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FEDFocus on Payment System Improvements

FEDFocus on Payment System Improvements

 The U.S. payment system is undergoing a remarkable period of change, driven by rapid adoption of technology and evolving end-user expectations. The Federal Reserve Banks believe that collaboration and engagement with the industry is the foundation of any enduring strategic improvements to the U.S. payment system. The FRB has spent the last year conducting an extensive program of research and input gathering designed to inform an initiative to improve the speed, efficiency and security of the U.S. payment system. The effort began last fall with release of the “Payment System Improvement – Public Consultation Paper” which solicited comments on gaps and opportunities in the payment system.

To address the gaps and opportunities in the current payment environment, the Federal Reserve Banks have proposed in the paper five desired outcomes to be achieved within 10 years.

1. Strategic industry engagement - Key improvements for the future state of the payment system have been collectively identified and embraced by payment participants, and material progress has been made in implementing them.

2. Ubiquitous real-time retail payments - A ubiquitous electronic solution(s) for making retail payments exists that does not require the sender to know the bank account number of the recipient. Confirmation of good funds will be made at the initiation of the payment1. The sender and receiver will receive timely notification that the payment has been made. Funds will be debited from the payer and made available in near-real-time to the payee.

3. Improved efficiency - Over the long run, greater electronification and process improvements have reduced 
the average end-to-end (societal) costs of payment transactions and resulted in innovative payment services that deliver improved value to consumers, businesses and 

4. Improvements in cross-border payments - Consumers and businesses have better choice in making convenient, cost-effective and timely cross-border payments from and to the United States.

5. Enhanced payments safety and security - The Federal Reserve Banks have collaborated, as appropriate, with the industry to promote the security of the payment system from end-to-end amid a rapidly evolving technology and threat environment. In addition, public confidence in the security of Federal Reserve Financial Services has remained high.

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