Update from the Faster Payments Task Force July, 2017

Strategies for Improving U.S. Payment System Focuses on Improving Payment System Speed, Efficiency, and Safety from End-to-End Five desired outcomes developed with extensive payment stakeholder input Speed Security Efficiency International Collaboration © 2017 Federal Reserve Banks. Materials are not to be used without consent.

Achieving Desired Outcome for Safe, Ubiquitous, Faster Payments Capabilities for the U.S. Desired Outcome a safe, ubiquitous, faster payments capability in the United States Strategies Paper Task Force Work Efforts Address Challenges and Opportunities © 2017 Federal Reserve Banks. Materials are not to be used without consent.

Task Force Work Plan and Key Accomplishments © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Faster Payment Task Force Overview The Faster Payments Task Force work is helping to accelerate and enhance implementation of real-time payment capabilities in the United States Desired Outcome a safe, ubiquitous, faster payments capability in the United States Currently available on FedPaymentsImprovement.org Collaborative Work Efforts Final Report Part Two Challenges and Opportunities Solution Proposals and Qualified Independent Assessment Final Report Part One Published in July 2017 in the Final Report Capability Showcase Effectiveness Criteria © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Faster Payments Effectiveness Criteria Developed as a description of stakeholder needs that can be used to assess faster payments solutions and as a guide for innovation in the payments industry.  Ubiquity U.1 Accessibility U.2 Usability U.3 Predictability U.4 Contextual Data Capability U.5 Cross-Border Functionality U.6 Multiple Use Cases Speed (Fast) F.1 Fast Approval F.2 Fast Clearing F.3 Fast Availability of Good Funds to Payee F.4 Fast Settlement among Depository Institutions and Regulated Non-bank Account Providers F.5 Prompt visibility of payment status Efficiency E.1 Enables Competition E.2 Capability to enable value- added services E.3 Implementation Timeline E.4 Payment Format Standards E.5 Comprehensiveness E.6 Scalability and Adaptability E.7 Exceptions and Investigations Process Safety and Security S.1 Risk Management S.2 Payer Authorization S.3 Payment Finality S.4 Settlement Approach S.5 Handling Disputed Payments S.6 Fraud Information Sharing S.7 Security Controls S.8 Resiliency S.9 End-user Data Protection S.10 End-user/Provider Authentication S.11 Participation Requirements Governance G.1 Effective governance G.2 Inclusive governance L.1 Legal Framework L.4 Data privacy L.2 Payment System Rules L.5 Intellectual property L.3 Consumer Protections Legal © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 6

Capability Showcase Short industry videos of capabilities that could support end-to-end faster payment solutions Capabilities may support one or more of the Effectiveness Criteria Offers opportunity for capability providers to collaborate Educates task force on marketplace capabilities © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 7

Task Force Final Report Part One The U.S Path to Faster Payments, Final Report Part One: The Faster Payments Task Force Approach Provides an overview of: The background and process of the task force’s work Task force motivation for pursuing faster payments solutions in the context of the current payments landscape. © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 8

Faster Payments Solution Proposal and Assessment Process © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Proposal Submission and Assessment Any Faster Payments Task Force participant was eligible to submit a proposal for an end-to-end payments solution Assessment undertaken by Qualified Independent Assessment Team (QIAT) Qualitative assessment against the Effectiveness Criteria Task forces provided commentary on the assessments and proposals © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 10

The Faster Payment Solution Proposal and Assessment Process was Designed to Facilitate Diverse Stakeholder Input 22 proposers submitted solutions for QIAT assessment 19 chose to be assessed by task force participants 16 opted-in for inclusion in the task force’s final report The goal of this process is to create broad adoption of these capabilities by consumers and businesses over the coming years. © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 11

The U.S. Path to Faster Payments Final Report Parts One and Two © 2017Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Final Report Development The vision for the Final Report is to influence stakeholders to continue moving toward faster payments capabilities for the United States Final Report Development Task Force Process Effectiveness Criteria Capability Showcase Proposal Submission, QIAT Assessment, and Task Force Input Challenges, Opportunities, Goals and Recommendations Final Report Content Part One Landscape and Benefits Task Force Background and Process Overview Published - January 26, 2017 Part Two Proposals and Assessments Challenges and Opportunities Recommended Next Steps Published – July 21, 2017 © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

The U.S. Path to Faster Payments Final Report Objectives: To present the results of the task force for implementing a safe, ubiquitous, faster payments capability in the U.S. To propose recommendations and approaches for advancing the payments system To champion the industry and stakeholders to take steps toward implementation and adoption of a faster payments capability To suggest ideas to maintain momentum and continue collaboration for faster payments © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Part Two of the Final Report: Developed around Foundational Themes Potential Questions to be Addressed Broad Adoption Education Stakeholder collaboration Interoperability Rules and standards Role of directories Integrity and Trust New technology Reputational risk Developing the Ecosystem Governance Industry catalyst © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent. 15

Final Report - Recommendations Ten Recommendations in Three Key Areas Governance and Regulation – Interim Collaboration Working Group – establish a formal governance framework Establish rules and standards Evaluate laws and regulations Infrastructure Improvements - Develop design for directory services Request the FRB to develop 24x7x365 settlement services and to assess other operational roles Sustainability and Evolution – Address evolving security threats and foster continuous innovation Fraud detection/reporting/information sharing; advocacy/education; cross-border RTP; emerging technologies © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

Final Report – A Call to Action To All Payment System Stakeholders – Make the Faster Payments Vision a Reality Embrace and promote the vision and the Effectiveness Criteria Actively participate in the ongoing dialogue Contribute to work group efforts and deliverables Take steps to make every organization faster payments ready by 2020 How to Engage Go to FasterPaymentsTaskForce.org Learn more about the recommendations Sign-up to follow and/or engage in the next phase of faster payments work © 2017 Federal Reserve Banks. Materials are not to be used without Federal Reserve consent.

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