1. Dan Gonzalez Vice President, Payments Industry Relations
Building a Faster, Safer Payment System
PayCLT Meeting
November 4, 2016
Dan Gonzalez Vice President, Payments Industry Relations
© 2016 Federal Reserve Banks. Materials are not to be used without consent.

2. Strategies for Improving the U.S. Payment System Paper
Five desired outcomes developed with extensive payment stakeholder input
Speed
Security
Efficiency
International
Collaboration

3. Mission and Objectives of the Faster Payments Task Force
Identify and evaluate approach(es) for implementing a safe, ubiquitous, faster payments capability in the United States
Represent… views on future needs for a safe, ubiquitous faster payments solution
Assess…
alternative approach(es) for faster payment capabilities
Address…
other issues deemed important to the successful development of effective approaches

4. Faster Payments Task Force Composition
Total Registrants: 315+
© 2016 Federal Reserve Banks. Materials are not to be used without consent.

5. Task Force Work Overview
EFFECTIVENESS CRITERIA
Potential faster payment system features
CAPABILITY SHOWCASE
Faster payments components available in the marketplace
SOLUTION PROPOSALS
Demand for an end-to-end faster payment system in the United States
QUALIFIED INDEPENDENT ASSESSMENT
Assessing proposed solutions against the effectiveness criteria
CHALLENGES AND OPPORTUNITIES
Barriers and opportunities within the payment industry
Task Force Work Overview
The Faster Payments Task Force work is helping to accelerate and enhance implementation of real-time payment capabilities in the United States
RECOMMENDATIONS AND NEXT STEPS
Facilitating successful implementation of faster payments
Available on FedPaymentsImprovement.org
To be published in the first half of 2017

6. Faster Payments Effectiveness Criteria
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
F.3 Fast availability of Good Funds to the Payee
Effectiveness Scale
Very effective – Within 1 minute.
Effective – Within 30 minutes.
Somewhat effective – Within 1 hour.
Not effective – Over 1 hour.
F.2 Fast Clearing
Effectiveness Scale
Very effective – Within 2 seconds.
Effective – Within 5 seconds.
Somewhat effective – Within 1 minute.
Not effective – Over 1 minute.
F.4 Fast Settlement among Depository Institutions and Regulated Non-bank
Effectiveness Scale
Very effective – Less than 30 minutes and otherwise fully satisfies these criteria.
Effective – Less than 2 hours and otherwise mostly or fully satisfies these criteria.
Somewhat effective – No later than end of day and otherwise partially, mostly, or fully satisfies these criteria.
Not effective – Next day or longer, or does not otherwise satisfy these criteria.

7. 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

8. Proposal Submission and Assessment
Any Faster Payments Task Force member was eligible to submit a proposal for an end-to-end payments solution
Assessment undertaken by Qualified Independent Assessment Team
Qualitative assessment against the Effectiveness Criteria
Task force will provide commentary on the assessments and proposals

9. Task Force Commentary Period Overview
Phase 1: Education
Build understanding and confidence in assessment process
Phase 2: Dialogue and Commentary
Facilitate understanding, dialogue and response to proposals
Phase 3: Insights and Implications
Share outcome of assessments to drive insight for report recommendations

10. Challenges and Opportunities Work Group
A “Challenges and Opportunities” work group was formed to support development and delivery of the final report.
Sub-work groups determine information gaps and conduct deep dives on assigned challenges and opportunities.

11. Final Report Phased Release Strategy Final Report Inputs
QIAT Assessment
Task Force Community
Challenges and Opportunities Work Group
Task Force Review
Effectiveness Criteria
Capability Showcase
Final Report Inputs
Release One
Landscape and Benefits
Task Force Background and Process Overview
Release Two
Proposals and Assessments
Challenges and Opportunities
Recommended Next Steps
Phased Release Strategy

12. What to Expect Next
Task Forces Review Solution Proposals and Preliminary Assessments
Proposals offer models of what an end-to-end faster payment system in the United States could look like and will show how each proposal measured up against the various effectiveness criteria
Part One of the Final Report
Describes the task force history and background, including the process undertaken to identify and assess faster payments solutions
Part Two of the Final Report
Includes a discussion and assessment of the specific proposals and identifies strategic issues deemed important to the successful development of faster payments in the United States.

13. Secure Payments Task Force Mission and Objectives
Work to reduce fraud risk and advance the safety, security and resiliency of the payment system
Advance areas of focus for payment security and priorities for future action to enhance payment system safety, security and resiliency
Advise the Fed on payment security matters
Coordinate with the Faster Payments Task Force to identify solutions for any new or modified payments infrastructure

14. Focus Areas Feb 2016 Feb 2016 Mar 2016 June 2016 Nov 2016
Payment Identity Management
Work Group Chair:
Nancy O’Malley, MasterCard
Identification and adoption of payment identity management practices to mitigate existing and anticipated fraud vectors
Feb 2016
Information Sharing for the Mitigation of Payment Risk and Fraud
Glen Ulrich, U.S. Bank
Improve the awareness, implementation and exchange of fraud and risk information both domestically and cross-border
Mar 2016
Data Protection
Reed Luhtanen,
Wal-Mart Stores, Inc.
Identification and adoption of frameworks / methodologies for protecting sensitive payment data at rest and in transit
June 2016
Law and Regulation Coordination
Victoria Strayer, TSYS
Identify opportunities for more consistent interpretation and application of payment laws and regulations to enhance payments system security
Nov 2016
Feb 2016

15. Accomplishments To-Date
Collaborated on the Faster Payments Effectiveness Criteria
Ongoing Support of the Evolution and Adoption of Standards
Enhanced Federal Reserve Payment Security Research
Enhanced Federal Reserve Payment Security Research
Identified and Advanced Work on Payment System Security Focus Areas
Launched Survey to Solicit Industry Feedback on Work Group Solutions

16. 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

17. Questions?