FR3054_20191115_omb

Supporting Statement for the
Payment Systems Surveys
(FR 3054; OMB No. 7100-0332)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Payments Systems Surveys (FR 3054; OMB No. 7100-0332). The Payments
Systems Surveys are used to obtain information specifically tailored to the Federal Reserve’s
operational and fiscal agency responsibilities. The Payments Systems Surveys family of surveys
is currently comprised of the following:
 Ad Hoc Payments Systems Survey (FR 3054a),
 Currency Quality Sampling Survey (FR 3054b),
 Currency Quality Survey (FR 3054c), and
 Currency Functionality and Perception Survey (FR 3054d).
The Board revised the FR 3054a to increase the frequency of surveys from once per year
to five times annually, and reduce the number of respondents from 20,000 to 4,000. The increase
in frequency of surveys allows the Federal Reserve System flexibility to respond to diverse needs
for data by surveying smaller groups of respondents multiple times throughout a year. Under the
FR 3054a, the Board plans to administer online or in person surveys, in-depth interviews, and
observations of focus groups in order to answer critical programmatic questions from U.S.
currency stakeholders. In addition, the Board implemented one new survey, the Currency
Education Usability Survey (FR 3054e). The Currency Education Usability Survey would be
conducted approximately five times per year will assess the usability of digital or online
education materials on U.S. currency. The Currency Education Usability Survey may be
conducted by the Board or a private firm. The FR 3054b, FR 3054c, and FR 3054d are not being
revised. The current estimated total annual burden for the FR 3054 is 19,150 hours, and would
increase to 20,400 hours. The revisions would result in an increase of 1,250 hours.
Background and Justification
The Board oversees the Federal Reserve Banks’ provision of financial services to
depository institutions; develops policies and regulations to foster the efficiency and integrity of
the U.S. payment system; works with other central banks and international organizations to
improve the payment system more broadly; conducts research on payments issues; and works
closely with the Bureau of Engraving and Printing (BEP) and U.S. Secret Service (USSS) on
currency design, quality issues, and to educate the global public on the security features of
Federal Reserve notes. Board officials serve on the Advanced Counterfeiting Deterrence group
(ACD), an interagency working group that is responsible for maintaining the security of U.S.
currency. As a member of the ACD, the Board supports the BEP in the design of next family of
U.S. currency by providing critical data on the use and circulation of Federal Reserve notes.
The Board periodically gathers data from various groups (including financial and
nonfinancial institutions, banknote equipment manufacturers, and global wholesale banknote

dealers) regarding demand for currency and coin, the quality and functionality of banknotes, the
public’s perceptions of security features, and how individuals use currency. These data are
considered particularly essential when (1) critical economic changes occur, (2) the BEP
encounters production problems and banknotes do not meet quality standards, (3) new banknote
designs are under consideration, (4) issues of immediate concern arise from Federal Reserve
System committee initiatives working on banknote security and issuance, or (5) Congress enacts
new or revised legislation that impacts currency production, currency issuance or coin
distribution.
In support of the Board’s currency recirculation policy, the Federal Reserve Bank of San
Francisco’s Cash Product Office (CPO) and the Federal Reserve Bank of Richmond’s Currency
Technology Office (CTO) monitor the quality of currency by analyzing data on banknotes
processed at Federal Reserve Banks each month.1 Once a year, the CPO randomly selects
depository institutions that have deposit accounts with Federal Reserve Banks to voluntarily
submit, as part of their normal deposits, currency that is unsorted from their commercial
customers, in order to assess the validity of the monthly monitoring and the quality of currency
in circulation.
The Board works closely with the BEP and USSS on banknote design to ensure that
banknotes consistently meet the needs of the public, are usable in all types of transactions
(including those involving automated equipment), and can be easily authenticated. To maintain a
sound money supply, it is important that currency functions properly in all types of transactions
and can be easily authenticated and denominated by all users. To assess how banknote
equipment manufacturers determine the authenticity and denomination of a banknote, the Federal
Reserve System conducts meetings and interviews with these stakeholders regarding currency
security features and key banknote design elements.
Description of Information Collection
Ad Hoc Payments Systems Survey (FR 3054a)2
The Federal Reserve System currently conducts the Ad Hoc Payments Systems Survey
once per year to collect information on specific issues that affect its decision making. The
principal value of the Ad Hoc Payments Systems Survey is the flexibility it provides the Federal
Reserve System to respond efficiently to the need for data. The Federal Reserve System cannot
1

