FED's Plan for Improving Payment System

After 18 months of research, The Federal Reserve issued its Strategies for Improving the U.S. Payment System, which presents a plan to enhance the speed, safety and efficiency of the payment system.

Key takeaways:

  • The plan suggests that a new infrastructure could be the best way to facilitate near-real-time payments.
  • The FED will focus on building a faster payments option for a subset of transactions that could benefit substantially from real-time processing, representing 10-12% of all payments, or 29 billion transactions annually.
  • While the FED sees their role as a leader or catalyst for change, they do not plan to step in and build their own new payment service. They are encouraging the private sector to take a more forceful role in the effort.
  • Costs to the industry of implementing faster payments over a 10 year span will total $3.8 - 7.2 billion.
  • The FED views other industry efforts such as NACHA’s plan for same-day ACH clearing and The Clearing House’s plans to build a real-time payments system as complimentary to the common desired outcome of faster payments.