The payments industry is closing out 2024 with a range of unresolved issues, from regulatory uncertainty to the evolution of open banking and fraud mitigation.

Our President and CEO, Brian Tate, was recently interviewed by American Banker and shared insights on the fluid regulatory environment and its impact on banks, fintechs, and the broader payments ecosystem. In the article, he addresses the regulatory environment and said:

"Everything is tied by a string. There are a lot of creative ideas that are waiting in the wings, but there's a lot of regulatory uncertainty out there." 

To read what Tate and other industry leaders are saying about the challenges and opportunities in 2025, check out the full article: Payments at the end of 2024: Lots of cliffhangers

​In my last blog, I wrote about how government is more important than politics for trade associations like the IPA.
Now that we know the results of the election, the industry needs to keep in mind that nothing is guaranteed.

We all operate under certain assumptions, including that the Trump Administration will lead to a lighter regulatory burden and be better for banks. In May, The New York Times wrote that “some in Mr. trump’s circles are urging the campaign to consider more substantial – even institution-altering – changes to the central bank ... ultimately making the rules less onerous for financial institutions for instance.”

But let me ask a question.

How much does the Trump organization pay in interchange fees on transactions at its properties?

Hotels, golf courses, and resorts take in a lot of revenue, and cash is not the predominate form of payment in the United States.

Imagine someone from the Trump organization told the president elect over the next three weeks, “we found a way to save millions.”

This is purely a hypothetical, and I am not suggesting that it will happen.

But it is an example of how regulatory risks can still exist no matter who is in office.
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The industry still needs to have a voice in government, and the IPA is committed to working with its members to advocate for a regulatory environment that promotes innovation for its customers. 

With the election around the corner, politics dominates conversations and news cycles, but government is more important for the IPA and its members.  

Politics is about photo ops, sound bites, and attending events while trying to win votes. 

Government is about creating, understanding, and implementing policies. 

Elections matter. No rational person would deny that. Some might even find them entertaining, getting caught up in the horse race. 

But it is what happens after the election, when whoever wins needs to make the government work for the country; that matters more.  

For trade associations like the IPA, the important work happens on the government side. 

Regardless of who wins control of the White House, the House, and Senate compliance will still be an important part of financial services. Regulators will still be watching the industry and proposing new rules. And we may see more legislation introduced into Congress. 

Before, during, and after the election, the IPA will continue its work to create a regulatory environment that fosters innovation and competition in financial services.  

Doing requires keeping up with legislative and regulatory proposals, educating members on what they might mean, and responding appropriately to them. A lot of fine print needs to be read, and the analysis needs to include what is not said along with what is said.  

Unlike politics, government is often quiet, detailed work that doesn’t make for good LinkedIn posts, but it remains essential to keeping the industry moving ahead.  ​

“Hurry up! Do something! You’re going to lose your money!” yelled the FBI agent on a panel at the IPA Compliance Boot Camp.

Not only was I surprised, but so were all attendees.

After taking a moment to reorient ourselves, the agent explained that fraudsters know that putting people under pressure makes it harder to think clearly.

But it is not just criminals who are applying pressure. The regulators seem to be working on applying pressure to the payments industry as they release a flood of new regulations to govern just about every part of the fintech universe.
The IPA’s mission is to help the industry deal with that pressure by advocating for our members in front of regulators and legislators, and by educating our members on the latest developments and best practices in compliance.

Our Compliance Boot Camp, held earlier this month in Chicago, focused on the education part of our mission. Companies need compliance programs in place long before the regulators come knocking. As the world rapidly evolves, compliance plans need to cover the rules that are in place and anticipate what might be next. Being prepared can help compliance teams avoid mistakes that come with the pressure of regulations both new and old.
The Boot Camp’s agenda provides clues for any innovator as to the areas they need to assess in their own plans.  (The IPA would like to thank Discover for hosting this year’s boot camp, and Baird Holm for helping us to secure CLE credits for attendees.)

We started with a Regulation E refresher, because that is a foundation regulation for all payments products. Companies need to have these basics covered before they start offering payments products. By the same token, we also had the FBI present on Crypto fraud. Like so many payments products, Crypto is a tool for, though not a cause of, crime. We also covered third party oversight, because innovation involves working with companies outside the bank to make interesting products available to customers.

Looking ahead we discussed the new rules for Earned Wage Access products, and the possibilities that might be on the horizon when it comes to cannabis banking. We also spent time discussing open banking, which could create threats or opportunities for financial institutions and their partners. Whether open banking is a threat, or an opportunity will come down to preparation.

Finally, we spent time on artificial intelligence. While AI is often touted as the next technological wave, the financial services industry has been using it for decades in areas such as fraud detection and credit decisioning. AI is a place where the new meets the old, because rules like those governing fair lending don’t change just because banks add new decision-making tools. Companies will need to evaluate this new technology through a traditionalist lens as well as an innovator’s lens to make sure they avoid traps.

