There was probably no better time of year to talk about payments — shoppers had been paying for holiday gifts with cash, credit and debit and increasingly are using mobile phones and their computers for purchases.
Understanding consumer and business needs and preferences is key to the Fed’s new Financial Services Strategic Plan, Richmond Fed Senior Vice President Dave Beck told the Commonwealth Association for Financial Professionals during a recent meeting at the Federal Reserve Bank of Richmond.
Other countries around the world are implementing near real-time payments systems for consumers and businesses. The Federal Reserve is talking with stakeholders so that we can understand whether speeding up payment clearing will drive innovation and meet the needs of consumers and businesses in the U.S. payments system, Beck said.
PHOTO BY MICHAEL BATTS
“As the economy becomes more global, there’s a need for interoperability among payments systems,” he said, pointing to technology advances in use in Europe as an example during his presentation.
The Fed has a role as both a payments system operator and as a leader and catalyst to influence payments system improvements. The recently approved Federal Reserve Financial Services Strategic Plan for 2012–2016 was developed to address end-user needs in the changing payments landscape. Through industry collaboration over the past decade, Reserve Banks have made substantial progress migrating from paper-based check clearing to more efficient electronic payments.
As Richmond Fed Chief Operating Officer Sally Green observed, “There’s been an enormous amount of change in the payments area” compared with just five years ago.
Even as more people adopt electronic payments, cash usage overall is stable and has actually increased in the Fifth District in the past year. Faster widespread adoption of new payments technologies in the United States is hindered by the efficiency of existing payments infrastructure, a backlog of other IT projects at financial institutions and information security concerns related to new technologies, Beck said.
The Richmond Fed and the Federal Reserve System have a long history of collaborating with the Association for Financial Professionals nationally and locally. The Fed has been an active participant in the AFP national conference, sharing information about Fedwire modernization and automated clearinghouse, or ACH, payments. And the Bank has participated in the Commonwealth Association for Financial Professionals’ local training and professional development seminars.
Green noted that AFP and CAFP members have also provided valuable insight about payments industry trends.
The Richmond Fed regularly hosts financial industry and outreach events. “We like to bring people into the Fed,” Green said. “We want people to know we are part of this community and to know who we are and what we do.”
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