In an effort to address questions about the Federal Reserve’s recently announced FedNow℠ Service and engage in dialogue on the many considerations that come with the new real-time gross settlement system, the FPC hosted a three-part Town Hall series. Each Town Hall had its own focus, allowing for conversations on the technical components (read my earlier blog post) and proposed characteristics of the Service, directories and interoperability to support ubiquity, and fraud mitigation activities to help ensure safety and security.
With more than 200 FPC members participating in the Town Halls, we were able to have healthy dialogue around various hot-button topics. Below is a high-level recap of those discussions.
Directories and Interoperability
This Town Hall set the foundation for discussion on how interconnected our faster payments landscape will be, emphasizing that the FPC continues to prioritize ubiquity as a necessary characteristic of a successful faster payments system. The Fed has also been clear in its public support for a ubiquitous system. One component of universal acceptance is ease of use and based on the examples of other countries’ implementation of faster payments, directories are central to that since they allow for transactions to be initiated using aliases such as mobile numbers and emails. Effective directories must also enable broad access and safety, and security, and determining directory options with those criteria, among others, will be key to supporting a more efficient faster payments environment.
But directories in and of themselves can only take us so far. As private companies (and eventually the Fed) offer more and more faster payment solutions to U.S. consumers and businesses, achieving ubiquity will mean that the industry will have to align around common technical specifications, message formats, liability and protections, and roles and responsibilities, across various platforms to ensure efficiency, while still allowing for differentiation and competition. And that’s where the FPC comes in, enabling the coordination across the industry necessary to determine how we are going to resolve those components.
Fraud Information Sharing
If ubiquity is needed to realize the full potential of faster payments, then fraud prevention is necessary to maintain those benefits into the future. Today, our industry leverages a variety of safeguards to mitigate fraud, from broad customer education to active solutions such as multifactor authentication and maker-checker functionality. But as money movement speeds up and fraudsters increase their level of sophistication, there are new considerations.
Our third and final Town Hall focused on what a consistent and holistic payments fraud classification model could look like, with an end goal of improved data quality, timeliness, and fraud mitigation effectiveness as widespread industry adoption is achieved. It was also reported on the Town Hall that the FPC’s Fraud Information Sharing Work Group is working diligently to develop a white paper on fraud prevention best practices, themes and trends, and will then tackle recommendations on next-generation fraud prevention solutions.
While the first ever FPC Member Town Hall series has concluded, the byproduct of the event—member input that will shape the future of the faster payments in the U.S.— will have far-reaching impact for our industry for some time to come.