© 2013 Federal Reserve System. Materials are not to be used without consent. Federal Reserve Financial Services Strategic Direction: 2012-2016 Payment

© 2013 Federal Reserve System. Materials are not to be used without consent.

Federal Reserve Financial Services Strategic Direction: 2012-2016

Payment System Improvement – Public Consultation Paper

Ken IsaacsonVice President

Federal Reserve Bank of New York


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Agenda

• Federal Reserve Financial Services (FRFS) Strategic Direction and Areas of Focus

• Payment System Improvement – Public Consultation Paper– Gaps and Opportunities– Desired Outcomes– Response Submission


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FRFS Broadens its Strategic Focus toward End-to-End

• Maintain and enhance FRB network security• Enhance understanding of end-to-end security• Collaborate and promote industry best practices

Safety and Security

• Develop solutions to enhance payment speed• Understand market demand for faster payments• Continue migration of paper to electronic

Speed

• Develop solutions to promote efficiency• Understand needs and barriers• Promote standards adoption to improve efficiency

Efficiency


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Insight and Collaboration via …

Industry Events and Conferences

Indu

stry

Consumer

Payments Rules and Standards

Groups

Technology Solutions Providers

Financial Institutions

Business

Government

Payments Network Operators

Emerging Payments Providers

One-on-One and Trade Group Meetings

Fed-Sponsored Forums and Communications

Industry Relations Program (IRP)

Engaging diverse stakeholders


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Future Payments Team (FPT)

Payment System Gaps and Opportunities Research

Gathered available secondary research sources that relate to payment attributes

Organized the research into “stories”• Stories explain end user

needs for payment speed and efficiency in different circumstances

Seeking industry feedback on relevance and priority of identified gaps and opportunities


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Executive Management Group (EMG)


• The paper seeks the input of payment system providers and end users on:– Payments system gaps, opportunities– Desired outcomes for the payment system in 10 years– Potential strategies and tactics to shape the future of the U.S.

payments system– The Federal Reserve Banks’ role in implementing these strategies

and tactics

On September 10, the EMG released a Payments System Improvement – Public Consultation Paper for public comment until December 13.


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Payment System Gaps and OpportunitiesContinued End-User Check Writing

Challenges in Converting Businesses to Electronics

Closed Payment Communities

Lack of real-time, end-user information on traditional payment rails

Slowness of U.S. Payments

Mobile Technology Revolution

Obstacles in International Payments

Security Concerns


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Desired OutcomesStrategic Industry Engagement

• Key improvements for the future state of the payment system have been identified and embraced by payment participants with material progress made in implementing them.

Ubiquitous Real-Time Retail Payments• A ubiquitous electronic solution(s) for making retail payments provides confirmation of good funds at

payment initiation and timely sender/receiver payment notification, debits payee funds and makes them available to payees in near real time.

Improved Efficiency • Greater electronification and process improvements have reduced the average end-to-end (societal)

costs of payment transactions and resulted in innovative payment services that deliver improved value to all parties

Improvements in Cross-Border Payments• Consumers/businesses have better choice in making convenient, cost-effective and timely cross-border

payments from and to the United States.

Enhanced Payments Safety and Security• We have collaborated with the industry to promote end-to-end payment system security amid a

rapidly evolving technology and threat environment. Public confidence in FRFS security remains high. ‘Good funds’ means the payer’s account is valid, funds/available credit are sufficient to cover the payment.


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Questions for Comment

For example:• Are you in general agreement with the payment system gaps and

opportunities?• What is the cost, including the opportunity cost, of not implementing

faster payments in the United States? • To what extent would a ubiquitous near-real-time system bring about

pivotal change to mobile payments?• In what ways should the Federal Reserve Banks help improve the payment

system as an operator, leader, and/or catalyst?

The paper poses multiple questions for public consideration and response. Respondents are encouraged to answer as many or as few questions as desired, based on their interest and expertise, and to supplement their responses with any other general perspectives on payment system improvements.


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Share Your Views on the Questions Posed in the Consultation Paper

Respond via online survey at FedPaymentsImprovement.org

Respond via email to [email protected]

Respond until December 13, 2013

Visit FedPaymentsImprovements.org to view the paper and instructions on submitting responses.

Documents

© 2013 Federal Reserve System. Materials are not to be used without consent. Federal Reserve Financial Services Strategic Direction: 2012-2016 Payment