Is a Faster Payments System in Our Future?

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The U.S. payments system is undergoing a significant period of change, driven by the adoption of new technologies and evolving end-user expectations. Research is confirming that consumers and businesses are becoming increasingly interested in a faster payments system. This system is modeled after a system similar to the Faster Payment Service already running in the U.K. This is also similar to the industry focus on mobile payments to make the entire payments process easier and efficient for all parties involved.

Its clear that mobile payments have made transactions possible and easier for businesses on the go. However, there is a lot of work that goes into getting them set up and secure for users. Although the gateway is secure, the transaction still has to bounce off wifi and radio towers, which makes it vulnerable.

Consumers and businesses recognize that faster payments would be beneficial in a lot of cases. There is a high need for instant payments in the U.S. and there is an opportunity to improve speed and efficiency of payments while also maintaining security.

As of now, the Federal Reserve wont mandate that banks and credit unions move to a new fast payment mechanism. They are working on suggestions and recommendations for how this can be done given our payment ecostructure. In doing so, fraud prevention solutions have to be taken into consideration. There is fear that with instant payments comes a heightened risk for fraud. This is where stronger authentication is a must.

Moving toward faster payments requires security enhancements. So while a fast payment system would require banks and credit unions to do some retooling and will be quite costly, the Federal Reserve believes that the investment would pay off in the long run.

What are you thoughts on a faster payments system?