The Fed’s Faster Payments Task Force isn’t kidding when it says it wants every U.S. consumer and business to be able to accept faster payments by 2020.
It’s an ambitious plan, no doubt. But with the release of its final report on July 21, detailing 16 proposed faster payment solutions and outlining possible approaches, the task force is making a serious call to action.
“The baton has been passed,” said Steve Ledford, senior vice president, product and strategy, The Clearing House (TCH), at a morning broadcast related to the final report. “Now, we have to do something.”
Ledford is one of 300 members of the Faster Payments Task Force, which was created and led by the Federal Reserve in 2015. Members represent financial institutions, consumer groups, payment service providers, financial technology firms, merchants, government agencies and a number of other interested parties.
TCH and FIS were active participants in the task force’s initiative and submitted a joint proposal for evaluation of TCH’s Real-Time Payments (RTP) system, which is targeted to launch later this year, the companies said. TCH enlisted the help of FIS to help achieve ubiquity by offering enhanced RTP services to more than 3,000 financial institutions.
“FIS has been implementing real-time payment schemes around the globe since 2009, and we draw important lessons from these projects every day,” said Anthony Jabbour, COO, banking and payments, FIS. “Speed, ubiquity and ease of use lead to high adoption rates and relevant payment solutions that banks can offer to their retail, small business and corporate clients. FIS understands the specialized risks inherent in a real time payments scheme, and that’s why we focus on minimizing risk to support systems, and ensure appropriate fraud prevention measures are taken into account. All this is vital to gain large-scale user uptake and thus turn a real-time payments vision into real-time business value for all.”
Canadian startup nanopay also proposed using its technology to enable faster payments in the U.S. “The Federal Reserve has recognized that the U.S. and American banks are far behind on payments,” said Laurence Cooke, CEO and founder of nanopay, in an email to Paybefore. “The Fed has led a process to design the ultimate faster payments platform, but has left the delivery to participants which meet all of the Federal Reserve’s Faster Payments Task Force Assessment Criteria.”
The task force defined 36 effectiveness criteria grouped into the six categories: ubiquity, efficiency, safety and security, speed (fast), legal and governance.
Cooke says the nanopay platform offers the “simplest and quickest integration into legacy banking systems.” In 2016, the Royal Canadian Mint tapped nanopay to bring digital currency to the mainstream in the country. Its patented technology securely stores and moves money in an instant without intermediaries, according to its website.
“Banks will begin planning for faster payment this year with the first systems coming online in 2018,” Cooke predicts. “A key driver will be pressure from global faster payment systems in the U.K. and Europe that will force banks to catch up to their European counterparts to remain competitive. Early adopting banks will gain market share, while laggards will be left behind. Adoption will be quicker than that in the U.K., which took eight years to reach 50 percent of payments.”
As participants in the task force and beyond fight for their piece of the faster payments pie in the U.S., the consensus seems to be that multiple players will be at the table and will have to work together to ensure interoperability, ubiquity and security.
- Fed Highlights Progress toward Faster, Safer Payments
- A Year In, Progress for Fed’s Payments Improvement Plan
- Viewpoint: Faster Payments Are Here
Image Credits: Itzik Gur