Proposed Agency Information Collection Activities; Comment Request

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Notice, request for comment.

SUMMARY:

The Board of Governors of the Federal Reserve System (Board) invites comment on a proposal to extend for three years, with revision, the Federal Reserve Payments Study (FR 3066; OMB No. 7100-0351).

DATES:

Comments must be submitted on or before May 28, 2019.

ADDRESSES:

You may submit comments, identified by FR 3066, by any of the following methods:

• Agency Website: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
• Email: regs.comments@federalreserve.gov. Include OMB number in the subject line of the message.
• FAX: (202) 452-3819 or (202) 452-3102.
• Mail: Ann E. Misback, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551.

All public comments are available on the Board's website at http://www.federalreserve.gov/apps/foia/proposedregs.aspx as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006, between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the Board requires that visitors make an appointment to inspect comments. You may do so by calling (202) 452-3684. Upon arrival, visitors will be required to present valid government-issued photo identification and to submit to security screening in order to inspect and photocopy comments.

Additionally, commenters may send a copy of their comments to the Office of Management and Budget (OMB) Desk Officer—Shagufta Ahmed—Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503, or by fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT:

A copy of the Paperwork Reduction Act (PRA) OMB submission, including the proposed reporting form and instructions, supporting statement, and other documentation will be placed into OMB's public docket files, if approved. These documents will also be made available on the Board's public website at http://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested from the agency clearance officer, whose name appears below.

Federal Reserve Board Clearance Officer—Nuha Elmaghrabi—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551, (202) 452-3829. Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

On June 15, 1984, OMB delegated to the Board authority under the PRA to approve and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. In exercising this delegated authority, the Board is directed to take every reasonable step to solicit comment. In determining whether to approve a collection of information, the Board will consider all comments received from the public and other agencies.

Request for Comment on Information Collection Proposal

The Board invites public comment on the following information collection, which is being reviewed under authority delegated by the OMB under the PRA. Comments are invited on the following:

a. Whether the proposed collection of information is necessary for the proper performance of the Board's functions, including whether the information has practical utility;

b. The accuracy of the Board's estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

c. Ways to enhance the quality, utility, and clarity of the information to be collected;

d. Ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and

e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.

At the end of the comment period, the comments and recommendations received will be analyzed to determine the extent to which the Board should modify the proposal.

Proposal Under OMB Delegated Authority To Extend for Three Years, With Revision, the Following Information Collection

Report title: Federal Reserve Payments Study.

Agency form number: FR 3066a, FR 3066b.

OMB control number: 7100-0351.

Frequency: Annual.

Respondents: Depository and financial institutions, general-purpose payment networks, third-party payment processors, issuers of private-label cards, and providers of various alternative payment initiation methods and systems.

Estimated number of respondents: FR 3066a: 495; FR 3066b: 82.

Estimated average hours per response: FR 3066a: 22 hours; FR 3066b: 8 hours.

Estimated annual burden hours: FR 3066a: 10,890 hours; FR 3066b: 656 hours.

General description of report: These surveys help to support the Federal Reserve System's (Federal Reserve's) role in the payments system. The FR 3066a and FR 3066b would consist of a full set of surveys for 2019 and, following the pattern established in the previous three-year period, smaller versions of the surveys for 2020 and 2021. The reference period for each survey is the previous calendar year. The Federal Reserve Payments Study (FRPS) publishes aggregate estimates of payment volumes and related information derived from the surveys.

Proposed revisions: Proposed revisions to the survey questions reflect an increased focus on payments fraud and security concerns, adaptations to new developments in payments technology, feedback from responding institutions, and experience from analyzing the survey outcomes. Some questions would be added as a result, but more questions would be removed, resulting in a net reduction in questions for 2019 compared with 2016.

As authorized, the Board reduced the number of questions included in the 2017 and 2018 annual supplemental surveys. They also included some revisions to questions within the scope of authorization for those surveys, which helped to inform some of the proposed revisions. The proposed revisions for the 2019 triennial survey in comparison to the 2016 triennial surveys are described below.

FR 3066a. This survey seeks to collect information on volumes of payments and related activities from depository institutions and general-purpose credit card issuers, including commercial banks, savings institutions, and credit unions, divided into sections corresponding to payment types as listed below. The survey is structured to collect volume totals across the enterprise, meaning either a separate survey for unaffiliated depository institutions or a combined survey for sets of affiliated depository institutions organized under a holding company. Surveys are organized to collect separate total volumes for sections divided by payment type, followed by allocations of totals within sections that provide information about volumes of various processing methods, technologies, and usage. The survey generally includes an allocation of the total of each type of section-level payment into consumer and business volumes. Other kinds of allocations vary by section.

