Payments Exchange

Examining Market Structure Implications in the Faster Payments Market

Make sure to check out Faster Payments: Market Structure and Policy Considerations (Off-site) – a new working paper by Federal Reserve research staff that explores potential market structures in the new world of faster retail payments. This research aligns with the desired outcome of faster payments outlined in the Strategies for Improving the U.S. Payment System paper, released by the Federal Reserve in 2015. In order to pursue safe, ubiquitous and faster payments, the Federal Reserve convened the Faster Payments Task Force, a diverse group of stakeholders who set forth a roadmap for the industry to achieve its vision for faster payments. The market structure paper explores what that faster payments market could look like and the potential implications of different market arrangements.

The paper discusses three hypothetical market structure scenarios – a dominant-operator environment, a multi-operator environment, and a decentralized environment – and considers how those scenarios may affect efficiency, safety and ubiquity of faster payments. Outcomes in these scenarios are driven by factors like coordination costs and the degree of market power among participants. Highlights include each scenario’s unique set of benefits and challenges and examines some of the tools available to overcome those challenges. For example, interoperability and cross-platform governance arrangements can help mitigate difficulties with market fragmentation in environments with multiple providers.

Learn more by reading the paper (Off-site) in its entirety.

The Next Steps Webinar Recording is now Available for On-demand Viewing

On September 6, 2017, the Federal Reserve issued Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey (09/06/17, PDF). The paper reflects the Federal Reserve’s plans for near-term collaboration with the industry to move closer to achieving the desired outcomes articulated in the Strategies paper. Following the release of the paper, we hosted a number of educational events including a webinar series featuring Federal Reserve leaders expanding on the Next Steps paper.

Whether you missed the webinar and would like to view it for the first time or just want a refresher, you can now view the recording on demand. Join Dave Sapenaro, First Vice President and Chief Operating Officer of the St. Louis Federal Reserve and Federal Reserve System Payments Strategy Director, and Connie Theien, Senior Vice President and Director of the Federal Reserve System Payments Industry Relations Program, as they discuss the Next Steps paper and answer questions from attendees. As part of the discussion they outlined the Fed’s updated strategies to enhance the speed, safety and efficiency of the payment system from end to end through industry engagement and collaboration.

Looking for more educational payments content? Check out our YouTube channel (Off-site) now.

Fast Facts from the Latest Federal Reserve Payments Study Supplement

The Federal Reserve today released their latest payments study supplement which points to an increase in the use of credit cards in 2016 from 2015. Here are the fast facts:

  • The number of credit card payments grew 10.2 percent in 2016, a marked increase from the 8.1 percent growth experienced from 2012 to 2015
  • Remote general purpose credit card use increased 16.6 percent in 2016
  • Remote payments in 2016 represented 22.2 percent of all general-purpose credit and prepaid debit card payments, up 1.5 percentage points from an estimated 20.7 percent in 2015.

Other notable findings from the study include:

  • Total U.S. card payments reached 111.1 billion in 2016, reflecting 7.4 percent growth since 2015
  • From 2012 to 2015, ACH network transfers, representing payments over the ACH network, grew at annual rates of 4.9 percent by number and 4.1 percent by value
  • By 2016, 19.1 percent of all in-person general-purpose card payments were made by chip (26.9 percent by value), compared with only 2.0 percent (3.4 percent by value) in 2015

Learn more by reading the press release in its entirety or check out the full version of the report (Off-site).

Kenneth Montgomery Announced as Payments Security Strategy Leader

Last week, the Federal Reserve System announced that Kenneth Montgomery, Federal Reserve Bank of Boston’s first vice president and chief operating officer, will succeed Todd Aadland as the payments security strategy leader. In this role, Ken will lead the Federal Reserve’s effort to reduce fraud risk and advance the safety, security and resiliency of the U.S. payment system. His responsibilities will also include chairing the Secure Payments Task Force.

