The Federal Reserve has released details of nine new tactics it plans to employ to improve the US payments system across five key areas — speed, security, efficiency, international payments, and collaboration.
The tactics are set out in Strategies for Improving the US Payment System: Federal Reserve Next Steps in the Payments Improvement Journey, a new paper that follows on from a 2015 strategic vision document which called for payment industry stakeholders to commit to achieving five desired outcomes across the five key areas.
Those five areas will now be addressed as follows, the Fed says:
- Faster payments tactics “will 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 plans to pursue “settlement services that address the future needs of a ubiquitous real-time retail payments environment” and will explore and assess “the need for it to engage as a service provider in the faster payments ecosystem.”
- Federal Reserve work to reduce fraud risk and to 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.”
“The Federal Reserve will pursue two new tactics to support payment security,” the paper expains, “focused on studying security vulnerabilities and misalignment of incentives, as well as facilitating collaborative efforts to prioritize improvement efforts and stimulate market activity to effectively mitigate vulnerabilities.”
“Thanks to the collective efforts of hundreds of payment system stakeholders during the past two years, we’ve made real progress,” says Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City and executive sponsor of the payments improvement initiative.
“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.”
“With collaboration, inclusiveness and transparency as guiding principles, the Fed will continue to advance improvements through leadership and action,” adds Federal Reserve Board Governor Jerome H Powell, who co-chairs the payments initiative’s oversight committee.
“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.”