus includes.......  $1,375.00.
    FedLine Command Plus package.....
    Volumes included in the
     FedComplete 100A Plus package.
    FedComplete 200A Plus $1,350.00..
    includes FedLine Advantage Plus
     package.
    FedLine subscriber 5-pack........
    25,000 FedForward transactions...
    46 FedForward Cash Letter items..
    225 FedReturn transactions.......
    25,000 FedReceipt[supreg]
     transactions.
    100 Fedwire Funds origination
     transfers.
    100 Fedwire Funds receipt
     transfers.
    Fedwire monthly participation fee
    2,000 FedACH origination items...
    FedACH monthly minimum fee--
     Forward Origination.
    25,000 FedACH receipt items......
    FedACH monthly minimum fee--
     Receipt.
    20 FedACH web-originated return/
     NOC.
    750 FedACH addenda record
     originated.
    1,500 FedACH addenda record
     received.
    200 FedACH SameDay Service
     origination items.
    FedACH Participation Fee.........
    FedACH settlement fee............
    FedACH SameDay Service
     origination participation fee.
FedComplete 200A Premier includes....  $1,425.00.
    FedLine Advantage Premier package
    Volumes included in the
     FedComplete 200A Plus package.
FedComplete 200C Plus includes.......  $1,900.00.
    FedLine Command Plus package.....
    Volumes included in the
     FedComplete 200A Plus package.
FedComplete Excess Volume and Receipt
 Surcharge \73\
    FedForward \74\..................  $0.03700/item.
    FedReturn........................  $0.82000/item.
    FedReceipt.......................  $0.00005/item.
    Fedwire Funds Origination........  $0.84000/item.

[[Page 73052]]

 
    Fedwire Funds Receipt............  $0.08400/item.
    FedACH Origination...............  $0.00350/item.
    FedACH Receipt...................  $0.00035/item.
    FedComplete credit adjustment....  various.
    FedComplete debit adjustment.....  various.
------------------------------------------------------------------------
               FedLine Customer Access Solutions (Monthly)
------------------------------------------------------------------------
FedMail \75\ includes................  $85.00.
    FedMail access channel...........
    Check FedFoward, Fed Return and
     FedReceipt Services.
    Check Adjustments................
    FedACH Download Advice and
     Settlement Information.
    Fedwire Funds Offline Advices....
    Daily Statement of Account (Text)
    Daylight Overdraft Reports.......
    Monthly Statement of Service
     Charges (Text).
    Electronic Cash Difference
     Advices.
FedLine Exchange \75\ includes.......  $40.00.
    E-Payments Directory (via manual
     download).
FedLine Exchange Premier \75\          $125.00.
 includes.
    FedLine Exchange package.........
    E-Payments Directory (via
     automated download).
FedLine Web \76\ includes............  $110.00.
    FedLine Web access channel.......
    Services included in the FedLine
     Exchange package.
    Check FedForward, FedReturn and
     FedReceipt services.
    Check Adjustments................
    FedACH Derived Returns and NOCs..
    FedACH File, Batch and Item
     Detail Information.
    FedACH Download Advice...........
    FedACH Settlement Information....
    FedACH Customer Profile
     Information.
    FedACH Returns Activity
     Statistics.
    FedACH Risk RDFI Alert Service...
    FedACH Risk Returns Reporting
     Service.
    FedACH Exception Resolution
     Service.
    FedCash[supreg] Services.........
FedLine Web Plus \76\ includes.......  $160.00.
    Services included in the FedLine
     Web package.
    FedACH Risk Origination
     Monitoring Service.
    FedACH FedPayments Reporter
     Service.
    Check Large Dollar Return........
    Check FedImage Services..........
    Account Management Information
     (AMI).
    Daily Statement of Account (PDF,
     Text).
    Daylight Overdraft Reports.......
    Monthly Account Services (SCRD)
     File.
    Monthly Statement of Service
     Charges (PDF, Text).
    E-Payments Routing Directory (via
     automated download).
FedLine Advantage \76\ includes......  $415.00.
    FedLine Advantage access channel.
    One VPN device...................
    Services included in the FedLine
     Web package.
    FedACH File Transmission To/From
     Federal Reserve.
    FedACH Request Output File
     Delivery.
    FedACH View File Transmission and
     Processing Status.
    Fedwire Originate and Receive
     Funds Transfer.
    Fedwire Originate and Receive
     Securities Transfer.
    National Settlement Service
     Services.
    Check Large Dollar Return........
    Check FedImage Services..........
    Account Management Information
     with Intra-Day Download Search
     File.
    Daily Statement of Account (PDF,
     Text).
    Daylight Overdraft Reports.......
    Monthly Account Services (SCRD)
     File.
    Monthly Statement of Service
     Charges (PDF, Text).
FedLine Advantage Plus \76\ includes.  $460.00.
    Services included in the FedLine
     Advantage package.
    One VPN device...................
    FedACH Risk Origination
     Monitoring Service.

