Fed Highlights Progress toward Faster, Safer Payments
A 2-year-old Federal Reserve plan to improve the speed, efficiency and security of the U.S. payments system has made significant strides toward those goals, but there’s more work to do, according to the Fed’s latest progress report on the initiative. First announced in a January 2015 document titled Strategies for Improving the U.S. Payment System, the plan includes several strategies to enhance the U.S. payment system to “meet the changing demands of American consumers and businesses.” The initiative is being undertaken by the Fed in conjunction with a variety of payments stakeholders, including private businesses, financial services providers, financial institutions, consumer groups and government agencies.
A centerpiece of the plan was the creation of two payments industry task forces—one devoted to faster payments and the other to a more secure payments system. The latest progress report highlights accomplishments made by the task forces during 2016. Among the achievements of the Faster Payments Task Force was the commissioning of an independent assessment of 22 faster payments solutions proposals made under the Faster Payments Effectiveness Criteria, released in February 2016. The Faster Payments Task Force also analyzed potential challenges to faster payments implementation, such as provider interoperability, rules and standards, governance, adoption, safety and security. The Faster Payments Task Force also has just published the first part of a two-part final report providing an overview of its background and processes, the payments landscape and the benefits of faster payments. The second part of the report will be published in mid-2017, the Fed said.
Meanwhile, the Fed’s Secure Payments Task Force was busy in 2016 as well, taking steps such as mapping existing identity management practices in payment flows to identify opportunities for improvements, defining guiding principles for protecting sensitive payments data and tracking current industry efforts to share information for fraud and risk mitigation. In 2017, the Secure Payments Task Force plans to outline ways for the industry to improve payment identity management practices, provide guidance on standardizing definitions of fraud and risk data so it can be easily interpreted and acted upon, and publish a framework for protecting sensitive payment data.
Other accomplishments of the Fed plan thus far outlined in the progress report include efforts to enhance payment system efficiency through work on standards and directories and B2B payment improvements. In addition, joint efforts with industry players have accelerated plans to implement the ISO 20022 financial messaging standard for U.S. wire transfers and same-day ACH settlement.