Who We Are

Working Toward a Better Payments System

Collaborate. Engage. Transform.

We built this site as a resource for anyone interested in payments improvement to find a variety of news, useful resources, insights and industry trends. Importantly, the content you will find here is informed by engaged stakeholders from across the payments ecosystem. In bringing you this information, our goal is to build a robust and highly engaged FedPayments Improvement Community, where members are empowered to collaborate, engage and transform the U.S. payment system.

Our Role in Payments

100+ years of payments history

A payment system that is safe, efficient and broadly accessible is vital to the U.S. economy. As the central bank, the Federal Reserve has a vested interest in maintaining a strong, resilient and well-functioning payment system, and it performs various roles to serve that interest, including payment system service provider, leader/catalyst, regulator and supervisor. FedPayments Improvement efforts focus on the Fed’s roles of service provider and leader/catalyst.

Providing Financial Services

As a provider of financial services, the Reserve Banks store currency and coin, and process both checks and electronic payments through Fedwire® Funds Service wire transfers and Automated Clearing House (ACH) electronic credit and debit transfers. As part of payment processing, the Federal Reserve provides mechanisms for the settlement of payment transfers between financial institutions – the actual movement of funds from one account to another.

Galvanizing the Industry

The Fed is a thought leader and a catalyst for collaboration across the payments industry. In 2013, we launched a payments modernization effort with industry stakeholders and conducted extensive research on end-user preferences and needs for payments capabilities related to end-to-end speed, safety and efficiency of payments. Three foundational papers emerged from that work that helped demonstrate our understanding of where the needs are, and outline the strategies and tactics that we believe are necessary to address those needs.

  1. Payment System Improvement – Consultation Paper (PDF) Published in September 2013, this initial paper shares the Fed’s perspectives on the key gaps and opportunities in the current U.S. payment system. As a public consultation paper, it also sought to solicit broad industry input on the perspectives the Fed shared within the paper, potential strategies and tactics for shaping the future of the U.S. payment system, and what the Fed’s role in implementing these strategies and tactics might be.
  2. Strategies for Improving the U.S. Payment System (PDF) This next paper was published in January 2015 in response to the industry input collected following the publication of the Consultation Paper. It outlines desired outcomes for the payment system and multi-year strategies that the Fed will work with industry stakeholders to pursue, both as a leader catalyst and a payment systems service provider, to help achieve these outcomes.
  3. Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey (PDF) The final paper, published in September 2017, reflects the Fed’s plans for near-term collaboration with the industry to move closer to achieving the desired outcomes articulated in the January 2015 Strategies paper. It puts forth a series of refreshed strategies and describes nine new tactics the Fed will employ, in collaboration with industry stakeholders, to make further progress.

Specifically, the needs, or desired outcomes, are:

  • Speed: A ubiquitous, safe, faster electronic solution(s) for making a variety of business and personal payments, supported by a flexible and cost-effective means for payment clearing and settlement so that groups can quickly settle their positions
  • Security: Strong U.S. payment system security, high public confidence, and protections and incident response that keeps pace with the rapidly evolving and expanding threat environment
  • Efficiency: A greater proportion of payments originated and received electronically to reduce the average end-to-end (societal) costs of payment transactions and enable innovative payment services that deliver improved value to consumers and businesses
  • International: Better choices for U.S. consumers and businesses to send and receive convenient, cost-effective and timely cross-border payments
  • Collaboration: Necessary payment system improvements are collectively identified and embraced by an array of payment participants, with material progress in implementing them

These desired outcomes subsequently resulted in five payment improvement strategies: faster payments, payments security, payments efficiency, international payments and collaboration. Read more about them on the What We Do page.

Historical Role in Payments

The Fed has a 100+ year history supporting the nation’s payment system, working in various roles and capacities to bring about policy and technological advances, such as:

Want to know more about the Community?

Check out the great things we do in the Community including videos on some of our accomplishments.

1913

Federal Reserve Act

Federal Reserve Act

The Federal Reserve Act created the current Federal Reserve System and established the national check clearing system at the Federal Reserve, which mitigated financial crises, delays and prohibitively high interbank check-clearing costs.

1918

Wire Established

Wire Established

In the early 1900s, settlement of interbank payment obligations often involved physical delivery of cash or gold until the Fed established a more efficient, dedicated and secure funds transfer network via Morse code. This network later became the electronic Fedwire interbank funds transfer system for wholesale payments.

1970s

ACH Developed

ACH Developed

The Fed supported development of the Automated Clearing House Network (ACH) system in 1972 and began managing a national network of linked local ACH networks in 1978. Enhancements have included introduction of the FedACH® SameDay Service in 2010 (Off-site).

1980

Monetary Control Act

Monetary Control Act

Congress reaffirmed and expanded the Federal Reserve’s role as a service provider with the enactment of the Depository Institutions Deregulation and Monetary Control Act of 1980. This gave all depository institutions access to the same pricing for the Fed’s payment services and required the Fed to price specific types of services to fully recover the costs of providing these services.

2003

Check Clearing for the 21st Century Act

Check Clearing for the 21st Century Act

The Check Clearing for the 21st Century Act is a Federal law designed to enable banks to handle more checks electronically, with the goal of making check processing faster and more efficient. The Fed supported the nation’s transition to what is now an essentially all- check-processing environment.

2013

Payment System Improvement – Public Consultation Paper

Payment System Improvement – Public Consultation Paper

In 2013, the Fed published a paper containing its perspectives on the key gaps and opportunities in the current U.S. payment system. As a public consultation paper, the piece sought to solicit broad industry input on these perspectives, potential strategies and tactics for shaping the future of the U.S. payment system, and what the Fed’s role in implementing these strategies and tactics might be.

2015

Strategies for Improving the U.S. Payment System

Strategies for Improving the U.S. Payment System

In 2015, the Fed published Strategies for Improving the U.S. Payment System (PDF) in response to the industry input collected following the publication of the Payment System Improvement – Consultation Paper (PDF). It outlines desired outcomes for the payment system and multi-year strategies that the Fed will work with industry stakeholders to pursue, both as a leader catalyst and a payment systems service provider, to help achieve these outcomes.

2017

Next Steps Paper

Next Steps Paper

In 2017, the Fed published Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey (PDF) – a series of refreshed strategies and nine new tactics the Fed will employ, in collaboration with industry stakeholders, to make further progress on the desired outcomes articulated in the January 2015 Strategies paper.

2019

The Next Chapter

FedNow Service - The future of faster payments

On August 5, 2019, the Board of Governors of the Federal Reserve System announced that the Federal Reserve Banks will build and operate the FedNowSM Service, a new interbank 24x7x365 real-time gross settlement (RTGS) service with integrated clearing functionality to support faster payments in the United States.