Two Years, Five Strategies, Continuous Progress: Strategies for Improving the U.S. Payment System Turns Two

As we enter into 2017, it’s hard to believe that it has only been two years since we published Strategies for Improving the U.S. Payment System, our multi-year plan that focuses on end-to-end improvement of the speed, efficiency and security of our country’s payment system. To commemorate another year of substantive industry progress and momentum across the payments industry, the Federal Reserve released a Strategies for Improving the U.S. Payment System – January 2017 Progress Report, which highlights accomplishments as well as plans for 2017.

“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 and efforts to enhance payment system efficiency through work on standards, directories and business-to-business payment improvements.

Faster Payments Task Force accomplishments include:

  • 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.

Secure Payments Task Force accomplishments include:

  • 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.

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.

For a full summary of our 2016 accomplishments and insight on what’s to come in the year ahead, we invite you to read our Strategies for Improving the U.S. Payment System – January 2017 Progress Report.

Engage for Change

To receive communications and invitations to provide input on these initiatives, join the FedPayments Improvement Community. You can also follow us on Twitter to stay up-to-date on the latest events and developments.

Federal Reserve Payments Study Highlights Strong Trends in Card Use

From 2012 to 2015, credit and debit (including prepaid and non-prepaid) card payments continued to gain ground in the payments landscape, accounting for more than two-thirds of all core noncash payments in the United States, according to a Federal Reserve study of U.S. non-cash payments released December 22, 2016. Automated clearinghouse (ACH) payments grew modestly over the same period, and check payments declined at a slower rate than in the past.

The 2016 Federal Reserve Payments Study, which presents 2015 payments data, found that the number of domestic core non-cash payments totaled an estimated 144 billion – up 5.3 percent annually from 2012. The total value of these transactions increased 3.4 percent over the same period to nearly $178 trillion.

For more information, including additional key findings, review the initial data release report. Additional detailed information will be released in 2017 as the results of further analysis become final.

The Coalition Expands its Mission

It has now been five years since the Remittance Coalition was formed and since its founding, the Coalition has experienced tremendous growth and evolution (and they’re not done yet!). As part of its anniversary, the Remittance Coalition will henceforth be known as the Business Payments Coalition. Along with its new name, the Business Payments Coalition has also broadened their mission statement beyond remittance to encompass overall payments efficiency.

“Since it was formed as the Remittance Coalition five years ago, the Business Payments Coalition has evolved into a nationally respected organization that champions B2B payments efficiency and security. It is a true model of industry collaboration, with hundreds of active and effective volunteers from a wide variety of organizations including businesses of all sizes and types, banks, standards development organizations, consultants, software and technology vendors, and many others. By creating and publishing standards and technical reports, identifying ‘best practice’ business processes and promoting their use, educating about payment and remittance standards, and advocating ways to overcome barriers to straight-through processing, the Coalition has made real progress in achieving its goal of improving the efficiency of B2B payments across the end-to-end process.”

Claudia Swendseid
Senior Vice President
Federal Reserve Bank of Minneapolis
Founding Member, Business Payments Coalition (formerly the Remittance Coalition)

You can expect to see more progress from the Business Payments Coalition as work groups drawn from over 550 Coalition members continue to work toward increasing the efficiency of B2B payments by all types and sizes of U.S. businesses.

Join the Business Payments Coalition

Participation in the Coalition is free and open to any individual or organization interested in the Coalition’s objectives. Register now! You will receive a welcome packet, be added to the Coalition distribution list and be invited to participate in specific Coalition initiatives that may interest you.

Want to Learn More?

Review the Frequently Asked Questions (FAQs) or send an email to business.payments.smb@mpls.frb.org.

Can the United States Develop a Standard, Ubiquitous Business to Business (B2B) Electronic Invoice & Processing Platform?

Explore the possibility by reading the U.S. Adoption of Electronic Invoicing: Challenges and Opportunities paper release by the Payment, Standards and Outreach Group of the Federal Reserve Bank of Minneapolis.

In keeping with the desired outcome of end-to-end efficiency detailed in the Strategies for Improving the U.S. Payment System paper, the main goal of  U.S. Adoption of Electronic Invoicing: Challenges and Opportunities  is to consider the development and implementation of a standard, ubiquitous B2B electronic invoice and processing platform in the U.S. similar to those that have been developed in other countries. The paper also highlights:

  • Opportunities for businesses to:
    • Gain efficiencies and reduce costs by more broadly adopting e-invoicing
    • Expand into other areas of the financial supply chain
    • Reduce payment risk and late fees
  • Societal benefits from a reduction in paper invoices
  • Challenges stemming from a lack of:
    • Information technology resources to implement change
    • A compelling individual business case among smaller businesses
    • Common, unified standards or translation software to facilitate change
    • Industry-led coordination, collaboration and leadership to develop a strategy for change

Download the full version of U.S. Adoption of Electronic Invoicing: Challenges and Opportunities paper today!

A Great Resource Just got Even Better: Check out the Newly Updated Small Business Payments Toolkit

In April 2015, the Remittance Coalition released the Small Business Payments Toolkit and now, we are pleased to announce the release of the second volume. Volume 2 is chock-full of new information to further encourage the adoption of electronic business-to-business payments and remittance information exchanges by small businesses. Financial institutions, consultants, small businesses and anyone else interested in learning more about payments should download this free resource now.

