The Potential for (Much!) Faster Payments in the U.S.
I’m at the Kansas City Federal Reserve Bank’s conference on Consumer Payment Innovation. Bruce Summers, Former Director, Federal Reserve Information Technology, just finished presenting a major paper on payments system infrastructure and the Fed’s potential role in new systems in the future. The paper, which builds on an earlier paper coming out of the Chicago Fed’s Symposium on Immediate Funds Transfer last fall, makes four specific recommendations:
- The Federal Reserve Board should clarify its role and that of the Federal Reserve Banks in the existing consumer payment system and its future development.
- Federal Reserve Board and/or U.S. Treasury should engage the appropriate Congressional committees about the need for a national commission on payment system innovation in the digital economy.
- Federal Reserve Banks should perform a benchmark technical and cost assessment of implementing end-to-end clearing and settlement of IFT-like payments.
- Federal Reserve Board should develop a special-purpose bank charter for non-bank payment services providers.
Bruce’s paper is available here. Dense reading, but important!
The bottom line? People are talking about whether or not the U.S. should develop a same-day transfer system, along the lines of what the U.K. has done with its “Faster Payments System” and Mexico has done with SPEI. This could have radical – transformational – impact on the entire U.S. payments industry. Think, for example, what could be done with this, when combined with a mobile app, at the point of sale.