NEW YORK (6/24/14)--Sean Rodriguez, an official at the Federal Reserve Bank of Chicago, provided an update recently on the work of the Federal Reserve Banks on payment system reform and creating a new structural framework to facilitate faster payments.
Rodriguez last week told a group of attendees in New York that the Fed has been analyzing non-bank providers simulating real-time payments in closed systems (BankInfoSecurity June 18). He said that the research has led the Fed to believe that a new faster payment system rather than revamping the existing systems would bring more benefits the U.S. economy.
The Credit Union National Association and its Payment Subcommittee have met with Federal Reserve Bank officials. Last December, CUNA submitted a comment letter on the Fed initiative. CUNA continues to meet with Fed Banks, trade associations, credit unions and other stakeholders to discuss proposed changes to the payments system.
Rodriguez called on credit unions and banks to collaborate, saying that an agreement on timing and the method of reform were a necessary prerequisite.
Amid the push for change, the Fed is focused on strong data security, transaction validation, authentication, and obscuring or removing data used to process payments, according to BankInfoSecurity.
Rodriguez, who has worked at the Federal Reserve for 30 years, is the senior vice president of industry relations for the Fed's financial services branch. He made the remarks before 75 industry representatives at a town hall-style meeting--one of many that the Fed held between June 16 and June 23.
The estimated time required to complete the new payment system could be between three and five years, according to BankInfoSecurity. The Fed has said that it expects to publish a white paper this autumn on how it will proceed on the matter.
CUNA has said it will continue its efforts, in coordination with the leagues and key payment system entities, to help ensure the interests of credit unions are well-represented as changes develop.