The past year has been a busy one when it comes to payments regulation. Everything from disclosures to transaction routing has come to the attention of regulators and Congress. There is more to come in 2022.
In the latest episode of the IPA Payments Pod, Brian Tate, the IPA’s CEO, discusses the impact of some of the biggest stories from the past year and what they might mean for 2022.
We cover the PayPal lawsuit, which could change the way the prepaid products can offer credit, and the types of disclosures they need to provide.
We talk about earned wage access and buy-now-pay-later products. These products have drawn interest from Congress and Brian testified in front of the House Financial Services Committee on earned wage access products. You can find a video of his testimony here: Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL and Other Emerging Fintech Cash Flow Products | U.S. House Committee on Financial Services.
We discuss how the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation are at odds over a request for public comment on the Bank Merger Act. The CFPB published the request on its own site on Dec. 9, saying that the FDIC board had approved the request. The same day, the FDIC published a release on its own site that said no request for information had been voted on by the board and that it looked for to a collegial relationship with other regulators in the future.
We also cover the nomination of Saule Omarova to be comptroller of the currency, routing requirements, and even what might happen with Crypto.
Listen here and leave us a review!
Have Digital Driver’s Licenses Arrived? Apple has struck a deal with several states, but is it a good one?
Nearly everything in a physical wallet can be put into a digital wallet. For a long time, the one exception was your driver’s license, but that may soon change.
Apple has struck deals with a number of states to put licenses into iPhones. In this episode, Jason Mikula, the publisher of Fintech Business Weekly, talks about what he found when he reviewed the deals and how they look nearly identical from state to state and give Apple much of the control over the programs. The company has said on its iOS 15 Web site that it will launch a driver’s license or ID feature in 2022.
We discuss the pros and cons of digital driver’s licenses and of private companies getting into what was once purely a government domain.
You can find Jason on Twitter at @mikulaja and subscribe to his newsletter at: Fintech Business Weekly | Jason Mikula | Substack.
One challenge of banking with a digital-only bank is making cash deposits. With no branches, it can be tough on a consumer who wants to make cash available for digital spending. With cash still being king for many customer segments, fintechs need to find a way to help them move that cash into the digital realm.
Visa has been doing this for years for prepaid card holders by allowing them to make cash deposits at retailers and ATMs through its ReadyLink Network. Now, the company has expanded that access to debit programs, providing an opportunity for neobanks, other fintechs, and even traditional financial institutions potentially to offer deposit capabilities at a broad range of locations.
In the latest episode of the IPA Payments Pod, Lauren Fulmer, the director of U.S. Prepaid Product at Visa, talks about how the network works and what the future might hold now that it has expanded beyond prepaid cards.
You can find the episode here. Please subscribe and leave us a review.
Congress is researching fintech, and the IPA was there to help them understand the truth about earned wage access products.
On November 2, Brian Tate, the IPA’s CEO, testified in front of the House Financial Services Committee’s Task Force on Financial Technology in a hearing entitled “Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL and Other Emerging Fintech Cash Flow Products.”
The following witnesses testified:
He covered the uses of earned wage access by individuals and companies and responded to questions from the panel.
In this episode Brian talks about the hearing and what he thinks the questions and testimony of the other panelists might tell us about the future of payments regulation.
Congress and the regulators are not likely to stop at asking questions of industry representatives and consumer advocates. The future likely holds future legislation and regulations that will affect the payments business. If you would like to be a part of shaping what those laws and regs look, then join the IPA today.
Testimony of Brian Tate President and CEO of the Innovative Payments Association Before the House Financial Services Committee Task Force on Financial Technology
Chairman Lynch, Ranking Member Davidson, and members of the Task Force on Financial Technology, my name is Brian Tate, and I am the President and CEO of the Innovative Payments Association (IPA).
It is my privilege to appear before you today to share IPA’s views on emerging Fintech cash flow products with specific emphasis on the use of earned wage access services.
IPA is a non-profit trade association that serves as the leading voice of the electronic payments sector, including prepaid products, mobile wallets, and P2P payments. IPA’s mission is to encourage efficient use of electronic payments, cultivate financial inclusion, and empower consumers.
As we have learned throughout the pandemic, even the best laid plans cannot always protect families from unexpected financial disruptions.
The Federal Reserve’s 2018 Survey of Household Economics found that 40% of American households would struggle to come up with $400 to pay for an unexpected bill. Many consumers have few options should they face an unexpected expense between paydays, and the traditional options have proven to be expensive.
The U.S. Department of Labor reports nearly two-thirds of U.S. businesses pay their workers on a bi-weekly, semi-monthly, or monthly schedule, which means that workers are, in essence, giving their employers an interest-free loan. A study by the Financial Health Network found that 38% of respondents reported timing mismatches between wage income and expenses.
During the past ten years, the payment innovators have developed new services and products to help consumers meet these timing mismatches. One of the most practical and affordable options is Earned Wage Access, or EWA. Simply put, EWA programs allow consumers to access their own money prior to payday.
Getting paid daily is not a new concept. Many Americans, including wait staff, taxi drivers, and bartenders, can get paid at the close of their shifts.
The two former leaders of the CFPB – Directors Cordray & Kraninger – didn't agree on much, but both took concrete steps to support EWA. Director Cordray exempted employer-sponsored programs from his 2017 payday lending rule. And Director Kraninger issued an advisory opinion explaining that certain EWA programs are not credit. IPA agrees with both Cordray and Kraninger and maintains that EWA products are not loan or credit products, Therefore, they should not be subject to TILA.
