6 strategies for improving - university of north texas › sites › default › files ›...

© 2017 Federal Reserve Banks. Materials are not to be used without consent. 1

Strategies for Improving the U.S. Payment System

Government Treasurers of TexasDec. 4, 2017

Matt Davies, CTP Cedric Menchion, CTPAssistant Vice President Director of Financial ServicesFederal Reserve Bank of Dallas Killeen ISD

© 2017 Federal Reserve Banks. Materials are not to be used without consent.

Objectives

2

You will leave here with a better understanding of:• The Fed’s work on Strategies for Improving the U.S>

Payments System• What are “faster payments”?• Industry Initiatives in “faster payments”• The current landscape of payments security• Fed and industry collaboration to improve payments security


Five strategies in pursuit of five desired outcomes

Stakeholder Engagement

Faster Payments

Payment Security

Payment Efficiency

Enhanced Federal Reserve Services

Strategy 1: Stakeholder EngagementActively engage with stakeholders on initiatives designed to

improve the U.S. payment system


Strategy 2: Faster PaymentsIdentify effective approaches for implementing safe, ubiquitous, faster payments



Pursuing Faster Payments

6

Faster payments capabilities have the

potential to draw more of the

unbanked/under-banked population

into the financial mainstream

There is clear stakeholder

momentum in the U.S. to pursue faster retail payments on a

comprehensive, industry-wide basis

Several countries have developed/are

developing ubiquitous, faster

payments capabilities and the

U.S. is at risk of falling behind

Despite high levels of innovation in the U.S.

payment system, a lack of coordination is

creating fragmentation,

inhibiting ubiquity and creating confusion


Australia New Payments Platform

South AfricaRTC

Nigeria

NIP

ChileTEF

BrazilSITRAF

ColombiaTBD

MexicoSPEI

United StatesTBD

JapanZengin

South Korea

HOFINET

IndiaIMPS

European UnionSEPA Instant

SingaporeFast and Secure

Transfers

SwedenBiR

United KingdomFaster Payments

Service

DenmarkNETS

PolandExpress ELIXIR

ThailandTBD

Real-Time Payments – A Global Trend*

*Source: The Clearing House


Faster Payments Task Force 315*

Business End-User, 5%

Consumer Interest, 3%

Govt End-User, 2%

Large FI, 8% Medium FI, 14%

Non-Bank Providers,

31%

Other Stakeholders,

28%Small FI, 9%

Task Force Participants

8

*As of Dec. 2016


Faster Payments Task Force

• Effectiveness Criteria• Capability Showcase• Solution Proposals• Final Report, Parts I and II

9


Faster Payments Effectiveness CriteriaUbiquity

U.1 AccessibilityU.2 UsabilityU.3 PredictabilityU.4 Contextual Data CapabilityU.5 Cross-Border FunctionalityU.6 Multiple Use Cases

Speed (Fast)F.1 Fast ApprovalF.2 Fast ClearingF.3 Fast Availability of Good Funds to PayeeF.4 Fast Settlement among Depository Institutions and Regulated Non-bank Account ProvidersF.5 Prompt visibility of payment

status

EfficiencyE.1 Enables CompetitionE.2 Capability to enable value-

added servicesE.3 Implementation TimelineE.4 Payment Format StandardsE.5 ComprehensivenessE.6 Scalability and AdaptabilityE.7 Exceptions and Investigations

Process

Safety and Security

S.1 Risk ManagementS.2 Payer AuthorizationS.3 Payment FinalityS.4 Settlement ApproachS.5 Handling Disputed PaymentsS.6 Fraud Information Sharing S.7 Security ControlsS.8 ResiliencyS.9 End-user Data ProtectionS.10 End-user/Provider

AuthenticationS.11 Participation Requirements

GovernanceG.1 Effective governanceG.2 Inclusive governance

L.1 Legal Framework L.4 Data privacyL.2 Payment System Rules L.5 Intellectual propertyL.3 Consumer Protections

Legal

10


Faster Payments Effectiveness CriteriaEach individual criteria is comprised of several components

11

Criteria Name Summary Definition

Additional Considerations

Effectiveness Scale


Final Report Part Two: A Call to Action

12

The Task Force VisionThe Faster Payments Task Force calls upon all stakeholders to seize this historic opportunity to realize the vision for a payment system in the U.S. that is faster, ubiquitous, broadly inclusive, safe, highly secure, and efficient by 2020.

We ask you to support this effort by:• Embracing and promoting the vision and the Effectiveness Criteria; • Actively participating in the ongoing dialogue; • Contributing to work group efforts and deliverables; and • Taking steps to make your own organization faster payments ready by

2020.

