The US Federal Reserve has to be ‘nice’ to ‘everyone’ and accept that there will be multiple solutions to Faster Payments in the USA, even though they clearly don’t agree with this approach. The Fed’s problem is summed up by the fact that there were 300 members in the task force made up of “a broad and inclusive group of stakeholders with representatives from organizations across the payments community, including financial institutions, nonbank payment providers, businesses (merchants and corporates), consumer groups, federal and state government agencies, regulators, standards bodies, industry trade organizations, consultants, and academics.” The Fed could only act as a catalyst by convening “these payments stakeholders to work collaboratively to identify and assess alternative approaches to implementing safe, ubiquitous, faster payments capabilities in the United States.”

Faster Payments challenges

The report identifies significant challenges to “The faster payments system envisioned by the task force (which) requires broad adoption by service providers and end users.” However, several faster payments solutions are already in the marketplace and more are expected. The report identifies various problems with the multiple solution approach:

• service providers and end users will see little or no value if required to invest in or use multiple solutions to reach a large number of other end users
• the need to broaden the reach of all solutions by enabling faster payments transactions to cross between them
• technical and business process issues cannot allowed to inhibit this interoperability
• solutions may have different rules, policies, and functionality resulting in variations and ambiguity in the end-user experience
• security: When multiple solution operators pass payments and share information, a security weakness in any one solution makes the system as a whole more vulnerable.

Other countries approach and USA task force belief

Globally, “other countries have addressed these challenges through mandates and/or the development of a national faster payments system with a single operator. Unlike the USA who are taking a market-driven approach to payment system innovation that avoids government mandates.” Although this approach relies upon multiple solution operators and other stakeholders voluntarily collaborating to address these challenges, the taskforce believes that:

• “While broad collaboration can be difficult to achieve given competing interests of solution operators, service providers and end users, the task force believes its efforts demonstrate that such pro-competitive, voluntary collaboration is possible and can serve as the foundation for the work that lies ahead.”

The Path Forward

To maintain this momentum, the task force recommends ongoing collaboration to develop a faster payments system in the United States that fulfills its vision, with work beginning in three key areas:

• Governance and Regulation
• Infrastructure
• Sustainability and Evolution.

Call to action

The taskforce asks “you to support this effort by:

• Embracing and promoting the vision and the Effectiveness Criteria;
• Actively participating in the ongoing dialogue;
• Contributing to work group efforts and deliverables;
• Taking steps to make your own organization faster payments ready by 2020;
• To join in the next phase of this ground-breaking work, visit FasterPaymentsTaskForce.org.”

The scale of the problem

The report contains details of EIGHT Faster Payments solutions from Dwolla; Hub Culture, Eccho, Xalgorithms; Intercomputer Corporation; Kalypton Group Limited And Eccho; Mobile Money Corp; Nonopay; North American Banking Company And Independent Community Bankers Of America; and Ripple. This list just sums up the size and scale the problem the taskforce have set themselves.

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CTMfile take: The scale and depth of the problem of integrating all these Faster Payments solutions and making them work together feels just like PSD2. Very difficult, if not impossible……..