Payments
Payment systems ARE a network of networks
These networks transport messages that are instruction sets.
Payments rail: an individual payment network or platform that moves money from a payer to a payee.
- Dominant payment rails in the US: | ACH | Payment Cards | Wire |
- Growing/emerging payment rails: | RTP | Mobile Payments (ex. Paypal) | Blockchain |
- Declining payment rail | Checks |
Overall industry trends moving towards faster payments. Interoperability across systems becoming more important.
Retail vs. Wholesale payment systems
- Retail Payments: generally refer to B2C and P2P type transactions.
- Largest percentage of all payments by count, smallest by dollar value
- Non-cash payments are processed across a variety of systems: check clearing systems, ACH, credit and debit card networks, payment networks (Paypal, Square, etc.)
- Almost all non-cash payment instruments settle electronically
- Wholesale Payments: generally refer to settlement activity between interbank transactions on very large payments => typically initiated by government agencies, institutional banks, very large corporations, etc.
- Smallest percentage of all payments by count, largest by dollar value.
- Main arteries of the country’s economy
- Two large-value electronic funds transfer systems settle the bulk of all payments by dollar value, in the US => CHIPS & Fedwire.
- Also referred to as Large-Value Payments Systems (LVPS)
- Also see National Settlement Service (NSS)
Federal Reserve Data
Federal Reserve Payments Study (FRPS)
Quantifies aggregate payment volumes in the US. (about FRPS)
FedNotes - Consumer Payment Choice
Report on US consumer payment preferences