Currency Recirculation Policy, Federal Reserve Bank Services https://www.frbservices.org/resources/financialservices/cash/currency-recirculation-policy/index.html.
2
Certain criteria apply to information collections conducted via the Board’s ad hoc clearance process. Such
information collections shall (1) be vetted by the Board’s clearance officer, as well as the Division director
responsible for the information collection, (2) display the OMB control number, (3) inform respondents that the
information collection has been approved, (4) be used only in such cases where response is voluntary, (5) not be
used to substantially inform regulatory actions or policy decisions, (6) be conducted only and exactly as described in
the OMB submission, (7) involve only noncontroversial subject matter that will not raise concerns for other Federal
agencies, (8) include information collection instruments that are each conducted only one time, (9) include a detailed
justification of the effective and efficient statistical survey methodology (if applicable), and (10) collect personally
identifiable information (PII) only to the extent necessary (if collecting PII, the form must display current Privacy
Act notice). In addition, for each information collection instrument, respondent burden will be tracked and submitted
to OMB.

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predict what specific information would be needed because such needs are generally nonrecurring and time sensitive.
The survey topics and questions of interest vary with the focus of the survey. Because the
relevant questions change with each survey, there is no fixed reporting form. For each survey,
the Federal Reserve System prepares questions of specific topical interest. The Federal Reserve
System, in consultation with any partners, then determines the relevant target group to contact.
Target respondents for the Ad Hoc Payments Systems Survey are primarily individuals, but
surveys may be deployed to financial institutions, retailers, or law enforcement entities.
The Ad Hoc Payments Systems Survey may cover the following information or closely
related topics:
 demand for currency,
 demand for $1 coins,
 demand for transactional coin,
 market preferences regarding the quality of currency (new versus fit currency),
 public awareness of, preference for, and reaction to banknote designs and security
features,
 currency usage patterns and behaviors, or
 effectiveness and demand for educational information about banknotes.
These data are not collected on any other reporting form or on the same frequency as
other substantively similar data. The Ad Hoc Payments Systems Survey enables the Federal
Reserve System to collect a limited amount of data from a defined set of consumers, financial
institutions, stakeholders, or related entities in the event of an immediate and critical need for
specific information.
The Ad Hoc Payments Systems Survey may be conducted through a private firm, which
would be chosen in a competitive bidding process or other acceptably negotiated process.3 The
research instruments may be developed by the Federal Reserve System alone or jointly with the
firm selected by the Federal Reserve System. If a private firm is selected, the firm would be
responsible for developing and testing proposed survey procedures, following a sampling
protocol which would be established by the Federal Reserve System before the survey is
administered, conducting the survey as specified by the Federal Reserve System, preparing data
files containing the responses, computing analysis weights, and documenting all survey
procedures.4 Data editing and analysis of the results may be conducted either solely by the
Federal Reserve System or jointly with the firm.

3

Firms used by the Federal Reserve to conduct past surveys include the University of Michigan’s Survey Research
Center (SRC); NORC (a social science and survey research organization at the University of Chicago); ICF
International Inc. in Calverton, MD; Rockbridge and Associates in Great Falls, VA; Research Triangle Institute in
Research Triangle Park, NC; and Ogilvy in Washington, DC.
4
As necessary, all documents and procedures would be reviewed by the Board.

