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Federal Reserve Bank of Boston
Current Policy Perspectives
Faster payments: market structure and policy considerations
Aaron Rosenbaum
Garth Baughman
Mark D. Manuszak
Kylie Stewart
Fumiko Hayashi
Joanna Stavins

The U.S. payments industry is in the process of developing ubiquitous, safe, faster electronic solutions for making a broad variety of business and personal payments. How this market for faster payments will evolve will be shaped by a range of economic forces, such as economies of scale and scope, network effects, switching costs, and product differentiation. Emerging technologies could alter these forces and lead to new organizational arrangements or market structures that are different from those in legacy payment markets to date. In light of this uncertainty, this paper examines three hypothetical market structures that may emerge: a dominant operator environment, a multi-operator environment, and a decentralized environment. Each of these market structures has different implications for the public policy objectives of efficiency, safety, and ubiquity. The paper also considers tools to promote positive outcomes in each market structure.

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Aaron Rosenbaum & Garth Baughman & Mark D. Manuszak & Kylie Stewart & Fumiko Hayashi & Joanna Stavins, Faster payments: market structure and policy considerations, Federal Reserve Bank of Boston, Current Policy Perspectives 17-4, 21 Sep 2017.
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Keywords: faster payments; market structure; competition; payment system improvement; public policy; retail payments
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