Lyle Hauser, CEO of The Vantage Group, discusses the challenge of making real-time payments a reality.

1. The
Challenge
of Making
Real-Time
Payments a
Reality
LYLE HAUSER

2. A need for speed in the nationwide payment process (among
other things) led the Federal Reserve to form the Faster Payment
Task Force, which in turn led to an exhaustive report, which
included 10 recommendations. And that has led in turn to … what,
exactly?
There have been some strides taken since the task force
completed its work in July 2017 — notably creation that fall of a
real-time payments system called RTP by The Clearing House —
but there are miles to go to meet the stated goal of a new
nationwide payment system by 2020.

3. As pointed out in one report, challenges remain, particularly in
the area of interoperability, before the U.S. literally gets up to
speed — before a payment system is in place that task force
head Sean Rodriguez described as “faster, ubiquitous, safe,
broadly inclusive, safe and efficient” in a video on the
organization’s website.
The task force, composed of some 320 volunteers from
financial institutions, government agencies, consumer
advocacy groups, retailers, standards bodies, et al., convened
in May 2015. It wrapped things up 14 months later, after some
252 meetings and teleconferences, 19 surveys and votes and
some 120,000 hours of work, according to Lauri Giesen of
bai.org. The body’s report consisted of two parts, the first
released in December 2016, the second in July
2017.organization’s website.

4. While some have judged the goal of a
2020 launch to be overly ambitious,
there are many others who believe an
overhaul is long overdue — that the U.S.
is lagging behind the rest of the world in
the immediacy and efficiency of its
payment system.
“This is a once-in-a-generation
opportunity to create a new payment
system,” one panelist, Clearing House
senior vice president Steve Ledford,
said in the task force’s video, adding
that it was going to take efforts from
many sectors to make the new
system a reality.

5. Financial institutions, he said, are going to have to deliver new
products and services. Those building the infrastructure are
going to have to work in concert. Organizations and news
outlets are going to have to educate consumers. And the
consumers themselves must keep expecting more.
That works in reverse as well: Consumers don’t always have
immediate access to funds from businesses, financial
institutions or employers.
The latter is, of course, at the heart of the matter. Consumers
want to be able to pay their water bill immediately courtesy of
an online application, as opposed to experiencing an illusion of
immediacy, as is the case at present — one that sees them
make an online payment, only to discover that it might not be
processed for a number of days.

6. Speed and efficiency were
among the primary topics
explored by the task force,
as was ubiquity — i.e., the
assurance that payments
can be sent and received
by any consumer or
business. Security, legality
and governance were also
examined in depth.
The 10 recommendations center on those matters —
establishing a framework, developing cross-border
functionality, researching emerging technology, et al.

7. But again, strides like those taken by Ledford’s Clearing
House are rare, the challenges many. As mentioned, one of
the main ones involves the interoperability of the U.S.
system with those already in place throughout the world, of
which there are many.
The need for speed, in other words, remains. And it is not
confined to our borders.

8. Thank you
To view the entire blog, please visit:
Lylehauser.com
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