The Federal Reserve’s 2015 paper, Strategies for Improving the Payments 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, specifically in the areas of electronic invoicing, electronic remittance information and ISO® 20022 adoption, among others. 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 a new video.
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.
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.