Faster Payments Solution Proposals• Dwolla, Inc• Hub Culture, ECCHO,

Xalgorithms• InterComputer Corporation• Kalypton Group Limited and

ECCHO• Mobile Money Corp• nanoPay Corporation• North American Banking

Company, and Independent Community Bankers of America

• Ripple

• SHAZAM, Inc.• SwapsTech• The Clearing House and

FIS• Thought Matrix Consulting,

LLC• Token, Inc.• University Bank• WingCash• World Currency USA, Inc.

13© 2017 Federal Reserve Banks. Materials are not to be used without consent.


The Recommendations

14

Governance and Regulation Infrastructure Sustainability and Evolution

1. Establish a faster payments governance framework

2. Recommend and establish faster payments rules, standards, and baseline requirements that support broad adoption; safety, integrity, and trust; and interoperability

3. Assess the payments regulatory landscape and recommend changes to the regulatory framework

4. Establish an inclusive directory work group to identify and recommend a directory design for solutions to interoperate in the faster payments system

5. Enhance Federal Reserve settlement mechanisms to support the faster payments system

6. Explore and assess the need for Federal Reserve operational role(s) in faster payments

7. Recommend, develop, and implement methods for fraud detection, reporting, and info sharing in faster payments

8. Develop cross‐solution education and advocacy programs aimed at awareness and adoption

9. Conduct research and analysis to address gaps in cross‐border functionality and interoperability

10. Continue research and analysis on emerging technologies


Interim Collaboration Work Group (ICWG)

15

Two broad objectives:– Develop a faster payments governance framework that incorporates

public commentary, and– Establish the framework and membership

In developing the framework, the ICWG will define and implement:– The initial charter of the governance framework,– A representative and inclusive structure for membership, leadership

and voting rights,– Initial funding– Administrative support– Responsibilities and structures of any initial body(ies) and/or working

committees within the governance framework

The ICGW held its first meeting on July 17, 2017

Strategy 3: Payment SecurityReduce fraud risk and advance the safety, security and resiliency of the payment

system



Mission and Objectives of the Secure Payment Task Force

Provide a forum for stakeholders 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

action

Advise the Fed on

payment security matters

Coordinatewith the Faster Payments Task

Force

17


Task Force Participants

18

Task Force Registration Remains Open

Secure Payments Task Force 170*

Business End-User, 4%

Consumer Interest, 1%

Govt End-User, 5%

Large FI, 8%

Medium FI,11%

Non-Bank Providers, 32%

Other Stakeholders,

33%Small FI, 13%

*As of Dec. 2016


AccomplishmentsMapped out the lifecycle of eight key payment types noting existing identity management controls, risks and standards

Drafted guiding principles and identified components of a data protection framework

Documented a list of fraud and risk information sources to increase access to actionable information

Provided feedback on expanding fraud data reporting resulting in enhancements in the Fed’s Payments Study

Reviewed the faster payments solution proposals with a focus on payment security

© 2017 Federal Reserve Banks. Materials are not to be used without consent.© 2017 Federal Reserve Banks. Materials are not to be used without consent. 20

Payment Use Cases: Serve as an Educational Reference Guide for Payments and Security

Practitioners

Draft released for stakeholder comment: April 2017

Payment Flows

Controls

Sensitive Data

Risks

Applicable Standards

20


Payment Security Framework: Contains practical, risk-based guidance and advice on

payment identity management and data protection practices

Payment Security Framework: Contains practical, risk-based guidance and advice on

payment identity management and data protection practices

Payment Security Principles

Baseline Security Requirements

Recommended Security Requirements

Stakeholder Perspectives

Look Forward on Payment Security

21


Information Sharing Data Sources:Designed to improve awareness and implementation of inclusive cybersecurity

and fraud information sharing

List of known information sharing data sources

Relevant data sources across payment types and payment system participants

Categorized the data sources as freely available, subscription-based or proprietary

Draft released for stakeholder comment: April 2017

22


Enhancements to Existing Reports

Standard Fraud Reporting Proposal

Standard Fraud Reporting Requirements: Creates a structure to standardize fraud metrics and reporting

by payment type across the industry

23

Strategy 4: Payments EfficiencyAchieve greater end-to-end efficiency for domestic and cross-border payments



Facilitate Electronic Origination and Processing of B2B Payments

25

Small Business Payments Toolkit

Volume 2

StandardsBusiness PaymentCoalition


Migrate to the ISO® 20022 Messaging Standard

26

EducationWire Transfer and ACH

Implementation

Strategy 5: Enhanced Federal Reserve Services

Enhance Federal Reserve Bank payment, settlement and risk management services to address identified gaps



Improving the Speed, Safety and Efficiency of Clearing and Settlement Services

Education

Implementation of the NACHA Same

Day ACH rule

Expanded risk management

services


Join the Community at FedPaymentsImprovement.org!

Receive information on task forces and work groups, invitations to live/virtual events, surveys and other online feedback

opportunities.

@FedPayImprove FedPayments Improvement

29

6 strategies for improving - university of north texas › sites › default › files ›...

Documents