Goals and Recommendations

The foundational issues suggest a number of key challenges that must be addressed in a systemic way. In particular, developing an ecosystem that supports competition, while facilitating the collaboration necessary to resolve issues pertaining to broad adoption; safety, integrity, and trust; and interoperability, is required. These include:

  • Potential inconsistencies and lack of transparency in the end–user experience that could diminish the value proposition for adopting faster payments, particularly those pertaining to certain baseline features that affect the timing in the steps of the payments process, error resolution, legal rights, fees, risks, and liability;
  • A potential lack of trust in the integrity and security of faster payments due to concerns about potential “weak links” in the individual solutions and/or the entire faster payments system;
  • A potential lack of confidence in the financial soundness of the network due to weak links in the ability of individual solution operators and/or service providers to meet their financial and legal obligations; and
  • A potential lack of effective and seamless functional interoperability.

The task force has a strong preference for addressing these issues through broad stakeholder collaboration that allows market competition to determine the ultimate direction for faster payments. While broad collaboration can be difficult to achieve in the U.S. context, given the competing interests of major payment system operators, service providers, and end users, the task force believes its own efforts demonstrate that such collaboration is possible and can serve as the foundation for the work that lies ahead.

The task force calls upon all stakeholders to seize this historic opportunity to realize the vision for a payment system in the United States that is faster, ubiquitous, broadly inclusive, highly secure, and efficient, with all service providers enabling ubiquitous receipt for end–user customers by 2020.

Achieving this goal means a system that demonstrates significant and continuous progress in fully meeting the Effectiveness Criteria. It also means all stakeholders collaborating to resolve the issues that will otherwise stand in the way of broad adoption; safety, integrity, and trust; and interoperability, as well as taking steps to make their internal systems “faster payments ready.”

goals and recommendations audience

While it will be challenging, the task force believes that it is possible to meet this goal by implementing the recommendations in this report. Specifically, the task force recommends that work begin collaboratively in three key areas: Governance and Regulation, Infrastructure, and Sustainability and Evolution.

Governance and Regulation Recommendations

First, the task force recommends a framework for collaboration, decision-making, and rule setting, as well as regulations that support the faster payments ecosystem:

  • Recommendation 1 - Establish a faster payments governance framework:

    A voluntary, industry-led framework for collaboration and decision making is needed to execute on many of the task force recommendations and to achieve ubiquitous receipt – where all payment service providers are capable of receiving faster payments and of making those funds available to their end-user customers in real time – by 2020.

  • Recommendation 2 - Recommend and establish faster payments rules, standards, and baseline requirements that support broad adoption; safety, integrity, and trust; and interoperability:

    Establishment and enforcement of cross-solution rules and standards will aid in achieving the core ecosystem goals of broad adoption; safety, integrity, and trust; and interoperability. These cross-solution rules and standards would encompass a baseline set of requirements that enable payments to move securely and reliably between solutions, and ensure end users have predictability and transparency in certain key features pertaining to timing, fees, error resolution, and liability.

  • Recommendation 3 - Assess the payments regulatory landscape and recommend changes to the regulatory framework:

    The task force asks the Federal Reserve to initiate an effort with relevant regulators to evaluate current laws and regulations to ensure that they are suited to the unique characteristics of faster payments. The task force also recommends that a stakeholder group within the governance framework be formed to prioritize regulatory concerns and engage with relevant regulators on these issues.

Infrastructure Recommendations

Second, the task force recommends enabling needed infrastructure to support faster payments. This includes:

  • Recommendation 4 - Establish an inclusive directory work group to identify and recommend a directory design for solutions to interoperate in the faster payments system:

    Developing a design for directory services is important for achieving the core ecosystem goal of interoperability. Recognizing there are a number of directory services currently in existence or under development, the task force believes that work on this effort should begin as soon as possible upon publication of this Final Report to progress toward a recommendation for a commercially viable model of directory services.

  • Recommendation 5 - Enhance Federal Reserve settlement mechanisms to support the faster payments system:

    The task force asks the Federal Reserve to determine the optimal design of and implement a 24x7x365 settlement service to support the needs of the faster payments system. The task force believes that broader access to Federal Reserve settlement services will level the playing field and enhance competition among providers of faster payments services.

  • Recommendation 6 - Explore and assess the need for Federal Reserve operational role(s) in faster payments:

    As faster payments are implemented in the market, the task force asks the Federal Reserve to explore and assess the need for an operational role(s) in the faster payments system to support ubiquity, competition, and equitable access to faster payments in the United States. In addition to providing for a settlement capability, such roles might include provision of directory services, transaction processing, network access, security, and/or cross-border payments.

Sustainability and Evolution Recommendations

Third, the task force recommends that the faster payments system in the United States be future-focused and able to address evolving security threats, meet changing end-user needs efficiently and effectively, and enable continuous innovation through new technologies. An effective system also requires an ability to monitor progress toward achievement of the task force vision, while taking action to address identified gaps and broaden end-user participation. This encompasses a variety of activities, including:

  • Recommendation 7 - Recommend, develop, and implement methods for fraud detection, reporting, and information sharing in faster payments:

    Timely detection of fraud is important to building integrity and trust among end users in faster payments. As such, there are benefits that can be gained from timely fraud reporting and information sharing across solutions because it can highlight patterns in fraud and/or breaches that may not be visible to individual solutions alone.

