1. What has the GFFT done and what else will it do?
Consistent with the charge from the Faster Payments Task Force to recommend and establish a faster payments governance framework, over the last eight months the 27 Governance Framework Formation Team members, representing the broad array of payment system stakeholders, have been deliberating on a shared vision and design. Originally, the group was named the Interim Collaboration Work Group, as noted in the final report (Off-site); members renamed the group to something that more closely spoke to the work they were tasked with doing.
Through a consensus-oriented process, the GFFT has worked to incorporate the diverse views and positions of its members and their respective industry segments in drafting an operating vision for the U.S. Faster Payments Council (FPC). The GFFT is seeking stakeholder feedback on its proposal through June 22, 2018. The GFFT is also taking initial steps to establish the FPC; however, no decisions will be made that prejudge the outcome of the stakeholder feedback or potentially constrain the prerogatives of the FPC and its initial elected Board of Directors. Activities that must be planned and executed fall into four areas:
- Complete planning activities. The GFFT has established a bank account to cover start-up expenses, and is focusing on identifying a legal expert to assist with legal filings, including articles of incorporation and tax-exempt status; obtaining directors and officers insurance; developing a budget; drafting bylaws and a membership agreement; and drafting the responsibilities of an interim Board of Directors and an executive director.
- Formally create a not-for-profit association. On behalf of the FPC, several GFFT members will file the legal documentation and serve as the interim Board of Directors in order to begin recruiting members and accepting founding sponsor and founding member dues.
- Support initial functions. The interim Board will provide a business address and phone number, create a web presence to support member recruitment, draft an executive director job description, and transition to an initial, elected Board once there are sufficient members to elect such a Board.
- Complete startup. The initial elected Board will form an executive search committee to finalize the executive director job description and determine a strategy for interviewing and hiring the executive director.
2. Why is a governance framework necessary to aid in the establishment of faster payments?
The task force believed that an industry-led framework for cross-solution collaboration and decision-making is needed to support achievement of the faster payments system goals by 2020. Specifically, a body could facilitate successful pursuit of the task force goal of ubiquitous receipt – where multiple payment service providers are capable of receiving faster payments and of making those funds available to their end-user customers in real time. A coordinated, industry-wide and inclusive body will be more effective in facilitating interoperability, enhancing security, and increasing user awareness than if the parties were to act separately.
3. How was the Governance Framework Formation Team established?
There are 27 members of the GFFT, most elected by the Faster Payments Task Force before its conclusion in July 2017. A few additional members were appointed by the already seated group in late summer 2017. You can find the full roster on FedPaymentsImprovement.org. Industry segments represented include small, medium and large financial institutions, non-bank providers, business and government end users, consumer interest groups and “other,” which can include industry organizations, regulatory agencies, academia, consultants, etc.
4. What is the Federal Reserve’s role in the GFFT?
The Federal Reserve, in response to the Faster Payments Task Force’s request, has been facilitating and supporting the work efforts of the Governance Framework Formation Team. Sean Rodriguez, former chair of the task force, serves as chair of GFFT.
5. What are the GFFT’s objectives? What are some of the key strategies and tactics GFFT will implement in order to achieve these objectives?
The GFFT has been pursuing the following objectives: developing an initial faster payments governance framework that incorporates stakeholder feedback; and establishing the framework and membership. In developing the framework, the GFFT is tasked with defining and implementing the initial charter of the governance framework; a representative and inclusive structure for membership, leadership, and voting rights; and initial funding and administrative support. The responsibilities and structures of any initial body(ies) and/or working committees within the governance framework will also be defined.
6. What is the timeline for the work of the Governance Framework Formation Team?
Work for the formation team kicked off in earnest in September 2017 and is expected to continue through the second half of 2018. In order to establish a governance framework, the team has outlined a phased approach:
- Phase 1: Design the baseline components needed for the governance framework
- Phase 2: Establish the governance framework
- Phase 3: Operate and evolve the governance framework
Currently, the team is focused on activities to support drafting of the governance framework in the design phase, as well as some initial establishment activities. The GFFT envisions that once the initial establishment activities are completed and the FPC and membership are established, the GFFT will conclude, leaving Phase 3 activities to the newly established organization.
In spring 2018, the Operating Vision for the governance framework went out for stakeholder feedback. Publication of the governing documents for the FPC (e.g., the charter/bylaws and the membership agreement) is expected in the second half of 2018 after stakeholder feedback has been reviewed.
7. How will the formation team know they are working in the right direction?
Communicating with stakeholders is of utmost importance and the GFFT is currently seeking feedback on its proposed Operating Vision for the FPC before finalizing key organizing documents like the bylaws.
