At the 2015 AFP Annual Conference, AFP spoke with Patricia Hui, CTP, senior corporate treasury manager at Mentor Graphics Corp. and an AFP Board member, about the Federal Reserve’s initiative to speed up the U.S. payments system. A member of the Fed’s Faster Payments Task Force, Hui provided a corporate treasury perspective on why the initiative is needed in today’s environment.
AFP: What is the faster payments initiative and why do you think it’s so important?
Patricia Hui: The faster payments initiative is really important as I reiterate the main theme of this year’s AFP Annual Conference: solutions for the complex world. We are now living and operating in a very complex environment. Things change really quickly. For example, technology is rapidly changing many elements that support the payment process. High-speed data networks are becoming ubiquitous, computing devices are becoming more sophisticated and mobile, and information is increasingly processed in real time. These capabilities are changing the nature of commerce and end-user expectations for payment services. Meanwhile, payment security and protection of sensitive data are challenged by dynamic, persistent and rapidly escalating threats.
Basically, improvements must be made to our U.S. payment system in order to be competitive with other global payment markets. The Federal Reserve Bank recognized that. They published a whitepaper earlier in the year on the strategies of improving the U.S. payment system, and called on all stakeholders to seize the opportunity to join together for this exciting initiative. As a result, two task forces—the Faster Payments Task Force and the Secure Payments Task Force—have been established to engage a diverse array of stakeholders in advancing the work on U.S. payment system improvement.
The mission of the Faster Payments Task Force is to identify and evaluate alternative approaches for implementing safe, ubiquitous and faster payments capabilities in the U.S. Members of the task force are not only looking at the speed of processing payments, but are also looking at how to process payments securely and efficiently. In my opinion, the faster payment initiative has a tremendous impact on not only my company but also on other corporations in terms of processing payments both domestically and internationally.
AFP: What do you see as some of the potential benefits of faster payments?
Hui: Again, not only are we speeding up on how we process payments, but also making sure that our payments are being transmitted securely and more efficiently. So, we should be seeing some benefits coming from that. We are competing with other global payment markets that have implemented faster payment services that allow consumers and businesses to rapidly transfer funds between bank accounts. For example, Europe already has implemented faster payment services which including the incorporation of the ISO 20022 XML payment file standard. For U.S. corporations to efficiently transact business with trading partners in other parts of the world, should we be adopting the same payment standard? I believe we may see some potential benefits as a result of implementing a global payment standard.
AFP: What do you think treasury and finance professionals should do to prepare for faster payments?
Hui: I mentioned the two task forces that Federal Reserve Bank has set up. As a task force member, we encourage all interested parties to join the FedPayments Improvement Community by going to the Fed’s payment improvement website in order to stay informed and engage in an exchange of information pertaining to the Fed’s efforts to improve the U.S. payment system.
It is important for all constituents to stay up to speed with what these two task forces are working on right now. Obviously, we value the input from all interested parties, so I would encourage people to stay engaged and be connected.
Treasurers are encouraged to get involved with the Fed's strategy to improve the U.S. payments system. LEARN MORE