I’m at the Kansas City Federal Reserve Bank’s conference on Consumer Payment Innovation. Bruce Summers, Former Director, Federal Reserve Information Technology, just finished presenting a major paper on payments system infrastructure and the Fed’s potential role in new systems in the future. The paper, which builds on an earlier paper coming out of the Chicago Fed’s Symposium on Immediate Funds Transfer last fall, makes four specific recommendations:
- The Federal Reserve Board should clarify its role and that of the Federal Reserve Banks in the existing consumer payment system and its future development.
- Federal Reserve Board and/or U.S. Treasury should engage the appropriate Congressional committees about the need for a national commission on payment system innovation in the digital economy.
- Federal Reserve Banks should perform a benchmark technical and cost assessment of implementing end-to-end clearing and settlement of IFT-like payments.
- Federal Reserve Board should develop a special-purpose bank charter for non-bank payment services providers.
Bruce’s paper is available here. Dense reading, but important!
The bottom line? People are talking about whether or not the U.S. should develop a same-day transfer system, along the lines of what the U.K. has done with its “Faster Payments System” and Mexico has done with SPEI. This could have radical – transformational – impact on the entire U.S. payments industry. Think, for example, what could be done with this, when combined with a mobile app, at the point of sale.
Stay tuned!
As a founding partner of Glenbrook, Carol has offered clients over 25 years of experience in product, marketing, and strategy development with leading financial services providers in both wholesale and retail financial services. She is a co-author of the book “Payments Systems in the U.S.” Before founding Glenbrook Partners, Carol was a managing director of the Global Institutional Services division of Deutsche Bank, in charge of marketing, client online services, and Internet development.
Carol began her career as a corporate lending officer for large multinationals at both Bank of America and Citibank. During her time at Visa International, Carol founded and managed Visa’s European product-development office, where she led a series of electronic-commerce and chip-card projects designed to bring European banks online. Carol formally retired from Glenbrook in June 2020, but remains important to the firm as both a friend and advisor.