To be successful, new payment instruments, and changes to existing instruments, must ultimately be more convenient and cost-effective for end users. Consumers and businesses are not likely to modify their payment behavior unless they are shown how they will benefit from a change. A Federal Reserve Board staff study conducted in 2002, “The Future of Retail Electronic Payments Systems,” highlighted this observation.
We are more open to experimentation at the early stages of a product or method of service, as will be clear in the soon-to-be-released peer-to-peer lending regulations. At the same time, we have to be more conscious of the risks to stability as innovations catch on and expand. This phased approach is now being called the sand-box approach elsewhere.