As payments technology evolves, some are urging the Federal Reserve Board to take a leadership role in establishing guidelines and standards whereas others are quick to argue against the notion.
The only way for the U.S. industry to establish a near real-time payments system or a successful mobile payment system is for one organization to become the recognized industry leader and show the way, supporters say. But many stand divided on the concept, and in particular whether the Fed could assume that role.
"It would be helpful if the Federal Reserve took a leadership role and took its knowledge and expertise to work with other agencies that are crafting new payments designs. It could help lead to investments in new innovation," says Lisa Hrabosky, director of global core payments for PayPal, at the Chicago Payments Symposium, an event hosted by the Federal Reserve Bank of Chicago.
Paul Obermeyer, executive vice president and chief information officer for Comerica Bank, said the Fed is capable but the idea of elevating its role is impractical.
"There is no doubt that payments should be maintained by the Federal Reserve and banking industry," he said. "The Fed can really help us and we need a new paradigm to guide our efforts [but] a top-down approach just wont happen."
And Ken Isaacson, vice president of the Federal Reserve Bank of New York, fell just short of declaring the Fed as adopting a broader role.
Others at the Sept. 24 event particularly companies with global operations found fault with the very idea of a new regulating body.
Anita Patterson, director of treasury services for Cox Enterprises, says, my big concern is government and politicians getting involved if the Fed becomes a payments governing body, the politicians have to stay out of it.
Creation of payments standards has to be totally bi-partisan because otherwise political wrangling would create the biggest obstacle we could have in payments, Patterson says.
Steve Mott, president of Better Buy Design, says the industry needs a system in place for creating standards that benefit all stakeholders, regardless of how an industry leader might evolve.
There are payments innovators out there with deep pockets creating schemes while not laboring under federal regulations, Mott says.
PayPal is the best international payment option out there, and the rest of the industry is not getting anywhere, Mott adds.
Yet, while many facets of the payments system are broken, Mott says, Payments are not broken for the consumer.
Consumers view mobile apps such as the Starbucks app as powerful tools, Mott says. But payments companies look at apps and wonder which technology represents the winning path and which should be embraced, he says.
Still, the Fed is probably in the best position to take on a key role in establishing payments standards, Coxs Patterson says.
If someone does not stand up and take that top role, as an industry, well continue to not advance, she adds.
The Fed recently released its first of a three-part study seeking to pinpoint persistent problems in the payments industry and what might be done to address them, essentially promoting a faster and more secure U.S. electronic payments system.
Legacy payments systems lack the desired features needed for payments in the future, while ACH lacks real-time validation, the Federal Reserve Bank of New York's Isaacson says. Payment cards and wire transfers offer some needed real-time features, but not all.
While the number of mobile payments providers and the level of consumer adoption remains relatively small in the U.S., the innovators of the world have recognized gaps in the payments industry and are finding ways to work around the legacy systems, he adds.
In interviews with thousands of consumers and payments providers, the Fed discovered that real-time payments, mobile development and ubiquity represent the biggest issues in the advancement of payment technology.
Isaacson says a process to establish an industry leader to address those priorities would start with the creation of an industry group with a shared vision and reflective of things going on around the world.