As the regulators move ahead with their agenda, compliance teams should take some time to plan out their agenda to ensure that they are prepared both to manage current regulators, and the new challenges that technology and regulatory changes may bring.

​IPA Compliance Boot Camp: The IPA's Compliance Boot Camp in Chicago offers a unique opportunity to deep-dive into the latest regulations and trends. From hot topics like Open Banking and Earned Wage Access to the legal implications of AI and serving cannabis businesses, this one-day event is packed with insightful sessions led by industry experts. Don't miss this chance to gain the knowledge you need to thrive in today's dynamic market.

​IPA Compliance Boot Camp: The IPA's Compliance Boot Camp in Chicago offers a unique opportunity to deep-dive into the latest regulations and trends. From hot topics like Open Banking and Earned Wage Access to the legal implications of AI and serving cannabis businesses, this one-day event is packed with insightful sessions led by industry experts. Don't miss this chance to gain the knowledge you need to thrive in today's dynamic market.

​IPA Compliance Boot Camp: The IPA's Compliance Boot Camp in Chicago offers a unique opportunity to deep-dive into the latest regulations and trends. From hot topics like Open Banking and Earned Wage Access to the legal implications of AI and serving cannabis businesses, this one-day event is packed with insightful sessions led by industry experts. Don't miss this chance to gain the knowledge you need to thrive in today's dynamic market.

If your LinkedIn feed is anything like mine, you’ve seen an uptick in people looking for jobs and companies announcing cuts.

These are likely reactions to uncertainties in the economy and the political landscape. The problem is that they are the wrong reaction.

My thinking on this is informed by my time at the Graduate School of Banking at the University of Wisconsin, Madison. I was invited to attend when I was a reporter for American Banker. (The industry wanted to make sure that the reporting covering it had some knowledge of how things worked.)

One of the professors castigated the students for having the instinct to cut every time there was a problem or downturn. As he put it, companies might save some money by making cuts, but they don’t earn returns. Companies earn returns by investing.

We can see the results of not investing in the payments industry when we read the consent orders that have been filed against issuing banks. They failed to invest in adequate and qualified staff to manage partners and programs. They failed to invest in adequate systems to manage risks, identify customers, or even maintain ledgers. They failed to invest in proper oversight of their partners.

Banks that want to be in the innovation business are going to need to think of themselves as investors in the fintech sector. The difference is that the investments they make will not be monetary investments in third party companies. Instead, the dollars will need to be spent on themselves for technology, for additional people, and for training the people they have.

Two challenges will face the institutions that do this.

First, they will need to develop a strategy that justifies a longer time horizon for return on investment. In a world dominated by quarterly earnings calls, this can be tough. But having a larger goal can help directors and investors follow the money.
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Second, they will need to get comfortable not following crowd and cutting when times are tight. It can be difficult to take a different path than colleagues and competitors. But innovation comes from finding opportunity where others see problems.

Earned Wage Access (EWA) is becoming more and more popular among employees and employers alike to provide financial flexibility and stability. EWA allows employees to access a portion of their earned wages before payday, helping them to cover unexpected expenses or bridge financial gaps without relying on high-interest payday loans or credit cards. 

While EWA can provide significant benefits to employees, it is essential for employers to ensure that they are implementing these programs in a compliant and responsible manner. Compliance with federal and state laws is crucial to protect both employees and employers from potential legal issues.  

One important aspect of compliance with EWA programs is ensuring that employees are informed about the terms and conditions of the program. Employers should clearly communicate how EWA works, including any fees or charges associated with accessing their wages early. Transparency is key to building trust and ensuring that employees understand their rights and responsibilities. 

In addition to transparency, employers must also ensure that their EWA programs comply with all relevant labor laws and regulations. This includes ensuring that employees are not being charged excessive fees for accessing their wages early and that the program does not violate any wage and hour laws. Employers should work closely with legal counsel to review their EWA programs and ensure that they are in compliance with all applicable laws. 

Furthermore, employers should also consider the potential impact of EWA programs on employees' overall financial well-being. While EWA can provide short-term financial relief, it is not a long-term solution to financial instability. Employers should encourage employees to use EWA responsibly and provide resources for financial education and counseling to help employees improve their financial literacy and management skills. 
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By ensuring compliance with laws and regulations, promoting transparency and responsible practices, and providing support for employees' financial well-being, employers can ensure that their EWA programs are a positive and valuable addition to their benefits offerings. Earned Wage Access can be a powerful tool for improving employee satisfaction and retention, but it is essential to implement these programs in a way that prioritizes compliance and responsible practices. ​

IPA Compliance Boot Camp: The IPA's Compliance Boot Camp in Chicago offers a unique opportunity to deep-dive into the latest regulations and trends. From hot topics like Open Banking and Earned Wage Access to the legal implications of AI and serving cannabis businesses, this one-day event is packed with insightful sessions led by industry experts. Don't miss this chance to gain the knowledge you need to thrive in today's dynamic market.