Recommendation 2: Recommend and establish faster payments rules, standards, and baseline requirements that support broad adoption; safety, integrity, and trust; and interoperability.
The Faster Payments Task Force calls upon a body(ies) within the governance framework to recommend, establish, and enforce cross–solution rules and standards that aid in achieving the core faster payments ecosystem goals of broad adoption; safety, integrity, and trust; and interoperability. These cross–solution rules and standards would encompass a set of baseline requirements that enable payments to move securely and reliably between solutions, and to ensure end users have predictability and transparency in certain key features pertaining to timing, fees, error resolution, and liability.
Detail
Rules
To enable interoperability for payments that cross faster payments solutions, the task force calls upon a body(ies) within the governance framework to recommend, establish, and enforce cross–solution rules to address issues such as timing for the steps in the payments process (e.g., clearing, availability of good funds to the payee and settlement), and transparency of end–user fees. Cross–solution rules for fraud and error detection, reporting, resolution, and assignment of liability will also be important, given faster payments are irrevocable by the time funds are made available to the payee. In setting these rules, the task force also recommends that the attributes described by the task force’s Effectiveness Criteria related to “Safety and Security” (S.1–S.11), “Speed (Fast)” (F.1–F.5), and “Predictability” (U.3) are adopted. For example, the Effectiveness Criteria “Handling disputed payments” (S.5) refers to requirements, processes, and timeframes for addressing unauthorized, fraudulent, erroneous, or otherwise disputed payments, as well as allocation of liability, which are fundamental to building end–user trust in the faster payments system. The Effectiveness Criteria “Predictability” (U.3) refers to aspects of the payment experience that should be communicated to the end user in advance and at the time of each payment.
Standards
To enable interoperability for payments that cross faster payments solutions, the task force calls upon a body(ies) within the governance framework to recommend, establish, and enforce cross–solution standards to address issues such as technical data and message format standards. In setting these standards, the task force recommends that the attributes described by the task force’s Effectiveness Criteria related to “Safety and Security” (S.1–S.11), particularly “End–User Data protection” (S.9); “Contextual Data capability” (U.4); and “Payment format standards” (E.4) are adopted.
Baseline requirements
To ensure that payments that cross faster payments solutions do so safely and securely, and to build trust and confidence of end users, the task force calls upon a body(ies) within the governance framework to recommend and establish a core set of baseline principles and/or requirements for faster payments solutions, which could include:
- Requirements for strong security, including those for identity management, end–user and payment authentication, payer authorization, data protection, and fraud prevention and mitigation. The task force recommends that the attributes described by the task force’s Effectiveness Criteria “End–User/Provider Authentication” (S.10), “Payer Authorization” (S.2) “End–User Data protection” (S.9), and “Risk management” (S.1) form the foundation for these baseline requirements.
- Requirements that demonstrate participants in faster payments solutions can fulfill their financial and legal compliance obligations pertaining to cross–solution payments. The task force recommends that the attributes described by the task force’s Effectiveness Criteria “Participation requirements” (S.11) form the foundation for these baseline requirements.
- Minimal acceptable standards for the end–user experience, such as uniform disclosure requirements and standard terms. The task force recommends that the attributes described by the task force’s Effectiveness Criteria “Usability” (U.2) be incorporated into these baseline requirements.
Steps to advance this recommendation
The task force recognizes that work needs to commence on this recommendation as soon as possible upon publication of this Final Report. Accordingly, the task force asks the Federal Reserve to facilitate the formation of an informal rules and standards work group that would identify and complete necessary groundwork on benchmarking existing rules sets, which could be passed on to a body(ies) within the governance framework once it is established. It is important to note that this work group will not bring forward any recommendations or decisions pertaining to rules and standards.
Who
The informal rules and standards work group will identify and complete necessary groundwork for this recommendation. The work group will comprise payment stakeholders with rules– and standards–making experience, and the task force asks the Federal Reserve to facilitate its establishment. Once a governance framework is developed, this recommendation would become a formal responsibility of a body(ies) under that framework (see Recommendation 1).
Timing
The task force recommends the informal rules and standards work group be formed as soon as possible upon publication of this Final Report.