Federal Reserve To Propose Faster Payments In 2017

Announced today [October 4], the Federal Reserve is beginning a review of 19 proposals from two national payment industry taskforces charged with identifying potential faster U.S. payments system.

There are close to 500 members in the two taskforces, one of which focuses on faster payment capabilities while the other is considering how to enhance security in payment systems. The member of the two groups include representatives of financial institutions, consumer groups, payment service providers, fintech firms, businesses, and government agencies.

Before the review of the of the two task forces, McKinsey & Company conducted an independent analysis of the proposals using criteria developed by the task forces, 36 of which were finalized this year.

A two-part report will be produced based on the work by the task forces. The first part is planned for release in January 2017. It will provide the background and history of the task forces, describe the process that the groups followed and detail the current payments industry areas for improvement. This first part of the report will explain how the consumer can benefit from a faster payments system.

Part two of the report should be released in mid-2017. The second part will describe the proposals including a model of a more rapid U.S. payment system and assess the model according to the criteria developed by the two taskforces.

The second part of the report will also highlight important considerations in implementing the faster payments system and will recommend actions to be taken by the industry for fast adoption.

According to The Federal Reserve’s Faster Payments Strategy Leader and chair of the Faster Payments Task Force: “The task force review process is designed to facilitate diverse stakeholder input for the benefit of potential operators of faster payments capabilities, end users of these systems, and the public at large. The goal of this process is to create broad adoption of these capabilities by consumers and businesses over the coming years.”