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Currency Quality Sampling Survey (FR 3054b)
The Board works jointly with the CPO, the CTO, and each Federal Reserve Bank’s cash
department to conduct the Currency Quality Sampling Survey once per year to collect
information on the quality of currency in circulation. The respondents to the Currency Quality
Sampling Survey are depository institutions that have deposit accounts with a Federal Reserve
Bank.
The Currency Quality Sampling Survey may cover the following information or closely
related topics:
 samples of currency,
 quality of banknotes received from commercial customers of depository institutions, or
 a comparison of the quality of banknotes processed at Federal Reserve Banks with
banknotes received from commercial customers of depository institutions.
Currency Quality Survey (FR 3054c)
The Board works jointly with the CPO and the CTO to conduct the Currency Quality
Survey twice per year to collect information on the quality of currency in circulation. The
respondents to the Currency Quality Survey are depository institutions that have deposit accounts
with a Federal Reserve Bank (once per year) and banknote equipment manufacturers (once per
year). The information collected is used to determine their opinions of currency quality and
assess the needs for currency quality in the marketplace.
The Currency Quality Survey may cover the following information or closely related
topics:
 opinions on currency quality,
 cash handling practices, or
 uses of currency sorting equipment.
Currency Functionality and Perception Survey (FR 3054d)
The Board may work jointly with the BEP and CTO to conduct the Currency
Functionality and Perception Survey up to four times per year to assess the functionality of
banknotes currently in circulation and to gain information from banknote equipment
manufacturers that would be used as input in future designs of Federal Reserve notes. The
frequency of the survey is determined by the number of banknote equipment manufacturers that
solicit bilateral meetings or by the Board, CTO, and BEP choosing to solicit bilateral meetings
with specific banknote equipment manufacturers based on business needs. The respondents to
the Currency Functionality and Perception Survey are banknote equipment manufacturers, and
the information collected is used to determine how their equipment authenticates currency and
how future banknote designs can incorporate more or better machine-readable features.
The Currency Functionality and Perception Survey may cover the following information
or closely related topics:
 opinions on currency quality,

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


uses of sensor technology, or
the effectiveness of machine-readable features of banknotes.
Respondent Panel

As noted above, the Payments Systems Surveys include surveys of financial institutions,
including depository institutions, individuals, law enforcement, and nonfinancial businesses
(banknote equipment manufacturers, or global wholesale bank note dealers).
Adopted Revisions to the FR 3054
Ad Hoc Payments Systems Survey (FR 3054a)
The Board adopted a revision to increase the frequency of Ad Hoc Payment Systems
Survey up to five times per year in order to meet the changing needs of the U.S. currency
program. This amendment reflects an increased frequency of data collection on a temporary
basis. The frequency of surveys is determined by the number of events that require an immediate
and critical need for specific information. The increase in frequency of surveys allows the
Federal Reserve System flexibility to respond to diverse needs for data by surveying smaller
groups of respondents multiple times throughout a year. Additionally, the Board adopted a
revision to decrease the number of respondents from 20,000 to 4,000. Under the FR 3054a,
surveys could be administered online or in person, through in-depth interviews, and through
observations of focus groups. The Board estimates that each respondent will spend anywhere
between 0.25 hours to 1.5 hours (with a weighted average of approximately 0.75 hours for each
respondent. Most surveys under the Ad Hoc Payments Systems Survey will be short, and aimed
at gathering data to inform programmatic decisions.
The Federal Reserve System intends to use the Ad Hoc Payments Systems Survey to
administer surveys, interviews, and conduct focus groups to gather data about the perception and
needs that users of U.S. currency have.
Currency Education Usability Survey (FR 3054e)
The Board implemented a Currency Education Usability Survey (FR 3054e) to be
conducted through the Board or a private firm up to five times per year to collect information on
the effectiveness and usability of digital currency education tools. The frequency of the survey is
determined by the number of new web resources, website pages requiring feedback, and
instances of website architecture restructuring. The respondents to the Currency Education
Usability Survey would be primarily individuals, but the Currency Education Usability Survey
may request responses from depository institutions or retailers to support the development of
new digital education materials for these stakeholder groups.
The Currency Education Usability Survey may cover the following information or
closely related topics:
 website usability;
 mobile app usability; or

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

the effectiveness of other education-related digital activities and projects.

