Reed Luhtanen, Executive Director, FPC
And just like that, September has come to a close. Our successful 2023 Fall Member Meeting concluded just last week, and what a way to end the month!
It was energizing to see so many Members and industry participants at the fall event, engaging in discussion around the timely topics furthering faster payments. From the FedNow® Service to real-time payments use cases, to risk management and more, the 2023 Fall Member Meeting, which also provided an opportunity to celebrate the FPC’s five-year anniversary, served as a forum to recognize how far we’ve come, and look at what’s still to come.
For instance, we took time to talk about the FedNow Service. In the session, Getting Up to Speed on FedNow Post-Launch, early adopters were able to shed light on building a business case for real-time payments, as well as lessons learned from implementation. Participants shared that the interest in the FedNow Service and RTP® is there from large and small businesses alike, and by thinking about your commercial customers as consumers and building products with that in mind, that demand will rise. As Mark Majeske at Alacriti said, “We’re all consumers. We all use financial services. Think about what we hope to achieve. Everyone has something they want to do, but they can't. Take time to figure that out because that’s your product. That’s your use case. The use cases should be what your customers want to do, satisfies their needs, and makes their financial lives easier.”
The meeting also spent time exploring Request for Payment (RfP) as another important use case for real-time payments. In Paying it Safe: Understand the Potential Risks, Mitigating Safeguards, and Best Practices in RfP Use Cases, we reviewed the RfP use case and new measures put in place to make this use case more attractive to users. To make it so, Paul Amisano of the Federal Reserve Bank of Boston contends, “You need complete, 100 percent trust in two things: the legitimacy of the RfP and the authenticity of the sender.” And it is why we are seeing enhancements to established processes to build that trust and confidence.
For instance, The Clearing House (TCH) earlier this year implemented an improved RfP warranty process. While warranties have always been part of TCH’s operating procedures, the framework for receiving the warranty was not as clear. Jim Colassano of TCH explained during the session, “What we didn’t have in place was a mechanism for a bank to say my customer is claiming breach of warranty, now what is the process for me to recover? So, we put a process in place that details all of the obligations, how to submit a claim, how long a sender’s bank has to reply, and what their obligations are. And we have an arbitration process that helps wrap it all up."
The Fed, too, has refined RfP processes and just recently issued an updated version of the FedNow Operating Procedures to reflect the changes. Amisano shared in the session that “We strengthened three things as pertains to RfP warranties: First, we set a clear definition for what legitimate purpose is, and it aligns well with how The Clearing House has defined it. Second, we set expectations for FIs to monitor customers' usage of RfPs and to investigate anomalies that show up in usage. And third, we designed a clear process to initiate claims in the event of a suspected warranty breach.”
It is measures like these that will ensure the certainty that is desired when making any payment, but particularly instant RfP transactions. And with that certainty will come increased confidence in faster payments and the continued advancement and growth of these transactions.
From just these two session highlights, I hope it is clear that the depth and breadth of the conversations at our meetings are some of the most important drivers of the future of faster payments. If you aren’t yet a member, we hope you consider joining the FPC today, so you can make plans to join us for our Spring Member Meeting, taking place March 27 – 28, 2024, in Lake Buena Vista, Fla. The faster payments momentum is growing, and we don’t want you to miss out on your opportunities to leverage it. So, join the FPC today.