8. I have concerns about the dues structure. Is there a chance it can be modified?
In developing a pro forma dues structure, the GFFT attempted to balance the goal of making it possible for all interested stakeholders to join the FPC while also providing sufficient funding to support the operations of the organization. However, it is not set in stone. As noted in the Operating Vision document, the design of the FPC remains a work in progress, with a number of issues to be worked through, including the final structure/levels of the dues tiers. As such, the GFFT encourages detailed feedback on the anticipated revenue requirements, as well as the proposed dues, and would particularly appreciate recommendations on the dues structure, the benchmark for the dues tiers and the levels.
9. I am wondering about the rationale for the Board vote allocations and whether the GFFT is open to reconsidering that.
In considering the allocation of Board votes, the GFFT sought to balance equal representation (assigning each segment a minimum of two votes, to ensure clear segment “voices”) with equitable representation (allocating additional seats to segments with greater infrastructure investment and risk exposure). While the proposed allocation is one approach, achieving the appropriate balance remains an open issue. The GFFT welcomes feedback on an equitable allocation of Board votes, taking into account the varying roles and risk exposures of the different stakeholders in the payment system, as well as the envisioned responsibilities and authority of the Board and the FPC.
10. How can I get more involved in GFFT’s work?
You can stay up to date with the work of the Governance Framework Formation Team by signing up to be a part of our community at FedPaymentsImprovement.org. Once part of our community, you can expect periodic updates, as well as a chance to weigh in as part of the stakeholder feedback process.
11. What is a faster payment?
Although the U.S. Faster Payments Council (FPC) will determine the key characteristics of a “faster payment,” for the draft Operating Vision document, the meaning of the term “faster payment” is consistent with the Committee on Payments and Market Infrastructures definition:
“a payment in which the transmission of the payment message and the availability of final funds to the payee occur in real time or near-real time on as near to a 24-hour and seven-day (24/7) basis as possible”.1
In addition, the Faster Payments Task Force’s Effectiveness Criteria focused on broader payment system improvements, including ubiquity, efficiency, safety, security, and governance.2 The GFFT has taken these Effectiveness Criteria into consideration when developing its proposed design for the FPC and, in keeping with the guiding principle of flexibility and responsiveness, has left it to the FPC to further define faster payments as the U.S. market and end-user needs evolve.
12. Why does the description of the FPC differ in some respects from the recommendations in the Faster Payments Task Force (FPTF) Final Report?
Establishing a governance framework was beyond the scope of the FPTF and as such, the FPTF commissioned the GFFT (formerly the Interim Collaboration Work Group) to do so. The GFFT has worked to balance adherence to the task force vision in the Final Report Recommendations and the recognition that the authority and legitimacy of the governance framework rests on a broad and diverse membership. As such, the GFFT is attempting to design an organization that likely will be attractive to a wide array of stakeholders, including established players and new/emerging entrants in the market, financial institutions of all sizes, business and consumer end users, and all other interested/affected stakeholders. Based on GFFT member deliberations, this means an organization that serves as a catalyst for achieving ubiquity in 2020, and is flexible in the way it identifies and resolves barriers and challenges.
The core functions of the FPC are described differently than they were in the FPTF Final Report, but they still encompass the task force recommendations. For example, the FPTF Final Report calls for the development of rules and standards; the Operating Vision notes that rules and standards are part of a larger toolkit available to the FPC’s Operations Committee for fulfilling its charge to identify and resolve problems using the lightest touch and most appropriate tool for the specific issue at hand.
From a practical standpoint, allowing the proposed organization to start with a “light touch” approach and evolve over time as industry needs arise is the best way to attract members and create a viable governance framework for faster payments.
13. What is the focus of the FPC?
The GFFT envisions that from the outset, the FPC will focus on private sector approaches to solving problems and removing barriers to achieving ubiquity. Specifically, this means facilitating steps that can lead to interoperability, thereby enabling all end users to receive immediate payments, as this will make origination of faster payments more attractive to payers and drive adoption overall. Because of its focus on facilitating dialogue and collaboration across the wide array of faster payments stakeholders, the FPC will be in a unique position to address gaps and barriers that would be more difficult to address through bilateral cooperation alone. The GFFT expects that once the FPC is established, the members together will identify and prioritize barriers and work with relevant industry organizations, where appropriate, to address them.
Examples of initial needs include:
- Mitigating safety and security concerns that make network operators, service providers and end users reluctant to interoperate and adopt faster payment solutions.
- Eliminating infrastructure gaps that limit the reach of each individual network and its customers.
- Addressing the lack of awareness and understanding of faster payments that inhibits adoption and potentially affects end user safety.
- Addressing the uncertainty and risks created by a legal and regulatory landscape that does not specifically address faster payments.