The Board proposes to make changes to categorical questions to provide clarity and to make them consistent with the proposed changes to volume questions. The Board proposes to distribute questions currently in the unauthorized third-party fraud into their respective payment type sections. Revisions to the fraud questions are discussed separately at the end of this section.

A description of the proposed survey questionnaire employed for FR 3066a, and proposed revisions to the 2019 survey compared with the 2016 survey, is as follows:

1. Affiliates: FR 3066a requests that survey participants report data at the holding company level for the entire enterprise, including all affiliate depository institutions, if applicable. To ensure accuracy, confirmation of these affiliates is requested. In the current survey, a simple listing of affiliated depository institutions is provided, and broad confirmation of its accuracy is requested. The Board proposes a revised version of the affiliates question, which would be included in a separate affiliates section. This revised question requests confirmation of whether or not the volumes in each section of the survey includes activity associated with the individual affiliated depository institutions. This more detailed information will accommodate occasional difficulties in providing complete information for some sections, and provide for more accurate validation of reported data.

2. Institution Profile: The institution profile section includes questions regarding the number and value of transaction deposit accounts of consumers and businesses (sometimes called checking accounts, negotiable order of withdrawal (NOW) accounts, or share draft accounts), and related retail and wholesale sweep accounts to understand the relationships between the accounts and payments. The Board proposes to remove the categorical question regarding whether the institution provides card-acquiring services.

3. Checks: The check section collects information about volumes of checks paid, deposited, and returned. The Board proposes to discontinue questions on check deposit allocations and only retain the question on the volume of total checks deposited. As a result, the survey would no longer track a variety of volumes and trends including consumer and business check deposits, remote deposit capture methods, including consumer mobile deposits, as well as paper check deposits at branches, automated teller machines (ATMs), and wholesale vaults. The survey would also no longer track remotely created checks. Check payments and returns questions would remain the same.

4. Automated Clearing House (ACH): The ACH section collects information about the volumes of originations and receipts of ACH transfers, and outgoing returns. The Board proposes to discontinue questions on ACH offsets, and a variety of details on ACH returns.³ The proposed revisions would add questions on direct exchange and same-day settlement volumes. The removal of the offset questions recognizes that the costs of tracking offsets exceed the benefits, that methods of using and tracking offsets are not consistent enough to be estimated separately with precision, and that many respondents lack information about them. Respondents are asked to exclude any offsets, if possible. As a result, however, the Board recognizes that measured ACH volumes will be inflated by an unknown quantity of offsets, which tends to affect value estimates more than number. Values and average values will tend to be inflated, and other ACH measures will also be affected. For example, calculated fraud rates are deflated in cases where offsets cannot be removed.

5. Wire Transfers: The wire transfer section includes questions regarding the number and value of wire originations and receipts allocated between network and book transfers. The Board proposes to retain total wire receipts, but remove its subcategories. This reduction in wire receipt details parallels the reduction in details of check deposits.

6. Non-Prepaid Debit Cards: The Board proposes to separate the non-prepaid debit and general-purpose prepaid sections of the survey. This change removes a question on the sum of debit and prepaid card transactions, and another on the sum of cash-back from debit and prepaid cards. The general-purpose debit card section includes questions on the volumes of debit card transactions with various allocations, as well as the number tally of consumer and business cards in force and with purchase activity. The Board proposes to remove the question on the number of chip-enabled cards in force. Cash-back at the point of sale is also collected from respondents. Allocations between card-present and card-not present are proposed to be replaced with allocations between in-person and remote, following the change implemented in the current 3066b. The Board proposes to remove the questions allocating card-present transactions between PIN, signature-authenticated, and other (no signature required), replacing them with an allocation of in-person transactions between those with and without a PIN. Card-not-present would be replaced with remote, and an allocation of remote between domestic (U.S.) payee and foreign (cross-border) payee would be added. The Board proposes to add a question on the number of debit card transactions made via a digital wallet, including tokenized digital wallet, to include an allocation between in-person and remote transaction volumes.

7. General-Purpose Prepaid Cards: The general-purpose prepaid card section includes questions on the total number and value of prepaid card transactions with various allocations, as well as the number tally of consumer and business cards in force and with purchase activity. The section includes questions on accounts and balances for reloadable and non-reloadable prepaid card accounts. The Board proposes changes that parallel those described in the general-purpose debit cards section.

8. General-Purpose Credit Cards: The general-purpose credit card section includes questions on the total volumes of credit card transactions with various allocations, as well as the number of consumer and business cards in force and with purchase activity. The Board proposes changes to transaction volume and card tally allocations that parallel those described in the general-purpose debit cards section. This section also includes questions on accounts and balances for business and consumer credit card accounts. For consumer accounts, it includes allocations between accounts with current balances only and with revolving balances. The Board proposes to modify and expand the allocations to include, zero balance, current balance only, revolving balance only, and current and revolving balances. These proposed revisions are intended to separately collect the portions of current activity-only accounts that have zero and nonzero balances and the portions of balances in accounts with revolving and current amounts. The Board proposes to add questions on general-purpose cobranded cards, in order to obtain volumes of non-network card payments. The change is expected to provide a more complete picture of the use of credit cards for payments (and possibly, rewards) versus borrowing. The Board proposes to remove questions on non-network transactions, along with the allocation between balance transfers and convenience checks.

