Payments Efficiency Overview

The U.S. payment industry can benefit from coordination on information and how it should be exchanged when moving from manual to modern systems. To address these challenges, the Federal Reserve, in collaboration with the payments industry, has been working toward a more efficient U.S. payment system.

Payments efficiency is one of the desired outcomes of the Strategies for Improving the Payments System (PDF) paper, and the Fed supports efforts to help lower end-to-end costs, enable innovative payment services and shift to ubiquitous electronic payments forms. Additionally, with digitalization comes richer data and more data insights, leading to improved automation for business processes.

With advancements in technology, the Fed is fully committed to helping modernize systems across the payments industry. As part of the work to promote greater adoption of electronic business to business (B2B) payments, the Fed is working with the industry to make B2B payments more efficient in the areas of e-invoicing, remittance data and ISO® 20022 adoption, among others.

Read more about the efficiency initiatives the Fed is pursuing:

ISO 20022 Adoption

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 will continue to engage 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.

Encourage B2B Exchange of Electronic Remittance Information

Electronic remittance information, which contains details about a payment, can help reduce payment application costs and improve efficiency. 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) for greater detail about a payment.

Broaden the Reach of E-invoices

Electronic invoices (e-invoices) are a necessary first step to achieving straight-through processing for B2B payment transactions. The Fed is supporting the BPC’s work to explore the possibility of developing and implementing a standard, ubiquitous B2B e-invoicing (Off-site) and processing platform similar to ones that have been developed in other countries.

Small Business Payments Toolkit

The Fed and BPC have partnered to develop the Small Business Payments Toolkit (Off-site). This can be used by small businesses and their advisors to communicate the benefits of using electronic payment types, such as ACH credits and debits, wire transfers and credit and debit cards instead of checks.

Small Business Payments Toolkit

The Small Business Payments Toolkit (Off-site) offers plain-language and practical education about various payment types. It describes the benefits of electronic payments and provides best practices for avoiding payment fraud. The toolkit also contains an extensive resource section with links to additional information.

Additional resources are available to support and promote greater usage of electronic payments in B2B transactions. The Business Payments Coalition Resource Guide (Off-site) provides access to educational materials, technical and trend reports.