Federal Reserve’s Faster Payments Task Force Publishes Final Report

The Faster Payments Task Force is a group of payment industry stakeholders with representatives from across the payment ecosystem. The group involved over three hundred different stakeholders. The Federal Reserve assembled the task force to help identify and evaluate alternative approaches to implementing safe and faster payments capabilities in the United States.  The Faster Payments Task Force was first convened by the Fed in May of 2015.

Today the Task Force is out with their Final report. Separated into part 1 and part 2, these documents are embedded below.

The Task Force has outlined a series of ten recommendations summarized below:

  • Recommendation 1 – Establish a faster payments governance framework: A voluntary, industry-led framework for collaboration and decision making is needed to execute on many of the task force recommendations and to achieve ubiquitous receipt
  • Recommendation 2 – Recommend and establish faster payments rules, standards, and baseline requirements that support broad adoption; safety, integrity, and trust; and interoperability: Establishment and enforcement of cross-solution rules and standards will aid in achieving the core ecosystem goals of broad adoption; safety, integrity, and trust; and interoperability.
  • Recommendation 3 – Assess the payments regulatory landscape and recommend changes to the regulatory framework: The task force asks the Federal Reserve to initiate an effort with relevant regulators to evaluate current laws and regulations to ensure that they are suited to the unique characteristics of faster payments.
  • Recommendation 4 – Establish an inclusive directory work group to identify and recommend a directory design for solutions to interoperate in the faster payments system: Developing a design for directory services is important for achieving the core ecosystem goal of interoperability.
  • Recommendation 5 – Enhance Federal Reserve settlement mechanisms to support the faster payments system: The task force asks the Federal Reserve to determine the optimal design of and implement a 24x7x365 settlement service to support the needs of the faster payments system.
  • Recommendation 6 – Explore and assess the need for Federal Reserve operational role(s) in faster payments: As faster payments are implemented in the market, the task force asks the Federal Reserve to explore and assess the need for an operational role(s) in the faster payments system to support ubiquity, competition, and equitable access to faster payments in the United States.
  • Recommendation 7 – Recommend, develop, and implement methods for fraud detection, reporting, and information sharing in faster payments: Timely detection of fraud is important to building integrity and trust among end users in faster payments.
  • Recommendation 8 – Develop cross-solution education and advocacy programs aimed at awareness and adoption: Education and advocacy programs for both end users and service providers are an important part of achieving the core ecosystem goal of broad adoption.
  • Recommendation 9 – Conduct research and analysis to address gaps in cross-border functionality and interoperability: Research and analysis should be undertaken to advance understanding of the requirements for cross-border interoperability with various jurisdictions, and develop recommendations to enable interoperability between faster payments solutions in the United States and faster payments solutions in other country jurisdictions.
  • Recommendation 10 – Continue research and analysis on emerging technologies: New technologies have the potential to change the payment landscape. As such, it is important to deepen understanding of the risks they may pose, as well as the potential they might offer, particularly with regard to enhancing security and/or meeting largely unmet needs in cross-border transactions and among underserved end users.

The Task Force hopes their recommendations lead to a payment system in the United States that is fast, ubiquitous, broadly inclusive, secure, and efficient by 2020. As many people know, payment transfers have been slow to improve at the traditional finance level but a new generating of payment providers have emerged to provide instantaneous transfers anywhere and anytime. Traditional payment methods such as wire transfers, Automated Clearing House (ACH), cards, checks, and cash are quickly being usurped by platforms like Venmo or Blockchain based transfer services. So is this too little, too late?

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