9. Cash: The cash section includes questions on the volumes of cash withdrawals and deposits by the common channels used by depository institution customers, as well as questions pertaining to cash terminals. A key part of the section covers the number and value of total ATM cash withdrawals including allocations for ATM withdrawals that are on-us and “foreign” (meaning via an ATM owned by another depository institution). Of the questions related to cash withdrawals, the Board proposes to only retain those which allocate cash withdrawals by location and account type. The Board proposes to remove number tallies of debit and prepaid cards in force with ATM access and with ATM withdrawal activity, allocations of cash withdrawals to prepaid card program accounts, tallies of debit and prepaid cards in force and with ATM withdrawals, allocation of cash withdrawals to consumer, business, and prepaid card program accounts. The ATM terminals section which includes tallies of the number of active ATM terminals, including allocations to owned and sponsored ATMs at branch locations and offsite, and tallies of active and total numbers of remote currency management terminals, is proposed to be removed. The Board also proposes to add a question to allocate ATM withdrawals between domestic and cross-border volumes.

10. Alternative Payment Initiation Methods: The alternative payments section asks questions about volumes of online and mobile bill and person-to-person payments. The Board proposes to remove business-to-consumer and business-to-business online and mobile payment volume questions. The Board proposes to remove the online and mobile allocations for consumer bill payments. The Board also proposes to remove these allocations for consumer person-to-person online and mobile transfers and to add allocations between “on-us” and “off-us” transfers.

11. Unauthorized Third-Party Payment Fraud: As noted, the Board proposed to distribute unauthorized third-party fraud questions to the corresponding sections of the survey. The Board proposes to add allocations of fraudulent ACH credits originated between same-day and non-same-day settlement, and allocations of fraudulent ACH debits received between same-day and non-same-day settlement. The Board proposes to add allocations of fraudulent wire transfers originated between domestic and foreign payees. The Board proposes to add a question on total fraudulent wire transfer receipts. The Board proposes revisions to allocations of fraudulent debit, prepaid, and credit card volumes to collect fraudulent in-person volumes, which would replace the current card-present volumes, along with adding sub-allocations to fraudulent volumes with and without PIN authentication. The Board proposes revisions to collect fraudulent remote volumes, which would replace the current card-not-present volumes, along with sub-allocations to fraudulent domestic and cross-border volumes. The Board proposes to add allocations for fraudulent domestic and cross-border ATM withdrawals. The Board proposes to add fraudulent online or mobile person-to-person transfers, along with adding allocations to “on-us” and “off-us.”

FR 3066b. These surveys are conducted as a census of known payment networks, processors, card issuers, covered alternative and innovative payment initiation methods and systems, and a stratified, representative random sample of transit system operators. In general, respondents are asked to provide information about any payments volume processed during the survey data collection period, by various categories listed below. Respondents are asked to report on a range of categories between total transactions and net purchase transactions, which includes total authorized transactions, chargebacks, adjustments, and returns. Most details in the surveys involve allocations of net, authorized, and settled transactions, and corresponding allocations of related third-party fraudulent transactions. Surveys request allocations of totals between consumer and business payments, as well as domestic and cross-border payments. Surveys also request the distribution of transactions into size categories, and for applicable surveys, the number tally of active and in-force cards.

A description of each of the different surveys employed for FR 3066b, and proposed revisions to the 2019 surveys compared with the 2016 surveys, is as follows:

1. General-Purpose Card Network Surveys (credit card, debit card, and prepaid card): These surveys collect the total number and value of all types of network payments initiated by the acquirer and made with U.S. general-purpose credit, debit, and prepaid cards issued on U.S.-domiciled accounts carrying a network brand. Data are allocated to the in-person and remote payment channels, and further allocated to payment technology, venue, and authentication types. The surveys also seek to collect number and value of total issuer-reported card fraud types, such as lost or stolen, counterfeit, and account takeover. The Board proposes moderate changes to the current card network surveys. As in the current surveys, card payment volumes would be tracked by entry mode. However, the Board proposes to modify the types of entry modes to include a breakout of contact and contactless chip cards for in-person transaction volumes with chip-authentication, but to remove the allocation between those initiated with or without a mobile device. In addition, the Board proposes to narrow the in-person card verification method categories to only track payment volumes with or without a PIN. The Board proposes to add allocations of cross-border transactions between in-person and remote. For fraudulent payments, the Board's proposed question changes would mirror those for total payments. In addition, the surveys would request distributions across fraudulent transaction sizes, and allocations of fraudulent payments between consumer and business, as well as for domestic and cross-border. Questions requesting the number tally of cards and the allocation of the number of terminals with and without chip-acceptance functionality activated are proposed to be removed.

