What is the role of a federated directory in Faster Payments?

The role of a federated directory in Faster Payments is to map an alias to its corresponding Payment Service Provider (PSP). This is crucial in a faster payments environment, where consumers and businesses often prefer to use identifiable and familiar references—such as email addresses or phone numbers—rather than complex account numbers. The federated directory serves as a centralized point that links these aliases to the actual payment accounts held by various PSPs.

This mapping facilitates the seamless and swift completion of transactions, as senders can initiate payments using aliases without needing to know the detailed banking information of the recipient. The federated directory ensures that payments are directed to the correct PSP, thereby enhancing the efficiency and user-friendliness of the payment process. As a result, it plays a vital role in promoting interoperability among different payment systems and participants in the faster payments ecosystem.