The US Federal Reserve has set out a series of options for speeding up the country's antiquated payments system.
Following many months of research and consultation with industry players, the Fed has finally published its strategy paper for improving the speed, efficiency and safety of payments. A host of options for making payments faster have been narrowed down to four possibilities of varying ambition.
- The first would see the existing ATM/PIN debit infrastructure tapped to enable credit push payments with real-time authorisation.
- The second would use distributed architecture for messaging between financial institutions over public IP networks, with a central authority establishing common protocols for messaging standards, communication, security and logging transactions.
- A third possibility would see the creation of a new near-real-time payments infrastructure to address targeted use cases, leveraging legacy infrastructure for settlement.
- Finally, option four would see a new near-real-time payments infrastructure built that would also process transaction types handled by legacy ACH and check platforms and potentially wire platforms as well.
The Fed will now set up a faster payments task force to further investigate the core infrastructure, security and operational changes each approach would require, as well as the estimated cost and time to implement them.
Esther George, president, Federal Reserve Bank of Kansas City and executive sponsor for the initiative, says: "This plan reflects the contributions and commitment of thousands of payment system participants who shared their expertise and perspectives during the past 18 months. Consequently, we believe the strategies and tactics in the plan have broad support and strong prospects for success."
The paper also calls for the creation of a taskforce on reducing payment fraud and advancing the safety, security and resiliency of the payment system. Additionally, the Fed is promising to pursue efforts to enhance payment system efficiency through work on standards, directories and business-to-business payment improvements.
Read Strategies for Improving the US Payments System:
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