The “Strategies for Improving the U.S. Payment System” white paper is the result of 18 months of research and consultation. The Fed aims to prompt businesses, payments firms, card networks, payment processors, consumer and financial institutions to work together to enhance the speed, safety and efficiency of the payments system. 

The paper has outlines the strategies and tactics it intends to pursue, in collaboration with industry stakeholders, including:

1. establish and lead a faster payments task force 
2. establish and lead a payment security task force
3. work to reduce fraud risk and advance the safety, security and resiliency of the payment system
4. achieve greater end-to-end efficiency for domestic and cross-border payments including implement ISO 20022 standard to US payment transactions, acceleration of B2B, P2B, and P2P payments
5. enhance Federal Reserve Bank payments, settlement and risk-management services.

Payment systems revolution

The extent of the revolution that The Fed are considering is shown by the possible design options they are considering to deliver the different types of faster payment that are needed:

• use the existing real-time ATM and PIN debit infrastructure
• allow direct clearing between financial institutions on existing public networks using common protocols
• build new real-time systems for some payments and then use the legacy infrastructure for settlement
• develop new real-time systems that compliment the existing ACH and cheque clearings.

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CTMfile take: This will all take time, e.g. the first Consultation paper was published in 2013, but there does seem to be a real momentum developing with the full support of the AFP and NACHA. The approach of splitting faster payments into the basic types, and not making them inter-dependent solutions, is vital. We may see some form of faster payments in the US well before 2020.