Pub. 11 2016-2017 Issue 2

www.nebankers.org 14 Extraordinary Service for Extraordinary Members. COUNSELOR’S CORNER Improving the U.S. Payment System Bryan Handlos, Kutak Rock LLP A PPROX IMAT ELY 122 B I L L I ON noncash payments (excluding wires) were made in the United States in 2012 with a value of more than $174 trillion, according to the 2013 Federal Reserve Payments Study. Obviously, these payments are supported by a payment system that is massive and complex. The Federal Reserve believes this system is at a critical juncture in its evolution. Technology is changing rapidly. High-speed data networks and increasingly sophisticated and mobile computing mean that real-time data processing is a reality. Dynamic, per- sistent, and rapidly escalating threats pose real risks, including endangering public confidence in the system. Who is responsible for answer- ing these challenges? How can challenges of this magnitude be addressed effectively? In 2012, the Federal Reserve System announced a focus on improving the U.S. payment system. Since then, the Federal Reserve has taken numerous steps, including establishing an industry relations program to broadly engage payment system stakeholders (not just banks), publishing a 2013 Consultation Paper that offered its perspective and solicited public feedback, sponsoring a number of studies, and investigating the merits of its own financial services initiatives. The 2013 Consultation Paper proposed five desired outcomes to be achieved within 10 years. Four of these addressed substantive topics: faster payments, strong security, increased electronic payments to improve ef- ficiency, and better cross-border pay- ments. The fifth and perhaps most important was to see that payment system improvements were collectively identified and embraced by a broad ar- ray of participants. In January 2015, the Federal Reserve System published its “Strategies for Improving the U.S. Payment System.” The remainder of this article calls out those strategies, references some of the key considerations behind them, and provides a partial overview of what has been accomplished so far.