Time Schedule for Information Collection and Publication
The time schedules for the distribution of, response to, and collection of data for each
survey are determined during the planning phase prior to the distribution of the survey
instrument. Before data collection begins, staff from the Federal Reserve System will explain to
respondents the purpose of the survey and how the data would be used. The Federal Reserve
System may choose to keep survey data confidential, depending upon the nature of the data
collection. Before publication, the Federal Reserve System decides whether to publish survey
data and informs respondents whether the data would be confidential or published on an
individual or aggregate basis. Aggregate survey information may be cited in published material
such as staff studies or working papers, professional journals, the Federal Reserve Bulletin,
testimony and reports to the Congress, or other vehicles.
Legal Status
The information obtained from the FR 3054 may be used in support of the Board’s role in
overseeing the Federal Reserve Banks’ provision of financial services to depository institutions;
developing policies and regulations to foster the efficiency and integrity of the U.S. payment
system; working with other central banks and international organizations to improve the payment
system more broadly; conducting research on payments issues; and working with other federal
agencies on currency design, quality issues, and to educate the global public on the security
features of Federal Reserve notes. Therefore, the FR 3054 is authorized pursuant to the Board’s
authority under sections 11(d), 11A, 13, and 16 of the Federal Reserve Act (12 U.S.C. §§ 248(d),
248a, 342, 411, 412, 413, 414, 415, 416, 417, and 421). The FR 3054 is voluntary.
The questions asked on each survey would vary, so the ability of the Board to maintain
the confidentiality of information collected would be determined on a case-by-case basis. It is
possible that the information collected would constitute confidential commercial or financial
information, which may be kept confidential under exemption 4 to the Freedom of Information
Act (FOIA) (5 U.S.C. § 552(b)(4)). In circumstances where the Board collects information
related to individuals, exemption 6 to FOIA would protect information “the disclosure of which
would constitute a clearly unwarranted invasion of personal privacy” (5 U.S.C. § 552(b)(6)). To
the extent the information collected relates to examination, operating, or condition reports
prepared for the use of an agency supervising financial institutions, such information may be
kept confidential under exemption 8 to FOIA (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
There has been no other consultation outside the agency; however, surveys and studies
may be conducted jointly with other agencies. If this were to occur, the Federal Reserve would
consult with other agencies’ staff, to the extent practicable, to create a consistent set of questions
or a substantively similar information collection.

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Public Comments
On June 21, 2019, the Board published an initial notice in the Federal Register
(84 FR 29203) requesting public comment for 60 days on the extension, with revision, of the
FR 3054. The comment period for this notice expired on August 20, 2019. The Board did not
receive any comments. The Board will adopt the extension, with revision, of the FR 3054 as
originally proposed. On September 26, 2019, the Board published a final notice in the Federal
Register (84 FR 50844).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 3054 is 19,150
hours. The adopted revisions result in a net increase in burden of 1,250 hours. The Board
estimates that the Ad Hoc Payments Systems Survey may be conducted up to five times per year
with up to 4,000 individuals, law enforcement agencies, financial institutions, or businesses.
Respondents will be selected based either on their business relationship with the Federal Reserve
System, or as identified by a market research firm. It is also estimated that each respondent
would spend anywhere between 0.25 hours to 1.5 hours (with a weighted average of
approximately 0.75 hours) preparing for and participating in each survey, which will either be
administered as online surveys or face-to-face guided discussions. The Federal Reserve
anticipates a 60 percent response rate.
The Currency Quality Sampling Survey would be conducted on an annual basis. The
Board estimates that each respondent would spend approximately 0.50 hours completing the
banknote collection associated with this survey. The Board analyzes the quality of currency
processed at all Federal Reserve Banks and it randomly selects 300 respondents whose deposits
reflect the average quality of processed currency. The Federal Reserve anticipates a 60 percent
response rate.
The Currency Quality Survey would be conducted twice per year, once with
approximately 25 depository institutions and once with approximately 25 banknote equipment
manufacturers. Depository institutions may be selected from the Federal Reserve System’s cash
customer advisory council and banknote equipment manufacturers may be selected from the
Federal Reserve’s central bank cash machine group. It is estimated that respondents would spend
approximately 30 hours preparing for and completing the Currency Quality Survey and
participating in either face-to-face guided discussions or telephone interviews. Because their
businesses are directly affected by currency designs and currency quality, the Federal Reserve
anticipates a 100 percent response rate.
The Federal Reserve anticipates conducting the Currency Functionality and Perception
Survey four times a year with approximately 250 respondents and estimates that each respondent
would spend approximately 2.5 hours preparing for and participating in discussions with the
Board, the BEP, the CTO, or the USSS. Banknote equipment manufacturers may be selected
from the Federal Reserve’s central bank cash machine group. Because their businesses are
directly affected by currency designs, the Federal Reserve anticipates a 100 percent response
rate.