When asked about Montgomery, Federal Reserve Board Governor Jerome H. Powell, co-chair of the initiative’s oversight committee, noted that “Ken’s long and distinguished record of service to the Federal Reserve System, along with his business experience and technical expertise, are exactly what’s needed to help maintain a strong partnership with the industry on improved payments security.”

Aadland, who has held the position since September 2015, will be transitioning into a new role overseeing multiple Treasury Services programs as well as Wholesale Operations at the Federal Reserve Bank of Kansas City.

We are very excited to have Ken on board and wish Todd Aadland the best in his future endeavors. For more information, you can read the press release in its entirety.

Learn How You Can Improve the Security of the U.S. Payment System – Follow the Secure Payments Task Force Today

Protecting the security and integrity of the U.S. payments system is a top priority and the responsibility of all payments industry stakeholders. Through unpresecure payments task force banner artcedented industry collaboration, the Secure Payments Task Force has already started laying the foundation to address payments security challenges by identifying and promoting actions that can be taken by payment system participants.

In addition, the task force is developing valuable resources to improve the awareness and implementation of cybersecurity and fraud information sharing among U.S. payments industry participants. Keep reading to get highlights about the group’s first deliverable and learn how you can participate in this groundbreaking collaboration.

Expansive Set of Cybersecurity and Fraud Information

We are pleased to announce the launch of the SecurePaymentsTaskForce.org website where you can find this valuable resource to help you mitigate payments fraud.

The Information Sharing Data Sources were complied by the task force to highlight intelligence reports, payments fraud trends, best practices and benchmarks, and additional resources that can help organizations address payments fraud risk.

Share Feedback

Go to SecurePaymentsTaskForce.org to share your experiences and feedback, or to submit relevant data sources for addition to the list. Help motivate the payment industry to realize improvements and encourage advancements that work toward a better payments landscape for all.

Be a Part of the Change

Protecting the security and integrity of the U.S. payment system is a top priority and responsibility for all payments industry stakeholders. Through unprecedented industry collaboration, the Secure Payments Task Force provides a forum for stakeholders to advise the Federal Reserve in its leader/catalyst and operator roles on payment security matters, and helps identify and promote actions that can be taken by payment system participants collectively or by the Federal Reserve System.

Get involved today! Join the Community

The Secure Payments Task Force needs your support to help secure the U.S. payment system! Join the Community to provide advice on security matters and help determine areas of focus to advance payment system security.

Join the Secure Payments Task Force

Collaborate with your peers on the Secure Payments Task Force who share your passion for realizing material improvements on the security challenges of today’s payment systems:

  • Payment Identity Management
  • Data Protection
  • Information Sharing for the Mitigation of Payment Risk and Fraud

Visit SecurePaymentsTaskForce.org

Visit SecurePaymentsTaskForce.org for a deeper dive into the task force, the work they have completed and opportunities to get a seat at the table.

Federal Reserve Announces ISO 20022 Migration Timeline for the Fedwire Funds Service

The Federal Reserve Banks today announced plans to complete their migration to the ISO 20022 standard for their real-time gross settlement system, the Fedwire Funds Service, by the end of 2023. Adopting the ISO 20022 standard for payments clearing and settlement messages supports the Federal Reserve’s strategy to enhance the efficiency of both domestic and cross-border payments as described in Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey.

Check out the press release for more information or visit the Federal Reserve Banks’ Resource Center for Adoption of ISO 20022 for Wire Transfers and ACH Payments page on our website.

Read the Business Payments Coalition’s Latest Paper: Catalog of Electronic Invoice Technical Standards in the U.S.

When it comes to sending and receiving electronic invoices, modern businesses are faced with a mountain of options and considerations. Businesses must also navigate the additional challenges of integration with their trading partners driven by the many different e-invoice technical standards available in the U.S. market.

