Greetings from the FedPayments Improvement Community Forum. This gathering of 400’ish financial institutions, service providers, Fed personnel and analysts is taking a look back at the evolution of faster payments thus far in the U.S., what is in front of the industry to tackle now, and what are some of the future opportunities and challenges to consider. Topics have been discussed around security and faster payments, the role that directories will play, cross-border real-time payments, how faster payments will be governed, the regulatory implications of faster payments and many, many other related subjects.
Importantly, there has also been a request made by the Fed for public comment on a proposal that the Fed facilitate the settlement of real-time transactions between financial institutions. Here’s the take on this topic from American Banker:
The Federal Reserve is seeking public input as it wrestles with the question of how forcefully it should push to build a faster payment system that links all 11,000-plus U.S. banks and credit unions.
The central bank on Wednesday released a 47-page notice seeking comment on its own role in a future world of round-the-clock, immediate payments. The question is a delicate one for the Fed, in part because big banks and small institutions hold conflicting views, and because it also wants to avoid been seen as usurping authority from the private sector.
The move comes at a time when the Fed is facing pressure to make decisions regarding faster payments. Real-time capabilities have long been in place in the U.K., Sweden and a host of other countries. In the U.S., payment apps like Venmo provide real-time notifications to users, but they do not provide all the benefits of a nationwide real-time system that connects every bank.
From conversations I have had, there is a clear desire on the part of smaller institutions to have the support of the Fed to provide settlement and related faster payment services least they get left behind as the large institutions make the resource commitments to move forward with faster payment and real-time payment plans.
You can read a copy of the Fed’s Request for Comment here.