Barbara Pacheco has spent more than 30 years working for one employer – the Federal Reserve Bank of Kansas City – but her very stable career path has managed to keep her on the cutting edge of new payments technology.
As head of the bank's Financial Services Division, which began in 1999 as a way to better understand the ATM and debit card networks, Pacheco facilitates the supply of payments information across the nation. Her role is vital at a time when new technology is attracting new risks to the payments industry. Smartphones in particular are a "double-edged sword," says Pacheco, because their potential to improve security may not resonate with consumers.
However, challenges like this can be a good thing. "It's fun times to be at the Fed and in payments right now," she says.
Indeed, the Kansas City Fed is known for its expertise in payments technology and the city itself has recently become a hotbed of sorts for alternative payments companies. The region is home to Sprint Nextel, the only wireless carrier that openly supports Google's digital wallet.
Kansas City was chosen in 2011 to be the first to receive Google's high-speed fiber optic network, Fiber, which the company says is 100 times faster than the national average.
"We're doing a lot in KC with respect to payments," Pacheco says.
Under Pacheco's guidance, the KC Fed commissions numerous research projects on mobile payments. Since 2005, it has hosted four international payments conferences.
"We have looked at interchange fees, nonbanks in the payment system and what the new payments systems are," she says. "What is the role for public authorities like the Fed, the Justice Department and payment system regulators as alternatives evolve?"
Pacheco is concerned that some of the new person-to-person payments methods may not be accessible to everyone. "Kind of like you have to 'join the club' to have the service," she says, citing PayPal as an example.
"One of the advantages that the Automated Clearing House network has—or the card networks have—is that you can pay anyone anywhere anytime," Pacheco notes. "P to P is one of the gaps the industry is thinking about and one of the things the Fed Reserve thinks about when moving the payments system forward."
Pacheco says while many consumers and businesses in the payments industry want to take advantage of technological developments, "we have to find a way where all the players—the suppliers and the financial institutions—can see their investments making sense from a business point of view that also satisfy the end users of the payments system."
One way to to improve P to P payments and leverage mobile technology, according to Pacheco, is to offer a "bank-centric" model through which a financial institution would offer customers the ability to complete a P-to-P transaction using the ACH with a directory service.
She also notes that unbanked and underbanked consumers "are definitely a segment of the population that needs to be part of the conversation – and the solutions – around payment industry challenges.
"One of the other areas our payments research group is studying is the use of prepaid cards and the capability of mobile smartphone interfaces to give them the types of opportunities that the banked have."
Early in her career, Pacheco worked as an equity analyst for brokerage firm Edward Jones in a summer internship program while she was earning her MBA from Washington University in St. Louis. Other than that, Pacheco's only stint outside the payments world was a four-year assignment in the Kansas City Fed's human relations department. She describes her time in HR as a "great experience" that helped her develop as a leader and expanded her perspective on what it takes to attract, develop, and retain other leaders.
While working in the human resource department, she became involved with a national nonprofit organization called Inroads that develops and coaches young people from underserved communities to become a part of corporate America. Inroads works to identify students in need, provide coaching, and then assist them in applying for summer internships. She still works with the group in an advisory capacity and is a member of its Kansas City Board. "It's been a very fulfilling experience for me," she notes.