[[Page 73053]]

 
    FedACH FedPayments Reporter
     Service.
    Fedwire Funds FedPayments Manager
     Import/Export (less than or
     equal to 250 Fedwire
     transactions and one routing
     number per month).
    FedTransaction Analyzer[supreg]
     (less than 250 or equal to
     Fedwire transactions and one
     routing number per month).
    E-Payments Routing Directory (via
     automated download).
FedLine Advantage Premier \76\         $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 includes........  $1,035.00.
    FedLine Command access channel...
    Services included in the FedLine
     Advantage Plus package.
    One VPN device...................
    Additional FedLine Command server
     certificates.
    Fedwire Statement Services.......
    Fedwire Funds FedPayments Manager
     Import/Export.
    FedTransaction Analyzer..........
    Intra-Day File with Transaction
     Details (up to six times daily).
    Statement of Account Spreadsheet
     File (SASF).
    Financial Institution
     Reconcilement Data (FIRD) File
     (machine readable).
FedLine Direct Plus \77\ includes....  $5,500.00.
    FedLine Direct access channel....
    One VPN device...................
    2 Mbps Dedicated WAN Connection..
    Services included in the FedLine
     Command Plus package.
    FedLine Direct server
     certificates.
    Treasury Check Information System
     (TCIS).
    Dual Vendors.....................
    FedLine Direct Contingency
     Solution.
    Check 21 Services................
FedLine Direct Premier \77\ includes.  $10,500.00.
    FedLine Direct Plus package (new)
    Two 2 Mbps dedicated WAN
     Connections.
    One Network Diversity............
    Two VPN devices..................
------------------------------------------------------------------------
                    A la Carte Options (Monthly) \78\
------------------------------------------------------------------------
Electronic Access:
    FedMail--FedLine Exchange          $15.00.
     Subscriber 5-pack.
    FedLine Subscriber 5-pack (access  $80.00.
     to Web and Advantage).
    Additional VPNs \79\.............  $100.00.
    Additional 2 Mbps WAN connection    $3,000.00.
     \77\.
    WAN Connection Upgrade:
        10 Mbps \80\.................  $1,700.00.
        30 Mbps \80\.................  $3,000.00.
        50 Mbps \80\.................  $4,000.00.
        100 Mbps \80\................  $7,000.00.
        200 Mbps \80\................  $11,000.00.
    FedLine International Setup (one-  $5,000.00.
     time fee).
    FedLine Custom Implementation Fee
     \81\ various.
    Network Diversity................  $2,500.00.
    FedMail Email (for customers with  $40.00.
     FedLine Web and above) \82\.
    FedMail Fax \83\.................  $150.00.
    VPN Device Modification..........  $200.00.
    VPN Device Missed Activation       $175.00.
     Appointment.
    VPN Device Expedited Hardware      $100.00.
     Surcharge.
    VPN Device Replacement or Move...  $300.00.
    E-Payments Automated Download (1-  $75.00.
     5 Add'l Codes) \84\.
    E-Payments Automated Download (6-  $150.00.
     20 Add'l Codes) \84\.
    E-Payments Automated Download (21- $300.00.
     50 Add'l Codes) \84\.
    E-Payments Automated Download (51- $500.00.
     100 Add'l Codes) \84\.
    E-Payments Automated Download      $1,000.00.
     (101-250 Add'l Codes) \84\.
    E-Payments Automated Download      $2,000.00.
     (>250 Add'l Codes) \84\.
Accounting Information Services
 (monthly):
    Cash Management System (CMS)
     Plus--Own report--up to six
     files with: \85\
        no respondent/sub-account      $60.00.
         activity.
        less than 9 respondent and/or  $125.00.
         sub-accounts.
        10-50 respondent and/or sub-   $250.00.
         accounts.

