The Federal Reserve’s 2015 paper, Strategies for Improving the Payment System (PDF), identifies payments efficiency as a key strategy to improve the U.S. payment system.
The Fed supports efforts to help lower end-to-end costs, enable innovative payment services and shift to ubiquitous electronic payment forms. The move from manual, fragmented payment processes, to modern, electronic systems will increase both efficiency and innovation in the U.S. payment industry.
That’s why the Fed, in collaboration with the industry, has been working to drive business-to-business (B2B) payments modernization forward, through greater adoption of electronic invoices (e-invoices), payments, remittance data (e-remittance) and the ISO® 20022 standard. This modernization will bring many benefits to businesses of all kinds including lower costs, better cash management, error reduction, risk mitigation, increased transparency and improved automation of business processes.
Learn more about the Fed’s collaborative efforts to modernize B2B payments in the below video.
Read more about the efficiency initiatives the Fed is pursuing:
E-invoices are a necessary first step to achieving straight-through processing for B2B payment transactions. Over the years, the Fed has supported the BPC’s work to develop a standard, ubiquitous B2B e-invoicing (Off-site) network similar to ones that have been developed in other countries. In early summer of 2023, participants of the BPC’s E-invoice Exchange Market Pilot launched a market ready exchange framework and established the Digital Business Networks Alliance (DBNAlliance) (Off-site) as the legal entity to oversee it.
Electronic remittance information, which contains details about a payment, can help reduce payment application costs and improve efficiency by enabling straight-through processing. The Fed is supporting industry groups working to develop and promote guidelines that make it easier to implement and use existing standards to enable greater automation of electronic payments and remittance information (Off-site).
Payment systems in the United States are adopting ISO 20022, a standards framework that defines the message structure and content to enable a common global “language” for messaging in payments, cash management reporting, securities, cards, foreign exchange and trade services. Adoption of the ISO 20022 standard for U.S. payment transactions can lead to greater end-to-end efficiency for domestic and cross-border payments.
Industry Outreach and Collaboration
Collaboration with stakeholders to develop and promote simplified, common guidelines can make it easier to implement and use B2B standards for electronic payments. The Fed is engaging with the Business Payments Coalition (BPC) (Off-site), financial institutions, other service providers and small-business experts to develop and implement education about electronic payments and payment standards.