America should be joining the modern payments world with an upgrade to the faster payments network
While America may well be one of the world economy powerhouses, it’s payments infrastructure is among one of the more primitive in a developed nation. While efforts are being made to move away from the likes of the incredibly unsafe magnetic strip and sign security protocols, to the more secure chip and sign, it’s the banks that also need to play catchup with the rest of the world.
The Federal Reserve Banks and Federal Reserve Board have been looking into the possibility of a faster network for payments and have come to the conclusion that it really is the best solution for the country and its payment infrastructure. The study showed that if real-time payments were adopted then a third of cheques would go away, Automated Clearing House use would drop by 11 per cent, and wires by seven per cent.
Speaking to Forbes, Sean Rodriguez, senior VP for industry relations at the Chicago Federal Reserve Bank summed up that “the bottom line in all the assessments, the recommendation they came forward with, is that we in the U.S. should build some new infrastructure to accomplish faster payment capabilities.”
It seems that the decision to move towards a faster system has only really come about in the last year or so, with many banks flip-flopping on their initial claims of being unable to see why change was needed. The case used to be that banks would say “there are no problems here, what are you trying to solve?’ Now it has evolved to ‘We get it. A faster payments capability would be beneficial. Let’s talk about what it should be and about how soon we can get there.’ This dialogue has turned into a go-forward strategy,” explained Rodriguez.
It seems that retailers couldn’t be happier about that prospect too, with Amazon’s director of product and marketing, Rich Koehler, pointing out that the company can actually ship products faster than it can move payments.
So, it’s certainly a move in the right direction if the US pushes forth into the world of real-time faster payments.
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