Wouldn’t it be nice if there was a universal technical standard for electronic invoicing? The Business Payments Coalition tackles this very topic in their latest paper: Catalog of Electronic Invoice Technical Standards in the U.S. The paper aims to lay the foundation for selecting an invoicing standard for the U.S. market with the hopes of accelerating the adoption of electronic invoicing. In the coming months, the group behind this paper, The Business Payments Coalition E-invoicing Work Group, will re-convene and begin working to define both an invoice technical standard and an interoperability framework for the U.S.

Stay tuned for more news from the Business Payments Coalition as this project progresses and be sure to read the paper if you haven’t already.

Where in the World is FedPayments Improvement: October Edition

The weather may be cooling off but fall conference season is heating up! We’re gearing up for another exciting slate of events and are looking forward to engaging with the industry and speaking on payment system improvements, the current state of our initiative and more. The following conferences are where we’re headed this month:

ConferenceDate/TimeSession TitleSpeaker
Payments Innovation Alliance MeetingOctober 11, 4:15 p.m.Business Payments Coalition e-Invoicing InitiativeTodd Albers
October 12, 8:15 a.m.ISO20022 for High Value and Low Value PaymentsGina Russo
AFP 2017October 15AFP Payments RoundtableDan Gonzalez
October 16The Payments BreakfastSean Rodriguez
October 16, 8:30 a.m.Blockchain Truth: Standards and PromisesGuy Berg
October 16, 4:00 p.m.What the 2016 Federal Reserve Payment Study Tells Guy Berg
SibosOctober 17, 12:00 p.m.HVPS+, a Global Standard for communications with High-Value Payments Systems Gina Russo
Money 20/20October 23, 1:30 p.m.Payments for a Real-Time Economy: Are We Ready for the Ride on New Payment Rails?Sean Rodriguez

We regularly attend events to discuss improvements to the U.S. payment system with payment system stakeholders. This collective and collaborative approach is key to implementing enduring strategic improvements to the U.S. payment system. If we have a booth at an industry event, please stop by or reserve time to speak with Federal Reserve experts and to view our schedule beyond the current month, please visit our industry events page.

Register to Attend our FedForum Webinar Series

In last week’s webcast President George and Governor Powell shared insights on the Federal Reserve’s Next Steps in the Payment Improvement Journey and answered questions regarding the Fed’s updated strategies. Over the next two months we’ll be hosting a FedForum webinar series that will go into further detail on the updated strategies and the nine new tactics discussed in the webcast.

Join hosts Dave Sapenaro, First Vice President and Chief Operating Officer of the St. Louis Federal Reserve and Federal Reserve System Payments Strategy Director, and Connie Theien, Senior Vice President and Director of the Federal Reserve System Payments Industry Relations Program, for the FedForum webinars on two separate dates and times:

  • FedForum Webinar 1 – Fed Next Steps in the Payments Improvement Journey
    Date/time: October 30, 11:00 a.m. – Noon ET
  • FedForum Webinar 2 – Fed Next Steps in the Payments Improvement Journey
    Date/time: November 16, 11:00 a.m. – Noon ET

Ready to join us? Register now and choose either the October 30 or November 16 session. Find more details on these events and other education offerings, as well as previous event summaries and recordings by visiting Fed Events.

Federal Reserve Next Steps in the Payments Improvement Journey Webcast

In today’s webcast President George and Governor Powell shared insights on the Federal Reserve’s Next Steps in the Payment Improvement Journey and answered questions regarding the Fed’s updated strategies to enhance the speed, safety and efficiency of the payment system from end to end through industry engagement and collaboration.

In the next few weeks we’ll be hosting a FedForum webinar series that will go into further detail on the updated strategies and the nine new tactics the Federal Reserve will employ, in collaboration with industry, to make further progress towards an improved U.S. payment system. Specifically, the webinars will focus on the work-to-date and progress of the Faster and Secure Payments Task Forces and Federal Reserve, the challenges and opportunities in the industry and next steps toward achieving the desired outcomes of the Strategies paper. Look for information coming soon.