This week, I began an important new assignment. I am now the CEO of the International Payments Framework Association (IPFA). If you haven’t yet heard of it, the IPFA provides rules, standards, operating procedures, and guidelines to improve cross-border payments. It’s now five years old and moving into the next, exciting, and supercharged phase of payments along with the rest of the industry.
Composed of banks, clearing and settlement mechanisms, payments service providers and some observer members, the IPFA created a formula for removing some of the friction from cross-border payments. There are two key ingredients to the IPFA formula. The first is an ISO 20022 format that serves as a sort of middleware translation layer to convert into and out of domestic formats. The second ingredient is the set of rules and procedures that guide payment processing.
As I was one of the founders of the IPFA work when I was at the Fed’s Retail Payments Office, I say with pride that the IPFA’s formula is recognized as a best practice in low value, cross-border payments. This means that I know first hand that the IPFA works well – and the Fed still processes its payments to/from Europe (via Equens) using the IPFA standards.
These are exciting times for cross-border payments, particularly given a backdrop of growing global commerce, out-of-country workforces, and increasingly rigorous regulation. Banks and other incumbents are being challenged by new entrants and new models – some quite radical – and are in turn investing in new capabilities themselves. I strongly believe that the IPFA can be an important force in enabling the healthy development of these markets.
What does the IPFA work mean for me on a day-to-day basis?
The IPFA is a regular activity that I will devote efforts to alongside my other Glenbrook activities. In practice, I’m only a part-time CEO role but the endeavor is of real-time importance. Standards may be the truly geeky part of payments but I believe they are critical to success. We have standards in our domestic payments. SWIFT relies on them. But the industry has not yet focused sufficient attention on seamlessly interconnecting local payments formats across borders. Removing cross-border friction is important but it becomes essential when we begin to talk about global instant payments.
Needless to say, the industry has got a lot of work to do and I look forward to leading the IPFA as it contributes to these efforts.
This post was written by Glenbrook’s Elizabeth McQuerry.