Faster Payments — How Fast is Fast?

As I sat down to work on my blog, I decided to review the definitions of fast and faster. According to our trusted friend Webster, fast is when something is “characterized by quick motion, operation or effect; moving or able to move rapidly.” 

Faster, conversely, is defined as “moving or capable of moving at high speed.”

For years, I have been saying there are three categories of payments: Sometime, near-time and real-time. 

Checks are a sometime payment – as the issuer you have no control over when the check is deposited or when it clears, but you know that it will sometime in the future.

Automated Clearing House (ACH) payments fall in the near-time (fast) category, whereas wire payments, until recently, were about the only thing we had that came close to real-time (faster). 

Faster payments is a drum you’ll frequently hear me beat and I have made it something of a personal mission, to ensure that the voices and concerns of community bankers are front and center as industry stakeholders work to improve the U.S. payments system.

I have had the honor of representing community banks on the Federal Reserve’s Faster Payments Task Force since it was formed in May 2015, as proposed by the Federal Reserve’s Strategies for Improving the U.S. Payment System. In two years, the Task Force has made considerable advancements in their pursuit to identify effective approaches for implementing safe, ubiquitous, faster payments in the United States.

I am proud to say that both myself and Cary Whaley, first vice president, payments and technology policy at ICBA, have represented community banks in this effort since the very beginning.

The Task Force, itself, is comprised of more than 300 diverse organizations ranging from regulators to fintechs to consumer groups. The varied viewpoints and expertise that make up the Task Force contribute to work products that are representative of all payment stakeholders. As part of our work effort, the Task Force developed 36 Effectiveness Criteria, categorized into six groupings (Ubiquity, Efficiency, Safety and Security, Speed, Legal, and Governance) that represent the collective views of payment stakeholders and serve to guide innovation. 

But, that isn’t all we’ve accomplished. The Task Force accepted proposals and commissioned an independent assessment of 22 payments solution proposals against the Effectiveness Criteria, 19 of which were reviewed by the Task Force. Sixteen of those will be included in Part Two of the Final Report publication this summer.  In case you missed it, The U.S. Path to Faster Payments, Final Report Part One was published in January 2017.

Real-time payments are fast approaching. To keep up with the newest developments follow @fedpayimprove on Twitter or visit Fed  Payments Improvement.