Federal Reserve issues progress report on efforts to improve the U.S. payment system
The progress report highlights collaborative efforts in support of five strategies outlined in the January 2015 publication of Strategies for Improving the U.S. Payment System. These strategies are being pursued by the Federal Reserve in conjunction with various private sector businesses, financial services providers, financial institutions, consumer groups and government agencies.
"The Fed's priority is to advance improvements that are in the public interest so that consumers and businesses alike have access to efficient, real-time and highly secure payments in the United States," said Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City, who is leading the payment system improvement initiatives on behalf of the Federal Reserve "Through a number of collaborative efforts, the industry is making real progress on all fronts and we're expecting to achieve a number of significant milestones in 2017."
The progress report details the work-to-date of two payments industry task forces created as part of the effort--one devoted to faster payments and the other to a more secure payment system.
Among its accomplishments, the Faster Payments Task Force:
- Fielded and commissioned an independent assessment of 22 faster payments solution proposals against the Faster Payments Effectiveness Criteria released in February 2016, 19 of which voluntarily progressed through a review by the 500+ participants of the two task forces.
- Analyzed potential challenges to successful faster payments implementation, focusing on provider interoperability, rules and standards, governance, adoption, safety and security.
- Today, published part one of a two-part final report that provides a high-level overview of the task force's background and processes, the payments landscape, and the benefits of faster payments.
The Faster Payments Task Force is working to complete its assessment of solution proposals and to develop recommendations and next steps for implementing safe, ubiquitous, faster payments in the United States, which it plans to publish in mid-2017, in the second part of its final report.
In 2016, the Federal Reserve's Secure Payments Task Force:
- Launched work to address the industry's most pressing payment system security issues: identity management, data protection, and fraud and risk information-sharing.
- Mapped existing identity management practices in end-to-end payment flows in order to identify opportunities for improvements.
- Defined the guiding principles for protecting sensitive data associated with payments, serving as a foundation for building a more comprehensive data protection framework for industry participants.
- Inventoried current industry efforts to share information for fraud and risk prevention and mitigation.
In 2017, the Secure Payments Task Force plans to outline ways for the industry to improve payment identity management practices, provide guidance on standardizing definitions of fraud and risk data so it can be easily interpreted and acted upon, and publish a framework for protecting sensitive payment data.
"Protecting payment systems and transactions has become a critical function for central banks, financial institutions and technology providers as sophisticated cyber threats have increased in size and scale throughout the world," said Federal Reserve Board Governor Jerome H. Powell, who co-chairs the initiative's oversight committee.
Other important accomplishments included in the progress report stem from efforts to enhance payment system efficiency through work on standards, directories and business-to-business payment improvements. In addition, joint efforts with industry participants have accelerated plans to implement the financial messaging standard ISO 20022 for U.S. wire transfer systems and widespread same-day ACH (automated clearing house) settlement.