The Financial Health Network’s report on EWA found consumers in financial distress may consider title, payday, or pawn loans as options. With the average cost per EWA transaction ranging between $2.59 - $6.27, the report makes it clear that EWA is far less costly than those other options.
EWA has grown in popularity because it is a safer, cheaper, and more efficient alternative to other short-term products on the market. EWA providers do not impact customers’ credit ratings and they do not share information to credit reporting agencies. EWA is offered with no recourse and providers have no rights
against the user in the event of nonpayment, loss of employment, closed accounts, or blocked payments. These are non-recourse transactions, which means the risk of loss is on the provider.
As someone who has been working since the age of 14, I can easily relate to a retail worker, single parent, or young adult facing a financial emergency and lacking easy access to short-term liquidity. At different points in my life, I have walked in the same shoes as millions of Americans who find themselves unable to pay for a utility bill, childcare, or an unexpected medical expense.
Treating EWA as credit would be a mistake and would remove a valuable tool from consumers’ financial toolkit.
Thank you for the opportunity to present the views of the IPA and I welcome any questions the Task Force may have.
The Consumer Financial Protection Bureau has a new director, and the Biden Administration has nominated a new Comptroller of the Currency. These two agencies regulate large swaths of financial services. With the appointments, the industry likely will see a change in both the kinds of regulations that will be promulgated and the tone of interactions with the regulators.
In the latest episode of the IPA Payments Pod, we talk with Brian Tate, the CEO of the Innovative Payments Association, about what these changes might mean and how the industry can prepare.
We expect that regulators will be looking more closely at the industry and will look for places where they think the previous administration’s agency heads were too lenient. The IPA will be watching the testimony of Rohit Chopra, the new head of the CFPB, in front of the House Financial Services Committee on October 27 and will let our members know what comes out of the meeting.
“Cyrpto” is a term applied to a broad range of products and services from digital currencies, to blockchains, to new forms of contracts and art called Non-Fungible Tokens, or NFTs.
Payments professionals know that they need to understand these products, but they are very technical, and it can be hard to study up while also doing one’s day job. Still, when clients, customers, and management start asking about what the company’s crypto plans are, we need to understand the question.
In this episode we talk with long time crypto-journalist Bailey Reutzel about how all of these things work and where they fit into the world of payments.
We talk about the history of bitcoin and whether or not it will ever become a true currency. We cover whether or not blockchains are as useful as they seem, and we look at what NFTs are and how they can be used.
We then cover where a payments company might begin exploring the crypto space. While many avenues are available, there may be a few that are better places to start.
You can find the podcast here, or wherever you get your podcasts. Make sure subscribe and leave us a review to help others find the information.
If this make you want to learn more, the IPA also hosted a Summer of Learning Session with K & L Gates about the legal ins and outs of NFTs. You can find a recording of that webinar here: (40) Summer of Learning: NFTs - A “flash in the pan”? Or a true “game-changer”? - YouTube
Its Fintwist product aims to help employers recruit and retain workers
The way companies pay workers has fallen out of step with their financial needs, and Comdata is looking to fix that with its Fintwist Payroll product.
In the latest episode of the IPA Payments Pod, we talk with Brian Radin, the president of Comdata’s prepaid business about how the company has adapted its payroll business to meet the changes brought on by long-term trends and the acute problems that some companies are facing in the wake of the COVID19 Pandemic.
Recognizing the companies are having a hard time recruiting and retaining, Comdata wanted to provide them with a product that would appeal to employees having a tough time managing their finances. By offering earned wage access and financial information in conjunction with a no fee account, they hope to make payroll a way for the companies to stand out in recruitment.
You can listen to the podcast on your favorite podcast app or at our site.
Make sure to subscribe and leave us a review.
To learn more about Fintwist, visit its Web site at Fintwist - Superior Workforce Payment Solutions (fintwistsolutions.com)
Summer may be winding down, but with the return of Congress, the regulatory season will soon be in full swing. With agency heads to be appointed and confirms, lawsuits making their way through the courts, and talk of reopening regulations like those created for the Durbin Amendment, things will get busy in Washington and beyond.
In this episode, the IPA’s CEO Brian Tate breaks down some of the currents that will drive all of this activity. We talk about the possible new agency heads for the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, the PayPal v. CFPB lawsuit, and possible changes to transaction routing for online merchants.
Subscribe and listen to the podcast through your favorite app or on the IPA Web site here: Podcast - Innovative Payments Association (ipa.org). Make sure to leave us a review if you find the content helpful!
Hackers, regulators, and customers can all turn gathering data into a liability for financial services companies. The risks grow with the volume, variety, and velocity of data – all of which are increasing in our digitized society.
The big challenge with all this data is how can it help businesses solve problems? Adwait Joshi founded DataSeers to build tools to answer this question for banks and Fintechs.
In the latest episode of the IPA Payments Pod, we discuss the promise and peril of data and how the flows of data will affect the future of regulation and the industry itself in the years to come. You can listen here, or wherever you get your podcasts.
To learn more about DataSeers, you can visit their Web site at: An AI Solution for Banking and Payments - FinanSeer® (dataseers.ai).
Write something about yourself. No need to be fancy, just an overview.