A Seat at the Table for Merchants – Let’s Define the Future of Payments Together
By Reed Luhtanen
Executive Director & CEO
U.S. Faster Payments Council
The future of payments will be written over the next decade. For the first time in more than fifty years, new payments rails are scaling in the market. Foundational work defining the core aspects of how these networks will function is being done. Rather than standing on the sideline watching it happen, merchants need to claim their seat at the table, and the U.S. Faster Payments Council (FPC) has one saved for you.
Addressing fraud is one aspect of any new payments system, and it serves as an example of the impact that merchants can make if you choose to use the opportunity that is being presented to you. With broad membership reflective of the U.S. Faster Payments Council's (Follow us on LinkedIn) mission to bring together all segments of the payments ecosystem – financial institutions of all sizes, technology providers, payments network operators, consumer advocates, and more – FPC’s Fraud and Scam Mitigation Work Group, sponsored by Federal Reserve Financial Services has provided thought leadership intended to help the payments ecosystem grapple with the aspects of fraud that are particular to faster payments systems such as the FedNow Service, the RTP® Network from The Clearing House, Visa Direct, and Mastercard Move.
Their most recent report, Instant Payments Fraud Dispute Resolution: Guiding Principles for the U.S., builds the bridge from that work group’s essential work to the FPC’s newly-formed Exception Resolution for Account-Based Payments Work Group, which will work to develop a framework for resolving faster payments exceptions, including disputes, fraud, scams, and customer inquiries that are specific to account-based payments.
This is a big deal.
For decades, merchants have argued that, as key participants in the transaction value chain, they should be included in developing the exception resolution aspects of payments systems. For the first time, that exact opportunity is being offered by the FPC. This work group includes participants from financial institutions, the network operators, technology providers, and many others. And we eagerly welcome merchant participation. This is an opportunity to shape the dispute and exception resolution approach for the first new payment type to emerge in the last 50 years.
And that is just one example of the opportunities FPC members have to shape the future of payments. FPC also recently announced a strategic partnership with Accredited Standards Committee X9. Together, X9 and FPC members will develop a wide range of standards for faster payments applications, defining the user experiences across a wide variety of use cases from B2B to P2P to retail and ecommerce. This foundational work will set the stage for the next generation of payments capabilities in the United States, and FPC members will be at the center of it.
As I noted, the recent report from FPC’s Fraud and Scam Mitigation Work Group helps lay the foundation for the work our Exception Resolution Work Group will be taking up. In the report, the work group developed a series of Guiding Principles for Instant Payment Dispute Resolution:
- Recognize All Parties Have Important Roles in Mitigating Fraud and Scams
- Focus on the Party Best Positioned to Mitigate Fraud
- Preserve the Integrity of the Payment Design
- Establish Structured Dispute Resolution Workflows
- Provide Instant Fraud Mitigation and User Awareness
- Define Core Responsibilities for Sending Institutions
- Define Core Responsibilities for Receiving Institutions
- Set Clear Expectations for Merchants and Processors
- Support Small Businesses and Vulnerable Consumers
- Promote Transparency and ISO 20022-Aligned Exchange of Information
- Apply Practical Lessons from Global and Domestic Precedents
As I mentioned above, for decades, merchants have argued that they ought to have a seat at the table. Now, the FPC and our diverse assortment of members are telling you we have created the forum for exactly that. Over the last 18 months, we have been rethinking everything and developing processes to ensure that the work our members are doing is calibrated to deliver real-world outcomes.
It is time to seize the opportunity. The work is starting. The outcomes will be real and lasting. Now is the time to engage and ensure the merchant voice is heard. If you want to work alongside network providers, financial institutions, and processors to develop the next generation of payments, reach out to the FPC now. There is an empty chair with your name on it.