The U.S. Path to Faster Payments

Transcription

1 The U.S. Path to Faster Payments NACM Credit Congress & Expo June 13, 2018 Kandie Alter Assistant Vice President, Payments Policy Group Federal Reserve System 2018 Federal Reserve Banks. Materials are not to be used without consent. 1

2 TODAY S PAYMENTS LANDSCAPE FASTER PAYMENTS AROUND THE GLOBE* Exploratory/Design/Build EU Kazakhstan Indonesia France Australia Saudi Arabia Canada USA Belgium Cambodia Hong Kong Netherlands Spain Hungary Italy Latvia Malaysia New Zealand Philippines Romania Slovenia Japan Live: Some Form of Real-Time Payments UK Korea Brazil Switzerland Poland Denmark Singapore Sweden South Africa Czech Rep. Mexico Taiwan Chile Nigeria China Bahrain India Finland Colombia Thailand Norway Turkey UAE Belize Ghana Iceland Kenya Nicaragua Sri Lanka *Source: McKinsey Federal Reserve Banks. Materials are not to be used without consent. 2

3 PAYMENTS ECOSYSTEM IN THE UNITED STATES 2018 Federal Reserve Banks. Materials are not to be used without consent. 3

4 Today s Payments Landscape Compound Annual Growth Rates For Noncash Payments* Number of Payments Value of Payments *Source: Federal Reserve Payments Study: 2017 Annual Supplement 2018 Federal Reserve Banks. Materials are not to be used without consent. 4

5 IMPORTANCE OF THE FEDERAL RESERVE S INDUSTRY ENGAGEMENT EFFORTS Catalyst for Progress Promote Financial Stability Open Dialogue Foster Relationships The Federal Reserve is uniquely suited to be an honest, independent facilitator across the disparate industry segments Industry collaboration is essential to the Federal Reserve s mission to promote financial stability and the safety and efficiency of payments, clearing and settlement systems Collaborative working groups provide a platform for open dialogue (in accordance with antitrust guidelines) among industry participants Continued industry engagement fosters relationships that can be leveraged during a crisis 2018 Federal Reserve Banks. Materials are not to be used without consent. 5

6 THE STRATEGIES PAPER FOCUSES ON IMPROVING THE SPEED, SECURITY, AND EFFICIENCY OF THE U.S. PAYMENT SYSTEM FROM END-TO-END. Ubiquitous, safe, faster electronic solution(s) Strong and responsive payment system security Payments originated and received electronically Better choices for cross-border payments Payment system improvements are collectively identified and embraced 2018 Federal Reserve Banks. Materials are not to be used without consent. 6

7 DESIRED OUTCOME: SPEED A ubiquitous, safe, faster electronic solution(s) for making a broad variety of business and personal payments supported by a flexible and cost-effective means for payment clearing and settlement groups to settle their positions rapidly and with finality Federal Reserve Banks. Materials are not to be used without consent. 7

8 FASTER PAYMENTS TASK FORCE JOURNEY Mission: The Faster Payments Task Force work helped to accelerate and enhance implementation of realtime payment capabilities in the United States. Task Force Formed Federal Reserve Banks. Materials are not to be used without consent

9 FASTER PAYMENTS TASK FORCE DELIVERABLES U.1 Accessibility U.2 Usability U.3 Predictability Ubiquity U.4 Contextual Data Capability U.5 Cross-Border Functionality U.6 Multiple Use Cases F.1 Fast Approval F.2 Fast Clearing Speed (Fast) F.3 Fast Availability of Good Funds to Payee F.4 Fast Settlement among Depository Institutions and Regulated Non-bank Account Providers F.5 Prompt visibility of payment status Faster Payments Effectiveness criteria Efficiency E.1 Enables Competition E.2 Capability to enable value- added services E.3 Implementation Timeline E.4 Payment Format Standards E.5 Comprehensiveness E.6 Scalability and Adaptability E.7 Exceptions and Investigations Process Governance G.1 Effective governance G.2 Inclusive governance Safety and Security S.1 Risk Management S.2 Payer Authorization S.3 Payment Finality S.4 Settlement Approach S.5 Handling Disputed Payments S.6 Fraud Information Sharing S.7 Security Controls S.8 Resiliency S.9 End-user Data Protection S.10 End-user/Provider Authentication S.11 Participation Requirements Legal L.1 Legal Framework L.4 Data privacy L.2 Payment System Rules L.5 Intellectual property L.3 Consumer Protections 2018 Federal Reserve Banks. Materials are not to be used without consent. 9

10 THE U.S. PATH TO FASTER PAYMENTS To continue the dialogue within the payment industry, the task force released its Final Report in two parts. Final Report Part One January 2017 Final Report Part Two July 2017 Glossary of Terms Foundational Issues Capability Showcase Solution Proposals and Assessments Effectiveness Criteria Ten Recommendations 2018 Federal Reserve Banks. Materials are not to be used without consent. 10

11 FASTER PAYMENTS TASK FORCE FINAL REPORT RECOMMENDATIONS Governance and Regulation 1. ESTABLISH: Governance framework 2. RECOMMEND AND ESTABLISH: Rules, standards, and baseline requirements 3. ASSESS AND RECOMMEND: Assess payments regulatory landscape and framework and recommend changes Infrastructure 4. ESTABLISH: Inclusive directory work group 5. ENHANCE: Federal Reserve settlement mechanisms 6. EXPLORE AND ASSESS: Need for Federal Reserve operational role(s) Sustainability and Evolution 7. RECOMMEND, DEVELOP AND IMPLEMENT: Methods for fraud detection, reporting, and information sharing 8. DEVELOP: Cross-solution education/advocacy programs 9. CONDUCT: Research/analysis to address gaps in cross-border functionality and interoperability 10. CONTINUE: Research/analysis on emerging technologies Read the Final Report at FasterPaymentsTaskForce.org 2018 Federal Reserve Banks. Materials are not to be used without consent. 11