[[Page 73054]]

 
        51-100 respondents and/or sub- $500.00.
         accounts.
        101-500 respondents and/or     $750.00.
         sub-accounts.
        >500 respondents and/or sub-   $1,000.00.
         accounts.
    End-of-Day Financial Institution   $150.00.
     Reconcilement Data (FIRD) File
     \86\.
    Statement of Account Spreadsheet   $150.00.
     File \87\.
    Intra-day Download Search File     $150.00.
     (with AMI) \88\.
Other:
    Software Certification...........  $0.00 to $8,000.00.
    Vendor Pass-Through Fee..........  various.
    Electronic Access Credit           various.
     Adjustment.
    Electronic Access Debit            various.
     Adjustment.
------------------------------------------------------------------------


    By order of the Board of Governors of the Federal Reserve 
System.
Ann Misback,
Secretary of the Board.
---------------------------------------------------------------------------

    \57\ 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: $0.672 for transfers up to 14,000; $0.200 
for transfers 14,001 to 90,000; and $0.132 for transfers over 
90,000.
    \58\ This surcharge applies to originators of transfers that are 
processed by the Reserve Banks after 5:00 p.m. eastern time.
    \59\ This fee is charged to any Fedwire Funds participant that 
originates a transfer message via the FedPayments Manager (FPM) 
Funds tool and has the import/export processing option setting 
active at any point during the month.
    \60\ Payment Notification and End-of-Day Origination surcharges 
apply to each Fedwire funds transfer message.
    \61\ Provided on billing statement for informational purposes 
only.
    \62\ This charge is assessed to settlement arrangements that use 
the Fedwire Funds Service to effect 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.
    \63\ If your organization is a settlement agent, it may be able 
to use the NSS 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 NSS 04 Agent Contact 
Form may submit offline settlement files. For questions related to 
the NSS offline service, please contact NSS Central Support Service 
Staff (CSSS) at 800-758-9403, or via email at [email protected].
    \64\ Any settlement arrangement that accrues less than $60 
during a calendar month will be assessed a variable amount to reach 
the minimum monthly fee.
    \65\ These fees are set by the Federal Reserve Banks.
    \66\ This surcharge is set by the Federal Reserve Banks. It is 
in addition to any basic transfer or reversal fee.
    \67\ The Federal Reserve Banks offer an automated claim 
adjustment process only for Agency mortgage-backed securities.
    \68\ This fee is set by and remitted to the Government National 
Mortgage Association (GNMA).
    \69\ The Federal Reserve Banks charge participants a Joint 
Custody Origination Surcharge for both Agency and Treasury 
securities.
    \70\ FedComplete customers that use the email service would be 
charged the FedMail Email a la carte fee and for all FedMail-FedLine 
Exchange Subscriber 5-packs.
    \71\ FedComplete packages are all-electronic service options 
that bundle payment services with an access solution for one monthly 
fee.
    \72\ Packages with an ``A'' include the FedLine Advantage 
channel, and packages with ``C'' include the FedLine Command 
channel.
    \73\ Per-item surcharges are in addition to the standard fees 
listed in the applicable priced services fee schedules.
    \74\ 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.
    \75\ FedMail and FedLine Exchange packages do not include user 
credentials, which are required to access priced services and 
certain informational services. Credentials are sold separately in 
packs of five via the FedMail-FedLine Exchange Subscriber 5-pack.
    \76\ 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.
    \77\ Early termination fees and/or expedited order fees may 
apply to all FedLine Direct packages and FedLine Direct a la carte 
options.
    \78\ These add-on services can be purchased only with a FedLine 
Solutions packages.
    \79\ Additional VPNs are available for FedLine Advantage, 
FedLine Command, and FedLine Direct packages only.
    \80\ These upgrades are only available for the new FedLine 
Direct packages and the Add'l 2M WAN connection. Fee is in addition 
to the FedLine Direct package fees or additional WAN fees.
    \81\ The FedLine Custom Implementation Fee is $2,500 or $5,000 
based on the complexity of the setup.
    \82\ Available only to customers with a priced FedLine package.
    \83\ Limited to installed base only.
    \84\ Five download codes are included at no cost in all Plus and 
Premier packages.
    \85\ Cash Management Service options are limited to plus and 
premier packages.
    \86\ The End of Day Reconcilement File option is available for 
FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It 
is available for no extra fee in FedLine Command Plus and Direct 
packages.
    \87\ The Statement of Account Spreadsheet File option is 
available for FedLine Web Plus, FedLine Advantage Plus, and Premier 
packages. It is available for no extra fee in FedLine Command Plus 
and Direct packages.
    \88\ The Intra-day Download Search File option is available for 
the FedLine Web Plus package. It is available for no extra fee in 
FedLine Advantage and higher packages.
---------------------------------------------------------------------------

[FR Doc. 2020-25176 Filed 11-13-20; 8:45 am]
BILLING CODE P