While the United States payments infrastructure and economy differ from other countries, insights on faster payment system design from various international implementations can provide considerable value for providers and end users. Over a dozen countries have implemented faster payments solutions with several others in development and early planning stages.
Each system was built with features that address the country’s market composition and end-user needs. Many of these systems have continued to evolve over time, offering new products to meet market demands. Most countries that have implemented faster payments were able to establish a solution that allows providers to build on top of a single platform.
Government Involvement in Faster Payments
In most countries where faster payments have been implemented, the payment industry was initially driven to implement a faster payment system as a result of a government mandate or regulation. In some countries, central banks also own and operate the faster payment system (e.g., Mexico, Iceland, and Turkey). In other countries, private operators—often owned by major banks—provide faster payment services (e.g., UK, Sweden, Japan, and Australia). Even in countries where private operators provide authorization and clearing services for faster payments, settlement services are typically provided by the central bank.
Speed and Hours of Operation
Almost all global faster payment systems are able to clear payments within seconds. Typically, the funds are made available to end users within a minute after the payment is initiated. Some systems may provide a payment confirmation within seconds, but allow banks to delay posting the funds to end-user accounts for a few minutes to a few hours. Settlement speed also varies by country. Although most retail faster payment systems have been designed to settle on a deferred net basis at the end of the day or multiple times throughout the day, some settle payments in real time.
Hours of operation also vary from country to country. Many faster payment systems operate on a 24×7 basis, although some do not guarantee immediate processing outside of certain hours or business days (e.g., Mexico, Brazil, and Japan). Hours of availability for end users may also vary by provider.
Types of Payment Services Provided
Most countries have initially focused on providing faster person-to-person payments and/or business-to-business payments. Since these types of payments are frequently made by checks or cash today, faster payment options provide opportunities for greater payment efficiency and enhanced data capabilities.
Lessons learned from implementations of faster payments in other countries may help in the design and rollout of faster payments in the United States.
Many countries that originally built a faster payment system using domestic messaging standards with limited ability to transmit detailed payment data and/or limited cross-border interoperability have since decided to transition to more flexible messaging standards. Although most international faster payment systems are relatively new, end-user adoption is growing in many markets and innovative new products and services have begun to emerge.
Other countries have designed new payment systems with improved data and e-invoicing capabilities in mind, allowing businesses to streamline their accounting systems and automate business processes. While faster payments itself does not improve features such as data and e-invoicing, the creation of a new payment system may provide opportunities to make enhancements to these types of capabilities. In addition to the growing number of national-level faster payment systems operating around the world, there is also a movement toward greater cross-border interoperability between systems.
As the task force continues to considered effective approaches for solutions in the United States, lessons from these global implementations supported analysis and recommendations featured in Part Two of the Final Report.