Division of Reserve Bank Operations and Payment Systems – RBOPS

What is the Division of Reserve Bank Operations and Payment Systems – RBOPS?

The Division of Reserve Bank Operations and Payment Systems (RBOPS) is an entity under the Federal Reserve System that manages policies and operations of the Federal Reserve Banks pertaining to payment services within the United States. The RBOPS division oversees operations when depository institutions require fiscal agency services from Federal Reserve Banks, the U.S. Treasury, and other government agencies.

The division also develops policies and regulations regarding the U.S. payments system, works with other central banks to improve payments, and conducts research on payments issues.

Understanding the Division of Reserve Bank Operations and Payment Systems – RBOPS

In order to maintain the nation's payment systems, the Federal Reserve Banks are tasked to keep sufficient currency in circulation to meet transaction and redemption demand, provide check clearing services to banks and other depository institutions, and directly operate electronic payment systems. In 2018, the U.S. payment system processed 174.2 billion transactions to pay for $97.04 trillion in goods and services. The Division of RBOPS develops policies to ensure the efficiency and integrity of the U.S. payment systems, and conducts research to improve the systems.

Currency

The Fed distributes currency in the form of notes and coins to member banks. Banks order currency to meet public demand for cash withdrawals by tapping their reserve accounts with their local Fed branch. Banks can deposit excess cash with the Fed in return for credit to their reserve accounts. The Fed branches store the cash or replaces bills with fresh notes if they are too worn out. The RBOPS oversees this process of physical currency circulating among the Fed branches, member banks, and the general public.

Check Clearing

The Federal Reserve System collects and processes approximately 40% of paper checks that pass between banks. The Fed is guided by the Clearing for the 21st Century Act, a federal law enacted in 2004. This act allows checks to be processed without physically transporting a paper check from one place to another. Instead, an electronic image of the check can be used. This makes it less expensive for banks and other companies to process checks, and also means checks are cleared faster. As a result, electronic payments have increased and writing paper checks has declined. 

The delay that exists between the time you write a check and the time it's actually cashed is called a float. Today, the only lag time between when you write a check and when it gets deposited is the amount of time it takes any check you mail to get through the postal system and be dealt with by the recipient, or the amount of time it takes the recipient to actually submit the check to their bank. There may also be a slight delay while the bank processes it after deposit.

Electronic Payments

The Federal Reserve is the largest Automated Clearing House (ACH) operator in the U.S. These electronic transactions include direct deposit payroll, government benefits, tax refunds, and recurring debit payments for mortgages, utilities, and other regular bills, along with payments made over the internet. ACH payments are increasingly the norm in the modern economy, eclipsing cash and check payments.

For larger transactions, the Fed operates a separate payment network called Fedwire. Fedwire handles larger transfers of bank reserves and securities among banks, the U.S. Treasury, other large financial institutions, and other government or international agencies.