2. Private-Label Credit Card Merchant Issuer Survey, Private-Label Credit Card Processor Survey, General-Purpose Prepaid Card Processor Survey, and Private-Label Prepaid Card Issuer and Processor Survey: These surveys collect the number and value of total payments originated from U.S.-domiciled accounts and made with a private-label credit or charge card, general-purpose prepaid card, and private-label prepaid card. Similar to card network surveys, the Board proposes to restructure the payment entry mode and card verification method categories to better reflect standard industry reports, but in less detail compared with the general-purpose card networks.

3. Electronic Benefits Transfer (EBT) Card Processor Survey: The EBT survey collects data on payments initiated with an EBT card to access funds and/or make purchases at approved merchants in accordance with government-administered program rules, and to receive cash. Transaction types in the proposed EBT survey are allocated between the main types of EBT card programs. The Board proposes to remove value distribution questions, card-acceptance terminal questions, and the number tally of cards in the previous year.

4. Automated Teller Machine (ATM) Card Network Survey: The ATM card network survey collects cash withdrawals and other transaction volumes made with U.S. cards, which are issued for U.S.-domiciled accounts and originated on the respondent's ATM network, including non-prepaid debit cards, prepaid debit cards, and credit cards. The survey also seeks to collect the number and value of issuer-reported fraudulent card payment types, such as lost or stolen, counterfeit, and account takeover. Respondents consist of the domestic ATM networks in the U.S. Most respondents also operate general-purpose debit card networks. The Board proposes to add total and fraudulent cash withdrawal volume allocations between domestic and cross-border for domestic accounts, as well as cross border cash withdrawal volume transactions at a domestic ATM for accounts domiciled outside the U.S.

5. Automated Teller Machine (ATM) Card Processor: The Board proposes to remove this survey of independent service operators.

6. Alternative Payment Initiation Methods Processor Surveys: Surveys cover alternative, innovative, and emerging payment initiation methods and systems. The Board proposes changes to three of these surveys.

a. Toll Collection Processor Payment Survey: The Board proposes a simplification of the title, changing the title from “Electronic Toll and Payment Collection Processor Survey.” The Board also proposes some clarifying changes to question descriptions, and removal of the questions on the distribution of transactions into various size categories.

b. Online Payment Authentication Methods Processor Survey: The survey collects the number and value of online payment authentications by method. The Board proposes to remove the allocations between credit card and PIN debit for the authentication method of e-commerce redirected from the merchant or biller site.

c. Transit System Operator Payment Survey: The Board proposes changes to this survey to first request an allocation of unlinked rides between those requiring payment and free rides.

The Board proposes to discontinue the FR 3066c data collection process of check images used to estimate the proportion of checks by categories such as payers, payees, and purposes. FRB Atlanta may continue a version of the check sample survey using sampled information from their own check processing operations, an approach that started in 2015.

The Board also proposes to discontinue the FR 3066d, which was designed to serve as a supplemental collection to the FR 3066a and FR 3066b, targeted at specific payment issues. If such a supplement is needed in the future, the Federal Reserve would likely utilize the Payments Research Survey (FR 3067; OMB Control No. 7100-0355).

Legal authorization and confidentiality: The information obtained from the FR 3066 may be used in support of the Board's development and implementation of regulations, interpretations, and supervisory guidance for various payments, consumer protection, and other laws. Therefore, the FR 3066 is authorized pursuant to the Board's authority under the following statutes:

• Section 609 of the Expedited Funds Availability Act (12 U.S.C. 4008)
• Sections 904 and 920 of the Electronic Fund Transfer Act (15 U.S.C. 1693b, 1693o-2)
• Section 105 of the Truth In Lending Act (15 U.S.C. 1604)
• Section 15 of the Check Clearing for the 21st Century Act (12 U.S.C. 5014) Sections 11, 11A, 13, and 16 of the Federal Reserve Act (12 U.S.C. 248, 248a, 342, 248-1, 360, and 411)

The FR 3066 is voluntary. Information collected on the FR 3066 is granted confidential treatment under exemption (b)(4) of the Freedom of Information Act, 5 U.S.C. 552(b)(4), which protects from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

Consultation outside the agency: As part of the routine execution of the surveys, the contractors that recruit responses and collect survey data engage with potential participants to review, explain, and obtain feedback about the surveys. These conversations help to develop or revise proposed questions to make them as relevant to and substantively consistent with industry practices as possible.