Fed Issues Report on Faster Payments Initiative

The Federal Reserve on Thursday released a high-level synopsis of its work to identify gaps in the U.S. payments system and potential improvements, marking the latest step in the central bank's two-year project to make the system faster and more secure.

The 62-page report issued this month constitutes part one of a final report that will be issued in June, containing recommendations for the future of payments and assessments of different provider proposals.

Some 19 companies have made a business case for better real-time payment systems, each drawing on different concepts. Some allow for upgrades to existing infrastructure, while others adopt newer technologies.

The work is being led by the Federal Reserve Bank of Chicago, assisted by Fed teams in New York, Cleveland, Atlanta, Kansas and San Francisco. Esther George, president of the Federal Reserve Bank of Kansas City, and Federal Reserve Board Governor Jerome Powell are the senior Fed sponsors of the work.

The initiative, begun in 2015, wasn't motivated by a feeling the old systems were creaky, but by the changing nature of end-user expectations over how payment systems work. It also comes at a time of heightened cybersecurity awareness, and concerns over data protection and fraud.

"Protecting payment systems and transactions has become a critical function for central banks, financial institutions and technology providers as sophisticated cyberthreats have increased in size and scale throughout the world," Mr. Powell, who co-chairs the initiative's oversight committee, said in a statement.

Write to Katy Burne at katy.burne@wsj.com