Solving for the Interoperability Challenge

Reed Luhtanen, Executive Director, FPC

Within the faster payments arena, we’ve got a lot. We have faster payments rails, including The Clearing House’s RTP® Network, the ACH Network (Same Day ACH), Visa Direct, Mastercard Send, and soon, a brand-new rail in FedNow℠. We even have faster payments apps that leverage those rails, such as Zelle, ExcheQ, Venmo, and more making it possible for consumers to send and receive money faster than ever.

While we’re well on our way to establishing a thriving faster payments ecosystem, we recognize we’re still missing a key factor that can contribute to achieving ubiquitous faster payments: interoperability. According to the inaugural FPC/Glenbrook Faster Payments Barometer, faster payments’ biggest challenge is that systems do not interoperate with each other. 53% of respondents expressed the lack of interoperability as a key barrier to faster payments adoption. And achieving it is a critical success factor. Almost 80% of the industry feel achieving interoperability across payments systems is very important if we want to realize the true value faster payments can bring.  

But with more than 10,000 financial institutions in the United States, a multitude of products and solutions, and a lack of consistency through standards, achieving interoperability is no easy feat. Respondents to the Faster Payments Barometer are mixed on how best to get there. 34% believe we should employ Network Operators to achieve interoperability; 26% citied intermediaries; and another 21% indicated a central switch could be the answer. And given the fact that almost half of respondents believe we need to get there in 1-4 years, we have a substantial task ahead of us.

But there is light at the end of the tunnel. We, as an industry, have done this before. We solved the ATM challenge. Today, regardless of which ATM is used and where a person banks, a person can pull money from or deposit funds into an account from any ATM.  We were able to create an easy, safe, and seamless experience for the end user because we all came together to make it happen.

At the FPC, we understand the challenge ahead of us, and we’re not shying away from it. In fact, we’re already taking substantial steps toward our ubiquitous future. Our Network Committee, which is comprised of members from U.S. network operators has been tasked with looking at interoperability, and recently shared findings during a members-only Town Hall followed by the release of its first deliverable: a U. S. Faster Payments Interoperability white paper.

The white paper takes a comprehensive look at the various models that can connect systems together, such as the Point-of-Origination Model, among others, and how settlement could work in those models. This information provides a consistent level of understanding for our industry on how interoperability can be achieved. It does not prescribe the exact path forward, but it provides the basis upon which we can collaborate and engage in additional dialogue to get us closer to our desired end state. 

While we recognize the road to interoperability might not be easy, with the support of our members and the industry at large, we are up to the challenge. The work towards our ubiquitous future has already begun, and we will continue our path forward. 
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