Wednesday, October 20, 2021
The pilots are part of the Fed’s payments efficiency initiative. BPC is a 10-year-old organization representing hundreds of banks, payment providers, consultants and others focused on promoting electronic B2B payments. It was originally known as the Remittance Coalition.
"The commitment to these work efforts by organizations across the industry is evidence that there is a real desire to modernize B2B payment processes," the Fed noted in a written statement. "Digital payments and processes benefit business through lower costs, better cash management, error resolution, risk mitigation, increased transparency and improved efficiency."
While consumer payments have benefitted greatly from new and faster ways to make payments digitally, like instant person-to-person payments, the B2B market has lagged. Indeed, according to some estimates, about 40 percent of U.S. companies still issue checks to pay bills.
"Businesses' appetite for faster payments has clearly accelerated due to growing acceptance of digital commerce during the pandemic," said Shonda Clay, chief of customer and industry engagement for the Federal Reserve Bank System.
In fact, three of every four businesses now consider it important to offer faster payments, according to results of a survey commissioned by the Fed. Nine in 10 businesses expect to be able to make and receive faster payments within three years, including instant payments, the Fed reported.
The Fed-commissioned survey, conducted in the second half of 2020, tallied responses from more than 2,000 businesses in a variety of industries with revenues ranging from less than $1 million to more than $250 million. A majority of respondents said they had sent and received some type of faster payment within the previous 12 months, including digital wallets, same-day ACH and push-to-card services that leverage debit card networks.
However, for faster payments, generally, and real-time payments, in particular, to work for B2B, there needs to be an interbank settlement mechanism that operates 24/7/365. The Clearing House, a consortium of banks, has already launched a real-time settlement mechanism known as RTP. About 130 banks and credit unions, supported by numerous core processors, use RTP, according to TCH. The Fed is developing an alternative service, known as FedNow, which will connect all federally insured banks and credit unions, and is slated to be operational by 2023.
For faster payments to play out in the B2B field, there also needs to be a framework for exchanging invoices and remittance details around those payments equally fast. Today, most invoices and remittance details are exchanged via paper, or as email attachments.
The Fed's e-invoice exchange pilot will work to advance the development, testing, implementation and interim oversight of an e-invoice exchange framework, the Fed said. The pilot is expected to run through year-end 2022, with an eye toward establishing a framework that can be implemented in 2023, in time for FedNow to become operational.
The remittance delivery work group will determine the viability of a framework that supports the exchange of electronic remittance information across payment types. Participants have a broad range of experience and expertise in remittance payment processing and posting, the Fed said.
The group's work will run through mid-2022 and leverage momentum already put in place by BPC. "The success of the work group will be integral to advancing creative, solution-oriented approaches to efficiently deliver and accept electronic remittance information for B2B payments in the United States," the Fed stated. 
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