Payments Efficiency Overview

End-to-end Efficiency for Domestic and Cross-border Payments

To help lower end-to-end costs, enable innovative payment services and shift to electronic payment forms, the Fed supports efforts to further technology and standards that enable straight-through processing in support of ubiquitous electronic payments. To that end, the Fed is pursuing the following initiatives:

  • Creating and implementing a strategy for the application of the ISO® 20022 standard to U.S. payment transactions
  • Accelerating adoption of secure electronic business-to-business (B2B) payments
  • Promoting greater interoperability for person-to-person (P2P), person-to-business (P2B) and B2B payment directories

ISO 20022 Implementation Activity

The Fed is adopting ISO 20022 messages for the Fedwire® Funds Service. This is in support of a key strategy from Strategies for Improving the U.S. Payment System (PDF).

Adoption of ISO 20022 will align the Fedwire Funds Service message format with a global standard that can improve payment processing efficiency and promote interoperability among high-value payment systems around the world.

Support for adoption of ISO 20022 was driven by a stakeholder group convened by the Fed and validated by an independent consulting firm in 2013. The stakeholder group, comprised of the Fed, The Clearing House Payments Company L.L.C., NACHA – The Electronic Payments Association and the Accredited Standards Committee X9 – Financial Industry Standards, Inc., assessed the business case for or against adoption of ISO 20022 payments messages by U.S.-based payment clearing and settlement infrastructures, financial institutions and corporate customers.

The business case assessment identified strategic reasons to consider adoption of the ISO 20022 standard for U.S. payment transactions to achieve greater end-to-end efficiency for domestic and cross-border payments.

The stakeholder group addressed the development of an implementation strategy for the application of the ISO 20022 standard to U.S. payment transactions as part of the desire to achieve greater end-to-end efficiency for domestic and cross-border payments. The stakeholder group conducted an assessment to identify specific pain points or opportunities that could be addressed by adoption of the ISO 20022 standard, with the timing, means and scope of adoption. Learn more about how ISO 20022 is standardizing payment technology.

Accelerating Adoption of Secure Electronic Payments

Collaborating with stakeholders, the Fed is working to address barriers to electronic payment adoption by businesses. By leveraging work already completed by the Business Payments Coalition (BPC) (Off-site) the Fed, as appropriate, will:

Collaborate with stakeholders to develop and promote simplified, common guidelines to make it easier to implement and use B2B standards for electronic payments and remittance information.

Accomplishments
The Fed collaborated with stakeholders including the BPC and NACHA to develop the B2B electronic payments directory.

Other collaboration initiatives include working with the BPC to define the data needs for simple remittance information that can be easily adopted by small and medium size businesses.

Work with banks, other service providers and small-business experts to develop and implement education about electronic payments and payment standards.

Accomplishments
Education offerings developed with the BPC include the Small Business Payments Toolkit (Off-site) and resources and webinars (Off-site) about how businesses can adopt and benefit from ISO 20022 corporate-to-bank messages. The Fed has encouraged information exchange at industry events such as the FedPayments Improvement Community Forum.

Develop and promote simplified, common guidelines to make it easier to implement and use B2B standards for electronic payments and remittance information (Off-site).

Explore the possibility of developing and implementing a standard, ubiquitous B2B e-Invoice (Off-site) and processing platform similar to ones that have been developed in other countries.