Federal Reserve Outlines Next Steps for Payment System Improvement
Tuesday, September 12, 2017
The Federal Reserve recently outlined tactics it will pursue to help improve the speed, safety and efficiency of the U.S. payment system in a new paper, “Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey.”
The paper is a follow up to the Fed's January 2015 strategic vision, “Strategies for Improving the U.S. Payment System,” which called for the commitment of all payment industry stakeholders to achieve five desired outcomes focused on speed, security, efficiency, international payments, and collaboration. It presents refreshed strategies and nine new tactics the Federal Reserve will employ, in collaboration with payment system stakeholders, to help achieve payment system improvements. In addition to the tactics described in this paper, the Federal Reserve will continue working to enhance its existing services and to advance ongoing initiatives.
The Federal Reserve's strategies and tactics address the five desired outcomes as follows:
- Faster payments tactics include efforts to facilitate industry development of a faster payments ecosystem as described by the Faster Payments Task Force in its final report, issued on July 21. The Federal Reserve is chairing and facilitating an interim collaboration work group chartered by the task force to establish a governance framework and will support other collaborative faster payments work efforts.
- Federal Reserve plans also call for pursuing settlement services that address the future needs of a ubiquitous real-time retail payments environment and exploring and assessing the need, if any, for Federal Reserve engagement as a service provider, beyond providing settlement services, in the faster payments ecosystem.
- Federal Reserve work to reduce fraud risk and advance the safety, security and resiliency of the payment system will expand beyond its Secure Payments Task Force to include a comprehensive analysis of payment security vulnerabilities, potential mitigation approaches, and misalignment of incentives that may hinder progress.
- Efforts to enhance the efficiency of both domestic and cross-border payments will continue to focus on collaborating with stakeholders to better understand barriers to improvement and pursuing adoption of standards and other solutions to address them.
"Our 2015 paper laid out ambitious goals for the U.S. payment system that will require the sustained commitment of the Federal Reserve and the industry to achieve," said Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City and executive sponsor of the payments improvement initiative. "Thanks to the collective efforts of hundreds of payment system stakeholders during the past two years, we've made real progress. Through the strategies and tactics outlined in this next-steps plan, the Federal Reserve will support continued industry momentum toward safe, ubiquitous, faster payments for our country."