Risks in Faster Payments

Julius Weyman, Federal Reserve Bank of Atlanta
Retail Payments Risk Forum
May 2016

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The purveyors of payment systems have long had the means to reduce intermediation time for retail payments. Japan's Zengin moved first—as far back as 1973—but for years, little else followed. That has all changed. Now, payment system purveyors that have established the means to effect retail payments in seconds talk of it as a marquee achievement. Those that haven't yet launched such a system are generally in pursuit of it, with few failing to name it as a primary goal. As more countries implement faster payment schemes, the question of what the United States will do gets increasingly pressing. This paper uses a variety of sources to determine how conditions in the United States compare to those of 15 other countries that have either deployed a faster scheme or have made plans to do so. It then draws out various risks that attach to the initiative and contrasts domestic circumstances with the parallel circumstances in other countries. The paper also provides a practical approach to understanding the highlighted risks, describing implications and suggesting options for addressing the challenges.

The views expressed here are the author's and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. This working paper is not associated with the work of the Faster Payments Task Force. Any remaining errors are the author’s responsibility.
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