In Pursuit of a Better Payment System [payCLT Meeting in Charlotte]

Dan Gonzalez, Vice President of Payments Industry Relations, from the Federal Reserve System, presented at the PayCLT meeting on March 18th, 2016 in Charlotte.

As was covered in the meeting, the Federal Reserve Banks have come up with five strategies for building a faster and safer payment ecosystem. Here is a brief summary of the presentation at the event:

Why pursue a payments improvement initiative in the United States?

  • Market fragmentation
  • Stakeholder momentum
  • Engage the unbanked / underbanked population
  • The United States is at risk of falling behind
  • High-income millennials could influence future financial services

How to build faster payments?

In order to build faster payments, organizations need to actively engage with stakeholders on initiatives designed to improve the U.S. payment system. No improvements on a global level can be made if major organizations are not willing to collaborate on developing and implementing new initiatives to improve the payment system. In order to reach positive scalable results, influential entities must work together to leverage efforts and expertise in pursuit of payment system improvements.

The next step is to Identify effective approach(es) for implementing safe, ubiquitous, faster payments. For that purpose there are three missions and objectives for the faster payments taskforce to focus on:

  • Represent views on future needs for a safe, ubiquitous faster payments solution
  • Assess alternative approach(es) for faster payment capabilities
  • Address other issues deemed important to the successful development of effective approaches

Reduce fraud risk and advance the safety, security and resiliency of the payment system would be another important initiative to work on. The main stakeholders need to advise the Fed in its leader/catalyst and operator roles on payment security matters, and identify and promote actions that can be taken by payment system participants collectively and/or by the Federal Reserve System:

  • Determine areas of focus for payment security and priorities for future action
  • Advise the Fed on payment security matters
  • Coordinate with the Faster Payments Task Force

Greater end-to-end efficiency needs to be achieved for domestic and cross-border payments.

Image source: In Pursuit of a Better Payment System, payCLT meeting on March 18th

What’s next?

Areas of Focus for Future Action:

  • Payment identity management
  • Information sharing for mitigation of payment risk and fraud
  • Data protection
  • Law and regulation coordination

The next PayCLT meeting is scheduled for April 1st 2016. Todd Clark, General Manager of First Data’s STAR Network will be the guest speaker at this event.