Overview of New Updates

  • Working with your Banker now has information on getting started with ACH origination, ACH returns and notifications of change and a sample trading partner agreement to start receiving ACH payments
  • Fraud Prevention and Mitigation Tips now speaks to bank services that could help a small business combat payments fraud
  • Resources has been updated to provide helpful information on ACH checklists and forms, bank holidays, regional payments associations, health care information and links to previously recorded education webinars on the toolkit
  • New sections were added to address EMV and chip cards, alternative payments and business continuity planning

Don’t miss out on these valuable new updates! Download the Small Business Payments Toolkit, Volume 2 today!

Register for a Webinar to Learn About the Benefits of ISO® 20022 Adoption for the Major U.S. Wire Transfer Systems

The Federal Reserve Banks have been collaborating with several other organizations known as the Stakeholder Group to prepare for the adoption of the ISO® 20022 standard for domestic and international wire payments.

ISO 20022 is a robust financial messaging standard that supports the end-to-end flow of payment information from the originator to the beneficiary. Some of the great benefits of ISO 20022 payment messages include, but are not limited to:

  • Support for rich payment data
  • Discrete fields to carry specific data elements (e.g., longer name fields, address information and structured remittance information)
  • Improved straight-through processing and compliance screening due to additional payment data
  • Facilitation of both cross-border interoperability and domestic interoperability between U.S. wire transfer systems and the SWIFT® messaging network

Register for the event offered on May 17 by visiting the Fed Events page. Check out the Fed’s Resource Center for Adoption of ISO® 20022 for Wire Transfers and ACH Payments for more details on the strides made toward adoption of the standard.

Register Now

Find out How Industry Collaboration Leads to Progress in our Latest Webinars

We are hosting two webinars that discuss how industry collaboration over the last year has led to substantial progress on the initiatives outlined in Strategies for Improving the U.S. Payment System. The first webinar will give you an overview of the industry progress made over the past year, while the second webinar gives an in-depth look at the Faster Payments Effectiveness Criteria developed by the Faster Payments Task Force.

Webinar 1 – Progress Report: In Pursuit of a Better Payment System

Date/time: March 21, 1:00 p.m. – 2:00 p.m. ET or April 7, 11:00 a.m. – Noon ET
Topics discussed:

Webinar 2 – Faster Payments Effectiveness Criteria: What’s Next?

Date/time: March 23, 3:00 p.m. – 4:00 p.m. ET or March 30, Noon – 1:00 p.m. ET
Topics discussed:

Find more details on these events and other education offerings, including how the Federal Reserve is making strides to adopt ISO 20022 in the U.S. for wire transfer systems as well as previous event summaries and recordings, by visiting Fed Events. Ready to join us? Register now for the Progress Report: In Pursuit of a Better Payment System and/or Faster Payments Effectiveness Criteria-What’s Next? webinar(s).

A Year of Progress: Celebrating the Anniversary of Strategies for Improving the U.S Payment System

Last week, we celebrated the first anniversary of Strategies for Improving the U.S. Payment System, a multi-faceted plan to enhance the speed, safety, and efficiency of the U.S. payment system. Over the past year, we have seen the strategies and tactics included in the plan come to life through broad, unprecedented stakeholder collaboration. Of note, two stakeholder task forces, one focused on faster payments and the other focused on payment security, were formed with representation from all payments system stakeholders – a major milestone in the payments improvement initiative.

The Faster Payments Task Force, established to identify effective approaches for implementing safe, ubiquitous, faster payment capabilities, made progress towards this goal through the development and approval of the Faster Payments Effectiveness Criteria. Released today, these criteria describe stakeholder aspirations for a future faster payments system and provide guidance to the payments marketplace for developing and assessing faster payment solutions.

To support the strategy of reducing payment fraud and advancing the safety, security and resiliency of the payment system, we established the Secure Payments Task Force. This Task Force has identified payments security issues for action, including payment identity management, data protection, law and regulatory coordination, and information-sharing to reduce payment risk and fraud. In addition, the Secure Payments Task Force contributed to development of the security-related Faster Payments Effectiveness Criteria.

Efforts to enhance payment system efficiency through work on standards, directories, and business-to-business payments improvements have also been realized through collaboration. In joint efforts with industry stakeholders, we announced a high-level plan to implement ISO 20022 for U.S. wire transfer systems, designed a technical proof of concept for a business-to-business directory, and advanced plans to implement ubiquitous same-day ACH.

Read our February 2016 Progress Report and hear more about the Federal Reserve’s vision for the future U.S. payment system in video interviews with Esther George, President and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the payments improvement initiative, and Jerome Powell, Federal Reserve Board Governor and co-chair of the initiative’s oversight committee.

It’s not too late to join our payments improvement efforts. Engage today to learn how you can add your voice to designing a faster, safer, more efficient payment system.

Site Navigation Update—Access to Information You Need to Stay Engaged

You may notice some changes to our site navigation today. We made updates to better align information you need to stay engaged with our progress toward the five desired outcomes outlined in the Strategies for Improving the U.S. Payment System paper.

Our navigation now includes sections around Faster Payments, Payments Security and Payments Efficiency. This new navigation allows us to group content previously under “Get Involved” into these new sections:

  • Faster Payments highlights work of the Faster Payments Task Force and will include other faster payment initiatives going forward
  • Payments Security highlights work of the Secure Payments Task Force and will include other payment security initiatives going forward
  • Payments Efficiency highlights the Remittance Coalition, B2B Payments Standards and Education and the Fed’s Resource Center for the Adoption of ISO® 20022 for wire transfers and ACH payments
  • Engage highlights way for you to get involved by joining the Fed Payments Community to stay up to date on efforts or to join one of the task forces

Take a look at the site map to learn more about our new site navigation. If you have any questions or comments, please contact us.