In early September 2017, the Board of Governors of the Federal Reserve System (Federal Reserve) published, Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey, a paper identifying updated tactics it will pursue to help improve the speed, safety and efficiency of the U.S. payment system. The paper builds on an earlier Federal Reserve paper, Strategies for Improving the U.S. Payment System, that was issued in January 2015. At that time, the Federal Reserve laid out its strategic vision for the future of the payments system and called for the commitment of all payment industry stakeholders to achieve five desired outcomes focused on speed, security, efficiency, international payments, and collaboration. The new paper outlines the Federal Reserve’s next phase of work, consistent with its objective to foster the efficiency, integrity, and accessibility of the payment system. Specifically, the paper presents refreshed strategies and nine new tactics the Federal Reserve will employ, in collaboration with payment system stakeholders, to help achieve payment system improvements.
The Federal Reserve’s strategies and tactics address the desired outcomes as follows:
- Speed. 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, 2017. 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. In addition, the Federal Reserve is pursuing Federal Reserve settlement services that address the future needs of a “ubiquitous real-time retail payments environment,” and evaluating whether it should engage as a service provider, beyond providing settlement services, to help facilitate a faster payments ecosystem.
- Security. The 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.
- Efficiency/International. 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. In particular, the Federal Reserve will continue to support industry efforts to develop and promote adoption of standards that enable end-to-end electronic processing of business invoices, payments, and remittance information.
- Collaboration. Continued facilitation of ongoing stakeholder engagement in payments improvement efforts through further outreach and education efforts to create awareness and encourage adoption of identified improvements and initiatives.
This remains an iterative initiative; the Federal Reserve notes that it “will continue to actively monitor and communicate progress, seek feedback and adjust approaches in response to developments as necessary.” According to the Federal Reserve, “[g]ood progress has been made, but much work remains to implement safe, ubiquitous real-time retail payments and enhance the safety, efficiency, and resiliency of the U.S. payment system. The Federal Reserve and payment system stakeholders face challenges on the road ahead, and the Federal Reserve is committed to ongoing collaboration and progress.
In addition to the tactics described in this paper, the Federal Reserve states that it will continue working to enhance its existing services and to advance ongoing initiatives.