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Presentation Before The World Bank Payments Reform Seminar November 4, 2003

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Addressing the Needs of the Public Sector Challenges and Opportunities in the U.S. Government’s Payment System: Domestically and Internationally . Presentation Before The World Bank Payments Reform Seminar November 4, 2003 Richard Gregg, Commissioner Financial Management Service

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Presentation Transcript
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Addressing the Needs of the Public SectorChallenges and Opportunities in the U.S. Government’s Payment System: Domestically and Internationally

Presentation Before The

World Bank Payments Reform Seminar

November 4, 2003

Richard Gregg, Commissioner

Financial Management Service

U.S. Department of the Treasury

Moderated By: Theresa Trimble, Manager, Fiscal Services

Division of Reserve Bank Operations and Payment Systems

Board of Governors of the Federal Reserve System

emerging technology driving change in the u s government key themes
Emerging Technology Driving Change in the U.S. Government—Key Themes
  • Internet technology a driving force in change for individuals, corporations, and governments conducting financial transactions
  • Electronic payments and supporting data are key
  • Simplifying interfaces and accounting a priority
four major business lines within fms
Four Major Business Lines within FMS
  • Payments
  • Collections
  • Governmentwide Accounting
  • Debt Management
the landscape
The Landscape
  • Payments We Make:

--FMS makes 85% of U.S. Payments

--Annual Dollar Value: $1.6 Trillion

--Annual Transactions: 918 Million (77% Electronic)

  • Payments We Receive:

--Annual Dollar Value: $ 2 Trillion

--Number of Transactions: 337 Million (30% Electronic)

where we are forms of payments
Where we are—Forms of Payments
  • Payments We Make

--ACH (Credit)

--Fedwire

--Check

  • Payments We Receive

--ACH (Debit)

--Fedwire

--Credit Cards

--Check

objectives key factors laying foundation for future payments and collections
Objectives—Key Factors Laying Foundation for Future Payments and Collections
  • Lower Costs

--Increase Electronic Transactions

--Reduce Interchange Fees

--Streamline Processes

  • Maximize Cash Management

--Improve Funds Collected

--Enhance Cash Forecasting

  • Ensure Proper Security

--Web Based Systems

--Lockboxes

objectives laying foundation for future payments and collections continued
Objectives—Laying Foundation for Future Payments and Collections (Continued)
  • Simplify Processes

--Single stream of data for agencies

--Fewer Systems

  • Take advantage of technology in U.S. financial infrastructure

--Federal Reserve—check truncation legislation

--Commercial Financial Institutions—pilot new approaches; better service

--Use email to inform customers

  • Think and act globally in our approaches to financial transactions
payments we receive challenges and opportunities ahead
Payments We Receive: Challenges and Opportunities Ahead
  • Conversion to Electronic Payments

--High Dollars/Low Transaction Volume

--Market Research

--Incentives vs. Mandates

payments we receive challenges and opportunities ahead1
Payments We Receive: Challenges and Opportunities Ahead
  • EFTPS (Taxes)

--Web Based

--Scalable and Secure

--Payment Confirmation and History

--Linking to Tax Filing Software

--PIN and Password through mail

--Some resistance

payments we receive challenges and opportunities ahead continued
Payments We Receive: Challenges and Opportunities Ahead (Continued)
  • Pay.gov (Non-tax)

--Web Based

--Scalable and Secure

--Forms plus payment

--Verification Engine

--Backlog of Agencies

--Comfort with current Processes

payments we receive challenges and opportunities ahead continued1
Payments We Receive: Challenges and Opportunities Ahead (Continued)
  • Check Conversion

--Check clearing/ACH rules

--Float Reduction and minimize paper

--Notice to individuals

--Corporate checks

payments we receive challenges and opportunities ahead continued2
Payments We Receive: Challenges and Opportunities Ahead (Continued)
  • Check Truncation (Check 21)

--Federal Reserve Leadership

--Effective in one year

--Voluntary

--Quality of Images

--Image Replacement Document (IRD): Quantity and Costs

--Option for Lockboxes

payments we receive challenges and opportunities ahead continued3
Payments We Receive: Challenges and Opportunities Ahead (Continued)
  • Integrated Agency Processes

--Payment and Accompanying Information Link to Agency System

--Fewer “Stove Pipe” reporting sources/more commercial products

--Easier interface with FMS

payments we receive challenges and opportunities ahead continued4
Payments We Receive: Challenges and Opportunities Ahead (Continued)
  • Security and Privacy

--Web introduces new challenges

--Checks present challenges too

--Convenient yet secure

--Secure Yet Protect Privacy

--Contingency planning and testing

--Innovation and vigilance

payments we make challenges and opportunities ahead
Payments We Make: Challenges and Opportunities Ahead
  • Conversion to Electronic Payments

--High Percentage of Transactions But High Volume Remaining

--Incentives vs. Mandates

--Paying the “unbanked”

--Market Research

payments we make challenges and opportunities ahead continued
Payments We Make: Challenges and Opportunities Ahead (Continued)
  • Payments Plus

--Sufficient information for all parties

--Accounting data that “fits”

--Streamlining FMS Processes

--Debt Collection

payments we make challenges and opportunities ahead continued1
Payments We Make: Challenges and Opportunities Ahead (Continued)
  • Innovative Products

--Internet Payment Platform (IPP)

--Stored Value Cards

--Debit Cards

--Opportunities Driven by Business Case

payments we make challenges and opportunities ahead continued2
Payments We Make: Challenges and Opportunities Ahead (Continued)
  • Security and Privacy

--Electronic Payments Provide Many Pluses

--Fraud can occur despite payment mechanism

--Enseal Technology for Treasury Checks

--Anthrax Threat

--Approaches to “close the loop”, I.E., easy confirmation

agenda for the future
Agenda for the Future
  • Focus on emerging technology
  • Address current infrastructure—tendency to hold onto current and outdated systems and infrastructure
  • Reduce the number of systems
  • Eliminate redundancy in data and information
  • Streamline databases, platforms, and tools
  • Drive toward less paper

Sustain Excellence in Financial Transactions

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