14. What does “interoperability” mean?
Interoperability means that transactions are able to flow across solutions and providers in a seamless way, and end users are able to rely on their preferred solution to reach everyone they transact with. Depending on the nature of the networks and solutions, interoperability at the rail level may not always be possible (such as when two networks use different assets or settlement mechanisms); as such, many avenues will be needed to achieve interoperability, including business process and message format standards as well as minimum end-user expectations and protections.
15. What do you mean by minimum service level expectations and end-user protections?
Minimum service level expectations align with and inform the key attributes of a faster payment. They could specify, for example, speed of funds availability, timely visibility of transaction status, security requirements, end-user obligations and liabilities, etc. They could also focus on transparency by specifying key disclosures that should be made to the end user before payment is initiated, including, for example, fees, funds availability and recourse in the event of error.
16. How will decisions be made?
The FPC strives to achieve its goals in a collaborative and consensus-based way. As such, work groups, committees and the Board of Directors generally will seek consensus in their deliberations on key issues and recommendations, particularly if resolution of an issue is likely to have a significant impact on individual stakeholders or groups of stakeholders. Adherence to this guiding principle for decision making is inherently deliberative, in the sense that members who do not support the majority view on a particular issue have the opportunity to be heard, and the majority has a responsibility to consider modifications that address the concerns of the minority.
Consensus-driven decision making is the process the FPC will follow in its deliberations. It is separate from, and complementary to, the FPC’s defined voting processes, where certain decisions may require a majority or super-majority vote from FPC membership or the Board of Directors, as will be defined by the FPC.
17. How will the Nominating Committee work?
The Nominating Committee has responsibility for nominating candidates to fill officer and director positions with the FPC. In accordance with the FPC’s guiding principles, the Nominating Committee is charged with developing a representative, inclusive, and diverse slate of candidates for open Board positions.
Selection of the Nominating Committee: the Board appoints a director to chair the Nominating Committee and the Nominating Committee Chair selects no more than twelve members to serve on the Nominating Committee (one minimum / three maximum from each membership segment, with a maximum of four sitting directors), subject to Board approval.
Selection of the Board of Directors: the Nominating Committee will put out a call for applications from FPC membership, develop the slate of director candidates, submit the slate to the Board for approval, and ultimately present the slate to the FPC membership for a yes/no vote on the slate as a whole. However, the Board has (i) an overall responsibility to ensure that the Nominating Committee proposed slate is consistent with the FPC’s guiding principles and, (ii) a segment-level responsibility to signal any concerns with their segment’s candidate(s) and direct the Nominating Committee to consider alternatives from the original applicants.
18. What happens if the membership does not vote to approve the Board slate?
Once approved by the Board, the director slate is presented to the FPC membership for a vote on the entire slate. Even with the multiple reviews built into the nominating process, the GFFT recognizes that the membership could vote down the proposed Board slate. The GFFT will address this in formal operating documents and welcomes comments on how this possibility could be resolved.
19. Can I be guaranteed a Board seat?
In keeping with the FPC’s guiding principles, members would not be guaranteed a Board seat. Rather, the Nominating Committee is charged with putting forth a slate of candidates to be voted on by FPC membership. General members do have the opportunity to freely participate on the FPC’s committees and work groups, subject to the need to ensure balance, inclusivity and effectiveness. These are the avenues for significantly influencing FPC decisions.
20. Whom does a Director represent?
Directors are accountable to the FPC membership and therefore encouraged to solicit feedback from their membership segments on a regular basis. However, directors have a fiduciary duty to uphold the broader purpose and guiding principles of the FPC. The Board of Directors is charged with setting strategic direction and ensuring the processes, activities, and decisions are consistent with the guiding principles of the FPC.
21. How will the FPC be funded?
The FPC aims to be an efficient, lean and adaptable organization. Funding for the organization will be provided from a number of sources, including membership fees. Revenue from other sources, such as contributions directed to specific programs, will be considered by the FPC once it’s up and running.
22. What are the differences between the various proposed membership types?
The GFFT proposes the FPC will have three types of members: founding member and sponsor; founding member; and general member. Founding members and sponsors provide funds equal to the greater of $25,000 or 2x the given member’s annual dues to be applied to dues for 2019 and 2020. In addition, founding members and sponsors receive a one-time 10 percent discount on their prepaid dues and are included in the initial FPC promotional campaign. Founding members provide funds equal to one year of the given member’s annual dues to be applied to dues for 2019. Both classes of founding members are also eligible to run for and vote on the initial and future FPC Board. Dues for all founding members are due by January 31, 2019. General members provide funds for one year of the given member’s annual dues; they are eligible to run for and vote on the future FPC board.
1 Committee on Payments and Market Infrastructure, “Fast payments – Enhancing the speed and availability of retail payments”. Bank for International Settlements (Nov 2016), available at:
2 Faster Payments Task Force, “Effectiveness Criteria” (Jan 2016), available at: