The Federal Reserve has been working aggressively to upgrade the U.S. payments system, and will release its roadmap this fall, Bank Innovation has learned.
Bank Innovation reported last week that a recently-published summary of a Federal Reserve Financial Services (FRFS) payments roundtable determined that the best method of changing the U.S. payments system would be to start from the ground up.
The summary from the roundtable showed that the Federal Reserve and attendants covered a plethora of topics — including potential use cases for customers and businesses, analyzing payment initiatives in other nations, coming up with options to revamp the U.S. payment system and the benefits and disadvantage of these systems.
Sean Rodriguez, senior vice president of payments industry relations on behalf of the Federal Reserve, confirmed to Bank Innovation that the payments system roadmap — which will outline “payment system improvement initiatives that advance the speed, efficiency and security of payments” — will be released later this fall.
“As you can see on the [FRFS] website so far, there’s a lot available — a faster payments assessment, an international payments summary, and more,” Rodriguez said. “All of those are pieces and parts of what will be in the roadmap. Over the latter part of June, we hosted six town hall sessions that had 300 or so participants. We laid out the contents and the public provided input, which gave us the opportunity to tweak or adjust things.” In addition, Rodriguez indicated that project maps called workstreams will likely determine what organizations, companies, and the government need to actually do in order to get the new payments system off the ground.
Rodriguez added that the roadmap will “incorporate desired outcomes” and there “won’t be any big surprises.”
When asked about when how long it would take for the U.S. to implement a new payment system, Rodriguez admitted he was “trying to be a little bit evasive, because it all depends on what we do and who’s going to do it.”
Rodrigues pointed out that the consultation paper that was published last year gave a 10-year horizon for faster payments. “I don’t think it will take 10 years,” he said, “but for more definition on exactly what we’re going to do… we’ll have a better sense of that in a year.”
Rodriguez explained that the Federal Reserve Financial Services has not just been trying to identify faster payments capabilities, but is also studying “international payments, security issues in payments space, overall efficiencies, upgrading current payment rails.”
“We try to collectively identify issues with industry,” Rodriguez said.
“The roundtable event was to discuss the results of our research effort,” he said. “We retained a consultant through a five-month engagement period to help identify potential options deploying faster payment options. There was lots of back and forth with institution stakeholders, technology providers, corporations, payment providers, and non-bank solutions.”
The “back and forth” seems to have paid off. Rodriguez said, “Based on the dialogue from the past 16, 18, months, it’s been encouraging that the industry is saying ‘yes, let’s do this. It’s not going to be easy, but so far so good. We’re really gathering momentum, with industry stakeholders in U.S. feeling like this is the right direction. Now, we have to focus on how we do this, which should mean lot of collaboration.”