The Federal Reserve and retail payments: a historical review

Abstract

Purpose The purpose of this paper is to provide a comprehensive historical review of the role of the Federal Reserve in retail payments in the USA. Design/methodology/approach It reviews the literature on the role of the Federal Reserve and assessments of its involvement. Findings In addition to its oversight and operational role, the Federal Reserve has conducted R&D and facilitated technology adoption. It has provided effective competition to the private sector without subsidies. Research limitations/implications The Federal Reserve has served the public interest and private networks have benefited from the “visible hand” of government. Practical implications Migration to electronic payments will likely change its role from an operator to setting standards for safety and security. Originality/value The historical review provides context against which the future strategy of the Federal Reserve may be assessed.