  • Recommendation 8 - Develop cross-solution education and advocacy programs aimed at awareness and adoption:

    Education and advocacy programs for both end users and service providers are an important part of achieving the core ecosystem goal of broad adoption. For end users, awareness and understanding of faster payments in general should be the focus. For service providers, programs should focus on awareness of the Effectiveness Criteria, particularly “Usability” (U.2) and “Accessibility” (U.1), as well as the baseline requirements for faster payments established under the governance framework.

  • Recommendation 9 - Conduct research and analysis to address gaps in cross-border functionality and interoperability:

    Research and analysis should be undertaken to advance understanding of the requirements for cross-border interoperability with various jurisdictions, and develop recommendations to enable interoperability between faster payments solutions in the United States and faster payments solutions in other country jurisdictions.

  • Recommendation 10 - Continue research and analysis on emerging technologies:

    New technologies have the potential to change the payment landscape. As such, it is important to deepen understanding of the risks they may pose, as well as the potential they might offer, particularly with regard to enhancing security and/or meeting largely unmet needs in cross-border transactions and among underserved end users.

The Path Forward and Next Steps

The task force believes that implementing these recommendations will lead to a payment system in the United States that is fast, ubiquitous, broadly inclusive, safe, highly secure, and efficient by 2020. To meet this aggressive timeframe, executing on these recommendations must commence this year and be sequenced to ensure appropriate resources are deployed in a timely manner and used effectively. As such, the task force recommends that work on critical path activities begin immediately and proceed as follows:

Next Steps for 2017

To provide early direction for the development and evolution of faster payments solutions already in and entering the market, the task force recommends the following activities start as soon as possible following publication of this Final Report:

  • Develop a governance framework proposal
    A critical first step is establishing a governance framework (Recommendation 1) that will ultimately have responsibility for implementing many of the remaining recommendations. In fact, this work has already begun with the formation of an Interim Collaboration Work Group (ICWG), which will develop, publish, and solicit public comment on its proposal for a governance framework.
  • Stand up informal work groups
    The task force expects groundwork to begin as soon as feasible on rules, standards, and baseline requirements (Recommendation 2); applicable regulatory requirements (Recommendation 3); and directory design to facilitate interoperability (Recommendation 4).
  • Begin work on a 24x7x365 settlement system
    Because broad access to settlement services will help level the playing field and enhance competition among providers of faster payments services, the task force calls on the Federal Reserve to begin efforts immediately on a 24x7x365 settlement service (Recommendation 5).
  • Begin to assess the need for Federal Reserve operational role(s)
    To ensure ubiquity, competition and equal access to the faster payments system, the task force calls upon the Federal Reserve to initiate an exploration and assessment of the need for Federal Reserve operational role(s) by year end (Recommendation 6).

2018 (and beyond)

Completion of the work of the ICWG will lay the foundation for a substantial amount of critical work to take place as soon as possible in 2018. This will include:

  • Establish the governance framework and its members
    The governance framework will enable collaboration and decision making on cross–solution issues that are vital to the development of the faster payments system. This will include taking the groundwork provided by the informal work groups and using it to facilitate establishment of cross–solution rules, standards and baseline requirements (Recommendation 2) and a commercially viable directory design for solutions to interoperate (Recommendation 4). In addition, the groundwork provided by the informal work group on regulatory requirements will support ongoing engagement with relevant regulators under the governance framework (Recommendation 3).
  • Carry out the work envisioned in Recommendations 7–10
    The task force expects the members of the governance framework to convene and provide resources for groups to execute on the desired deliverables for key activities as quickly as possible, including fraud detection and information sharing (Recommendation 7); cross–solution education and advocacy (Recommendation 8); research and analysis to address gaps in cross–border functionality and interoperability (Recommendation 9); and research and analysis on risks and potential benefits of emerging technologies in the faster payments context (Recommendation 10).
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Thank you to the task force participants, the proposers and the Federal Reserve, as the facilitator and guardian of this important effort, in completing this paper and the important information it provides in support of our payments future.
Barbara Gross, Bankers’ Bank, Small Financial Institutions
Nice job on including the perspectives and positions from a large, diverse group. It has been a pleasure to contribute to this process.
Deborah Phillips, Jack Henry, Non-Bank Providers
The team did a great job at pulling together the many differing opinions and reaching a conclusion that will help propel the U.S. payment system forward. While much work continues the team should be commended on the work completed to date.
John Drechny, Wal-Mart Stores, Inc., Business End Users
The Faster Payments Task Force, as a composite of industry leaders and stakeholders, has done a great job in this important first step. It has been a great experience being a part of the effort.
Dan M. Fisher, The Copper River Group, Other Industry Stakeholders