12 Faster Payments Road Ahead Goal: Ubiquitous Receipt of Faster Payments by 2020 July 2017 Fed Work Group Formed Fed Work Group Formed Industry Work Group Formed GFFT Established December 2017 Industry Group to be Formed Governance Framework January 2018 Industry Work Group to be Formed Stakeholder Feedback March 2018 July 2018 Establish Governance Framework and Members Fed Settlement Services Fed Operational Role(s) Assessment 2019 Directories Rules & Standards Regulatory Landscape Fraud Detection/Reporting Education & Advocacy Cross-Border Emerging Technologies 2020 Legend: Infrastructure Rules & Regulations Sustaining Activities Groundwork 2018 Federal Reserve Banks. Materials are not to be used without consent

13 FASTER PAYMENTS GOVERNANCE FRAMEWORK DEVELOPMENT PROCESS Phased approach to delivering the governance framework Phase 1: Design Phase 2: Establish Phase 3: Operate and Evolve Phase 1: Design the baseline components needed for the governance framework Develop the framework Determine the approach for establishing the framework Gather stakeholder feedback Visit FedPaymentsImprovement.org to learn how you can get involved Phase 2: Establish the governance framework Phase 3: Operate and evolve the governance framework 2018 Federal Reserve Banks. Materials are not to be used without consent. 13

14 THE PROPOSED U.S. FASTER PAYMENTS COUNCIL Draft faster payments governance framework released for broader stakeholder feedback Safe, ubiquitous faster payments will benefit a range of end users, including: Consumers Babysitter is paid in real time. Corporations Insurance company instantly sends a claims payment to a homeowner. Small Business A small business makes a just-intime supplier payment. The goal: a ubiquitous world-class payment system in 2020 where Americans can safely and securely pay anyone, anywhere, at any time and with immediate funds availability Federal Reserve Banks. Materials are not to be used without consent. 14

15 The Proposed U.S. Faster Payments Council What will this new organization do? This new organization will provide an inclusive and transparent forum for collaboration, problem-solving and decision-making, and its success depends on broad stakeholder participation. From the outset, the U.S. Faster Payments Council (FPC) will focus on pragmatic, privatesector approaches to solving problems and removing barriers to achieving faster payments ubiquity in the U.S. Guiding principles of the FPC include: Openness and Inclusiveness: All members have a voice through Board representation and open opportunities to serve on committees and work groups. Flexibility and responsiveness: The FPC has a flexible structure that can evolve with changing needs. Fairness and transparency: The FPC respects the competitive prerogatives of its member organizations, and strives for equal treatment and consensus in all significant decisions Federal Reserve Banks. Materials are not to be used without consent. 15

16 The Proposed U.S. Faster Payments Council Why does the U.S. need a governance framework? Catalyze faster payments ubiquity Enable interoperability; key to ubiquity by 2020 Shape the U.S. faster payments system so it benefits all American consumers and businesses. Remove barriers to ubiquity, such as safety and security concerns Provide members with a voice in the implementation and evolution of faster payments 2018 Federal Reserve Banks. Materials are not to be used without consent. 16

17 The Proposed U.S. Faster Payments Council How can the FPC benefit the broader payments industry? Mitigate safety and security concerns that make network operators, service providers and end users reluctant to interoperate and adopt faster payment solutions Eliminate infrastructure gaps that limit the reach of each individual network and its customers Address lack of awareness and understanding of faster payments that inhibits adoption Awareness campaigns for 300+ million consumers and 30 million businesses Minimum service level expectations, end-user protections Address uncertainty and risks created by a legal and regulatory landscape that does not specifically address faster payments 2018 Federal Reserve Banks. Materials are not to be used without consent. 17

18 The Proposed U.S. Faster Payments Council Other Collaborative Work Groups Directories Work Group Complete necessary groundwork in pursuit of a directory design for solutions to interoperate in the faster payments system Rules and Standards Work Group Complete necessary groundwork on benchmarking existing rules sets Legal and Regulatory Work Group Assess the payments regulatory landscape and recommend changes to the regulatory framework 2018 Federal Reserve Banks. Materials are not to be used without consent. 18

19 FEDERAL RESERVE NEXT STEPS: SPEED Lead and support collaborative industry efforts Pursue settlement services that address future needs Assess the need for Federal Reserve engagement as a service provider Support industry efforts to implement a safe, ubiquitous, faster payments capability in the United States 2018 Federal Reserve Banks. Materials are not to be used without consent. 19

20 Join +4,000 of your peers by being a part of the FedPayments Improvement Community Free and open to all interested stakeholders Represents a continuation of transparent, inclusive, and effective engagement Allows you to indicate which initiatives and topics are of interest to you, and participate when and how you wish Join the FedPayments Improvement Community today at FedPaymentsImprovement.org 2018 Federal Reserve Banks. Materials are not to be used without consent. 20

21 Engage with us! FasterPayments TaskForce.org FedPayments Improvement.org SecurePayments FedPayments Improvement FedPayments Improvement 2018 Federal Reserve Banks. Materials are not to be used without consent. 21

22 Questions? 2018 Federal Reserve Banks. Materials are not to be used without consent. 22