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The Currency Education Usability Survey would be conducted up to five times per year
with a total of 500 respondents. Each respondent would spend approximately 0.5 hours preparing
for and participating in either face-to-face guided discussions, or online surveys to assess the
usability of digital education tools. The Federal Reserve anticipates a 60 percent response rate.
These reporting requirements represent less than 1 percent of the Board’s total paperwork
burden.
Estimated
number of
respondents5

FR 3054
Current
FR 3054a
FR 3054b
FR 3054c
FR 3054d

Estimated
Estimated
Annual
average hours annual burden
frequency
per response
hours

20,000
300
25
250

1
1
2
4

0.75
0.50
30.0
2.50

15,000
150
1,500
2,500
19,150

4,000
300
25
250
500

5
1
2
4
5

0.75
0.50
30.00
2.50
0.50

Total

15,000
150
1,500
2,500
1,250
20,400

Change

1,250

Total
Proposed
FR 3054a
FR 3054b
FR 3054c
FR 3054d
FR 3054e

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Of these respondents, it is anticipated that 1,170 FR 3054a respondents, 15 FR 3054b respondents, 15 FR 3054c
respondents, 250 FR 3054d respondents, and 13 FR 3054e respondents would be considered small entities as
defined by the Small Business Administration (i.e., entities with less than $600 million in total assets),
https://www.sba.gov/document/support--table-size-standards.

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The estimated total annual cost to the public for these surveys is currently $771,240 and
with adopted revisions would increase to $807,690.6
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System is $36,000; however the Board notes
that the actual cost of the surveys would depend on the size of the sample, the number of
questions asked, the type and complexity of the questions asked, the frequency of the surveys,
and whether the survey is conducted by a private firm or Federal Reserve System staff. The
Board anticipates that in most cases, staff from the Board, the CPO, or the CTO will conduct the
FR 3054b and FR 3054c. The majority of the work for the FR 3054a, FR 3054d, and FR 3054e
will be conducted using a private firm, working on behalf of the Board. The Board estimates that
Board staff may spend up to 2,500 hours per year working on these collections. For the
FR 3054a, the Board may spend between $1 million and $2 million for the private firm to
develop, administer, and analyze the results of these surveys, depending on the scope and
complexity of the survey design. For the FR 3054e the Board will use internal staff time to
design, develop, and analyze surveys, so the Board anticipates spending no more than $5,000
each year for a private firm to administer these surveys.

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Under the current FR 3054, the total cost to the public for FR 3054a was estimated based on an assumption of
10,500 hours for individuals and 4,500 hours for all others. For FR 3054b, FR 3054c, and FR 3054d, the total cost to
the public was estimated based on the assumption that all respondents were businesses or government.
Under the proposed FR 3054, the estimated cost to the public for the FR 3054a is based on 10,500 hours for
individuals and 4,500 hours for all others. For the FR 3054e, the total cost to the public was estimated based on the
assumption that 1,125 hours will be used for individuals, and 125 hours will be used for all others. For FR 3054b,
FR 3054c, and FR 3054d the total cost to the public was estimated based on the assumption that all respondents are
businesses or government.
Cost estimates are created based on the following formulas and data sources (1) for individuals, the average
consumer cost of $26 is estimated using data from the Bureau of Labor Statistics (BLS) Economic News Release
(USDL-19-0307), www.bls.gov/news.release/cewqtr.nr0.htm and (2) for businesses and government, percent of staff
time, multiplied by annual burden hours, multiplied by hourly rates (30% Office & Administrative Support at $19,
45% Financial Managers at $71, 15% Lawyers at $69, and 10% Chief Executives at $96). Hourly rates for each
occupational group are the (rounded) mean hourly wages from the BLS, Occupational Employment and Wages May
2018, published March 29, 2019, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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