FFIEC Issues Retail Payment Systems Risk Management Guidance

The Federal Financial Institutions Examination Council (the "FFIEC") issued a Retail Payment Systems Booklet (the "Booklet") to provide risk management guidance to financial institutions ("FIs") concerning their retail payment activities (e.g. checks, card-based electronic payments and other electronic payment media). The FFIEC noted that as FIs shift from paper-based to electronic systems they will face increased risk management challenges. After providing an overview of retail payments systems, the Booklet describes the retail payment systems instruments typically offered by FIs (including, among others, checks, credit and debit cards, ATMs, EFT/POS networks, stored value cards, on-line P2P payments) as well as the role of the Automated Clearinghouse. The Booklet also describes the types of risks FIs confront in connection with retail payment systems and instruments and discusses effective risk mitigation practices, systems and controls, including those related to vendor and