As Federal Reserve Bank leaders continue to study the business case and complexities of establishing a faster U.S. payments system, FIS contends its past experience in other countries makes its technology the right fit for the initiative.
The Jacksonville, Fla.-based banking and payments technology company has already helped develop similar systems in the United Kingdom and Australia based on PayNet, a two-year old real-time payment rail that is already used by some U.S. banks.
PayNet is an electronic funds transfer network, though its transactions appear similar to Automated Clearing House payments on a network that has characteristics of a debit card system. For a consumer, funds are moved in real time through PayNet, with settlement occurring at the banks shortly afterward in the same day.
"The ACH infrastructure we are trying to replace is 40 to 50 years old," said Peter Gordon, senior vice president of money movement solutions at FIS and general manager of PayNet. "With a new rail, we can tokenize, we can encrypt and we can do end-to-end transactions that are truly secure from front to back."
Speaking at the Mobilizing Retail conference in Chicago, Gordon said the security measures FIS can deploy on PayNet rails "will make it a lot tougher" for criminals to attack.
"PayNet is all about building a brand new network and what's really driving this is the Federal Reserve movement into real-time payments," Gordon said.
The Federal Reserve's financial services unit has been studying the faster payments concept for more than two years, drawing on industrywide meetings, research and third-party analysis. The Fed is supposed to release a white paper soon on the initiative, outlining how the banks would participate in a new network, Gordon said. "We have asked them to work with us, that we have the pilots in place, and we would be happy to be one of the solutions used," he said.
As a provider of banking technology, FIS is certain that PayNet addresses the needs of the banks and trust of the consumers.
In a survey of consumers, FIS learned that the vast majority would like to see real-time payments offered through a regulated bank institution, Gordon said.
"They want to move money in and out of a bank account in real time," Gordon added. "With all of the mobile options out there today, they don't understand why the banks can't do that."
In addition to offering a new faster payments rail, FIS brings an option to the table that could shorten the amount of time it would take for the U.S. to implement such a change, said Larry Berlin, vice president with Chicago-based First Analysis Securities.
"The Federal Reserve is really talking about a 10-year window on its faster payments initiative, and that's probably too long," Berlin said. "When you look at ACH, it also took several years to get that established PayNet will help make all of this progress move along much faster."
Interoperability with mobile commerce will be part of PayNet's strengths, as FIS continues to work with establishing the technology behind the Merchant Customer Exchange's new CurrentC mobile wallet, Gordon said.
FIS has not publicly stated its PayNet pricing model, though Gordon said it is less expensive than debit transaction routing under the Durbin amendment's 21-cent cap plus 0.05% of the transaction.
The company has put millions of dollars into developing the PayNet infrastructure over the past three years with the intent to provide "the next-generation payment system," Gordon added.
"We are in the first inning on this faster payments network in the U.S., but we are hoping it will eventually evolve into a real-time network," Gordon said.