The Federal Reserve recently published a paper identifying tactics it will pursue to help improve the speed, safety, and efficiency of the U.S. payment system.
The paper, Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey, presents refreshed strategies and nine new tactics the Federal Reserve will employ, in collaboration with payment system stakeholders, to help achieve payment system improvements. It builds on steps the Fed took in 2015 to improve the payment system.
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.
“With collaboration, inclusiveness, and transparency as guiding principles, the Fed will continue to advance improvements through leadership and action,” Federal Reserve Board Governor Jerome Powell, who co-chairs the payments initiative’s oversight committee, said. “Our work with stakeholders over the past two years, including engagement with 500 task force members, has demonstrated that together we can help address industry challenges and seize opportunities.”
The effort builds on steps the Fed took in 2015 to improve the payment system.
“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,” said Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City and executive sponsor of the payments improvement initiative.