The Fed’s Mickey Mouse Market Research

If the title of this post is in any way demeaning or disparaging, I apologize. Mickey Mouse is way too important a cultural icon to be disrespected.

The Federal Reserve, on the other hand, I’m not too sure about.

It recently launched an effort to elicit feedback on how to improve the payments system, organized on a web site titled “In Pursuit of a Better Payment System”. The site links to a white paper produced by the Fed that seeks to:

“1) Articulate the Federal Reserve Banks’ perspective on key gaps and opportunities in the current payment environment; and desired outcomes that close these gaps and capture these opportunities.

2) Solicit broad industry input on the Federal Reserve Banks’ perspectives on gaps, opportunities, and desired outcomes articulated in this paper; potential strategies and tactics to shape the future of the U.S. payment system; and the Fed’s role in implementing these strategies and tactics. Questions near the end of this document are provided for those who would like to respond.”

While the Fed’s intentions to solicit input is admirable, its execution leaves a lot to be desired.

My issues with the effort concern the: 1) Content; 2) Survey; and 3) Sample.


The content of the white paper contains the following passage:

“The gaps and opportunities outlined above can be summarized in an over-arching problem statement for the U.S. payment system: End users of payment services are increasingly demanding real-time transactional and informational features with global commerce capabilities. The challenge for the industry is to provide a payment system for the future that combines the valued attributes of legacy payment methods – convenience, safety, and universal reach at low cost to the end user – with new technology that enables faster processing, enhanced convenience, and the extraction and use of valuable information that accompanies payments.”

End-users are “demanding real-time transactional features”? Really? I’d assert that consumers — if that’s what we’re talking about when we say “end-users” — couldn’t care less about real-time transactions in the majority of cases where a payment is made. 

Oh sure, when you want to get money to somebody in an emergency you think you want real-time, or when you pay a bill at the last minute, you say you want it to be real-time, but what consumers want is access to the money (in the first example), and credit for the payment (in the latter example). They don’t care if the payment is real-time or not. 

The paper identifies a number of “desired outcomes.” Some of them are laughable, like Desired Outcome 1:

“Key improvements for the future state of the payment system have been collectively identified and embraced by payment participants, and material progress has been made in implementing them.”

Material progress? What does that mean? How will we know if payment participants have “embraced” the key improvements? And who are the “payment participants” referred to? Consumers? Merchants? Banks? (A word of caution to the Fed: These three parties may have conflicting interests regarding “improvements” in the payment system. Just sayin’.).
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Or how about Desired Outcome 2:

“A ubiquitous electronic solution(s) for making retail payments exists that does not require the sender to know the bank account number of the recipient. Confirmation of good funds will be made at the initiation of the payment.The sender and receiver will receive timely notification that the payment has been made. Funds will be debited from the payer and made available in near real time to the payee.”

Maybe I’m missing something, but I’m pretty sure that when I make a retail payment today, I have no clue what the “recipient’s” (i.e., the company’s) bank account number is. Oh wait, they mean a P2P payment? Oh! Hey, guess what? There are a number of solutions on the market that do not require that the payer know the recipient’s bank account number. Fed Reserve, meet Paypal. Paypal, meet the Fed. 

Then there’s Desired Outcome 3:

“Over the long run, greater electronification and process improvements have reduced the average end-to-end (societal) costs of payment transactions and resulted in innovative payment services that deliver improved value to consumers, businesses, and governments.”

 Over the long run….you mean, like, over the next 100 years? What exactly are the “average end-to-end (societal) costs of payment transactions” today, so we can know if they’ve been reduced in the long-run? Dave Birch always seems to have those societal cost figures. Maybe he knows. And he’s not even American. 


In soliciting input on what improvements are needed, the Fed posted a survey online for “payment participants” to complete. Although there are just 21 numbered questions, the survey really consists of 40 open-ended questions. 

You could spend days filling out the survey. 

The first question asks “Are you in general agreement with the payment system gaps and opportunities identified in the “Payment System Improvement Public Consultation Paper”?”

Really? “General” agreement? I could see them asking respondents to estimate the degree to which they were in agreement (though, as a researcher, I’d have some issues with that) with specific gaps and opportunities. But no, the survey simply asks “yes” or “no” if the respondent is in general agreement. 

From an overall survey design perspective, this survey is a mess. There is no ability to quantify and aggregate responses across respondents.

Even worse, the attempt at providing the ability for respondents to elaborate on their perspectives falls short, as most of the user responses that I looked at rarely go beyond a one-word or one-sentence response to the question. 


The deadline to submit a response is December 13, 2013. In the first month following the posting of the web site, 18 responses were submitted. In the month since, zero responses have been submitted.

If another 18 people submit responses in the next month, the Fed will have 36 responses. If the pace we’ve seen in the past month holds, the Fed will be left with just 18 responses.

The people who have submitted responses should be commended for taking the time and effort to respond, at whatever level of response they provided. 

Seriously. No snark, no joke. 

But this doesn’t stop me from calling into question who these people are, and whether or not they’re representative of the “payment participants” population as a whole. 

Who are these people? What are their qualifications for providing perspectives? Which of the various constituencies do they represent? 

Maybe I’ll tell one of my 13 year-old’s teachers about this, and ask him or her to assign this as homework: Go to Fed site, read the paper on payments, then fill out the survey as best as possible.

Hey — the perspectives of 20 13-year-old 7th graders may be more valuable than the views of the people who have already responded.


Bottom line: The Fed’s effort to identify gaps and improvements in the payments system, to publish a number of “desired outcomes” from this effort, and to survey who-knows-who they’re surveying is a joke.

If the Fed is serious about this, it should contract out the effort to a firm (yep, like mine) that understands the payments system (from the perspectives of consumers, banks, and merchants) and understands how to do market research.   

Hey, who knows. Maybe the Fed isn’t really trying to gather valuable, usable information from the payments participants. Remember the degree of input “participants” in the health care system had in the design of Obamacare? (It was “none” for those of you who don’t remember). 

But, to its credit, at the least the Fed’s  In Pursuit of a Better Payment System web site is up and running. Which is more than we can say for you-know-which site.

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