Interoperability Standards for Real-Time Fraud-Signal Exchange Across U.S. Financial Institutions: Design Principles and a Reference Implementation

Abstract

The United States now operates two parallel real-time payment rails, The Clearing House's RTP Network (launched 2017) and the Federal Reserve's FedNow Service (launched July 20, 2023), both built on the ISO 20022 messaging standard, yet the two networks remain what industry participants describe as message-routing interoperable rather than message-exchange interoperable: a payment cannot originate on one network and settle on the other without a purpose-built translation layer. This lack of full interoperability extends to fraud-signal exchange specifically, at a moment when a receiving institution has as little as five seconds to respond to and post an incoming real-time payment, leaving minimal window for cross-institutional fraud checking under current arrangements. This article proposes a set of interoperability design principles and a layered reference implementation for real-time fraud-signal exchange across U.S. financial institutions, built on the existing ISO 20022 message schema, a dedicated fraud-signal exchange API layer, and the established FS-ISAC information-sharing infrastructure, which as of recent published figures connects more than 7,000-member financial institutions and 15,000 users across more than 70 jurisdictions. The article reviews the current state of payment-rail interoperability, proposes concrete design principles for a fraud-signal-specific extension to the existing ISO 20022 schema, situates the proposal against real, cited adoption data for FedNow and RTP, and assesses the governance and standards-setting challenges that must be resolved before such an extension could be implemented industry-wide.