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Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Andrea, it’s very good to be speaking with you, particularly regarding one of my favorite topics: faster payments. In particular, on this podcast we want to discuss the recent announcement regarding the formation of the U.S. Faster Payments Council, or FPC. If we could start off.

Could you please explain for us the role of the U.S. Faster Payments Council and why it’s needed?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

Sure. And by the way, we’re really happy to be talking to you about this today as well. So the goal of the Faster Payments Council is to facilitate a ubiquitous and world-class payment system where we as Americans can safely and securely pay anyone anywhere and at any time with immediate funds availability. So the role of the Faster Payments Council is to focus on private sector approaches to achieving that reality. Importantly, the Faster Payments Council will focus on collaborative problem solving just as was done in the governance framework formation team and the Faster Payments Task Force before that. On this idea of inclusiveness and collaboration, the idea is to have representation from a number of different segments across the payments ecosystem including business end users, consumer groups, financial institutions, both large and small, payment networks, and technology providers. And so we’ll be really focused on dialoguing to meet the needs of all these various constituents.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

That’s interesting. When you think about any brand new payments technology, of course there are a lot of issues that need to be worked out, particularly as it’s being formulated or being rolled out. I heard you mention one of the topics that you’ll cover is how do we reach ubiquity in the U.S. for faster payments.

Beyond ubiquity what are some of the other FPC top priorities that you’ll be covering?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

As we look to modernize the U.S. payments ecosystem, which of course is a rather complicated ecosystem, there’s bound to be a number of different issues and opportunities that will be worked out together. The priorities are things that will drive both a safe and ubiquitous system. So what we’ve done is there’s a number of work streams that are being kicked off that we believe at the Faster Payments Council that we need to tackle efficiently and effectively. They include things such as supporting the adoption of practices that support safety and security as well as things that support education and awareness so that there’s a better understanding of what faster payments is, how it works, and even what the FPC is. Then there’s also a number of initiatives underway that will focus on operational areas — things like how do we support a directory model that works for faster payments in the U.S.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Interesting. The directory problem can be pretty tricky to solve, I know, but I think there are some good activities and some good studies coming out in the marketplace. But another question I had for you, or I guess a few questions.

Who founded the FPC, and is this going to just pick up where the Faster Payments Task Force left off?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

I think that’s a great way to think about it. The Faster Payments Council will essentially pick up where the Task Force left off. And I think, importantly, many of the tenets and findings of the task force will continue to serve as the touchstone for all the work going forward. So the way it unfolded is in 2017 one of the top recommendations of the Task Force was to form this Governance Framework Formation Team, also known as GFFT, to develop and implement a governance framework that was inclusive of all the stakeholders. So the Faster Payments Council was founded by the 27 members of the GFFT working in close partnership with the Fed. What you’ll see is also through that work, what the GFFT did is that we discussed the elements, the bylaws, the operating vision, and we put forth some of that information to the public for comment in the summer and then took that feedback and reflected that in what is available today on our website.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Very good. You also mentioned that for the FPC you’re looking for participants from a variety of payment disciplines.

Who do you think should join this particular group? And also can you tell us how interested parties can join if they would like to participate?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

Sure. And you’re absolutely right – one of the very critical goals of the FPC is inclusiveness. So members of business and users, payment network operators, financial institutions, consumer end users, technology providers, they’re all encouraged to join because we think that will drive a lot of value for all these various individuals and businesses to come together and talk about what they need to have achieved in this newer payment system. And so the best way to join is simply to go to https://fasterpaymentscouncil.org/ where there’s a lot of additional information as well as the ability to apply for membership.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Next, if you could talk a little bit about how the Council’s governance is going to be determined?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

Sure, the voting membership is going to be electing a board of directors, which of course is going to be accountable to the members for setting strategic direction as well as making sure that that work is consistent with the principles of the Faster Payments Council. That board will also be responsible for ensuring that the views of the various segments are represented and so forth. This information is also available on the website. The board will be comprised of up to 21 members representing the different membership segments. So that was a big focus — to make sure there was, again, diverse and inclusive membership across the segments, not just in the membership, but also in the board.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

You represent Mastercard, and I understand that Mastercard is one of the founding members. And of course Mastercard is much more than just a card network, but I think your role in this faster payments organization is interesting.

Do you see faster payments competing with card payments in any way? Or really how do you see these two payment types coexisting?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

We still are looking after the payments and think there’s a lot of opportunity for payments that are made today on cash and check, and that’s really where we are focused. I think that everybody agrees that there is a need to electronify those payments. I think it’s also important to think about how we define faster payments, which I think everybody understands that they tend to offer more speed and continuous service, but the important thing to note here too is that faster payments can run on different rails. It depends which rail they run on based on consumer or customer end needs. So for instance at Mastercard we have faster payment products today that run on the debit rail, and those services are largely thought of as Mastercard Send. But we’ve also announced products and services that will run on the Clearing House rail. So again, it really depends on the use case and what is needed in that particular instance. At Mastercard, we’ve seen a lot of success and growth in products that have been running on the debit rails, and these are Mastercard Send products that solve pain points and needs in the insurance industry, and humanitarian aid, and the gig and healthcare industries. So that’s been really an important set of products and initiatives for us. But there is also still a number of use cases where check is a predominant form factor. And we think that new use cases and applications that also run on the Clearing House rails will be really important. I thinking about things like bank bill pay that we just announced very recently as well as opportunities for new applications in the business payment space where again still a lot of payments are being made today via check.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

It really is outstanding, not only the numbers but also the trillions of dollars that are still running rather inefficiently on checks. So that will be certainly something that the payments industry is looking forward to finding the right solution.

But how would you suggest that listeners find out more about FPC?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

We would love for your listeners to find more about the Faster Payments Council, and there’s a lot of information as well as a membership form at https://fasterpaymentscouncil.org/.

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Is there anything else on this topic you want to make sure that we take away?

Andrea Gilman, SVP, New Payments and Commercial Products at Mastercard

Yes, thanks for asking that. I would I would say that at Mastercard we have a long history of industry collaboration and that both Mastercard and the Faster Payments Council value diverse customers and perspectives. And so we really want to hear what it is that our customers – and we think here both of consumers and corporates as well as FIs — want and need as we evolve payments modernization initiatives.

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