Our wallets have become more than our billfolds and pocketbooks, but unless we stop to think about it, it is easy to ignore how all the little changes add up.
If you are a card manufacturer, though, you need to think about what the how tools like tap and go cards, mobile payments, and wearables are reshaping business and daily life.
Peggy O’Leary, CPI’s Director of Sales and Client Services in Prepaid, sees payments innovation reshaping everything from what we do at the checkout counter to the design of our wallets. In this episode, we talk about how these changes open up new opportunities for financial institutions, payments providers, retailers, and consumers alike.
Contactless payments mean that cards no long need to be card-shaped. What does that mean for the shape of our purses and wallets? What does it mean for the kinds of products that can be used as a payment form factor? Our physical reality could change because of changes in payments.
Mobile wallets allow for the instant delivery of not only payments credentials, but also of information ranging from special offers to directions to information on how a purchase might affect a shopper’s budget. What does this mean for financial institutions and retailers?
In a wide ranging discussion, Peggy and the IPA talk about some of these possibilities and the promises and pitfalls that come with them.
If you want to learn more about CPI and their manufacturing capabilities for all kinds of payments tools, you can visit their Web site at: https://www.cpicardgroup.com/
If you want to stay on top of new developments in the industry, plan to attend the Innovative Payments Conference in Washington DC, April 6-8. Learn more and register at: https://www.americanbanker.com/conference/innovative-payments
Cash remains an important part of the payments landscape, so access to cash can be a powerful tool for a variety of programs.
In an emergency when payments systems are down – the aftermath of a hurricane for example – cash can keep an economy going and ensure that people get their needs met as rebuilding starts. Incentives programs can use cash as an instant motivation. And cash can make it easy to transact without concerns about acceptance.
ATMs have been an important tool for debit card holds to get cash and make deposits, but mobile technology makes it possible for anyone to use an ATM if they can receive text messages. It isn’t even necessary to use a smartphone in many cases. So, cash access can extend to anyone with a mobile phone.
In the latest episode of the Innovative Payments Pod, we talk with PIN4 and its subsidiary, HalCash International, about how cardless transactions can help payments companies deliver services to their customers.
PIN4 is working with IPA member MasterCard on its MasterCard Cash Pick-Up service in the United States and working with a variety of companies in countries like Spain to deliver instantly available cash payments to individuals.
They have used their technology for incentives and gaming payments, but have plans to make it available for use cases like disaster payments and helping companies suffering system outages.
If you want to learn more about PIN4 and the Mastercard Cash Pick-Up capability, you can visit their Web site at: http://pin4.com/
If you want to stay on top of new developments in the industry, plan to attend the Innovative Payments Conference in Washington DC, April 6-8. Learn more and register.
Interested in becoming an IPA member and helping to shape the future of payments? Reach out today and talk to us about the benefits of joining. Go to www.ipa.org to learn more.
Recently, fintechs and large banks have clashed over who should have access to customer data.
Fintechs often rely on connections to their customers’ bank accounts in order to deliver products and services. Banks, on the other hand, do not want to be deposit hotels where customers are storing money until they can move it some place better because they worry about losing the customer. Additionally, banks are worried that allowing outside companies to access their customers’ data will lead to more identity thefts and hacks.
An example of this is the recent disruption connections between PNC Bank and Venmo accounts. In December, PNC Bank customers could not connect their bank accounts to their Venmo accounts. The Wall Street Journal reported that the bank had updated its data security systems and that led to it blocking access from a company called Plaid, which is a data aggregator that works with multiple fintechs to provide connections to bank accounts. PNC did suggest in tweets that its customers use Zelle, which is a person-to-person app provided through a consortium of banks.
Plaid links third-party apps to bank accounts using a process called screen-scraping, which essentially allows the app to log into a customer’s bank account by storing their logon credentials.
PNC was not the only bank in this kind of conflict. The American banker reported on Jan. 2 that J.P. Morgan Chase also planned to block screen scrapers of all kinds. This is interesting because in October 2018, Chase has signed an agreement with Plaid and three other companies to provide data through a secure API, according to the American Banker.
The Wall Street Journal reported on Jan. 13 that Visa has struck an agreement to acquire Plaid, which will further shake up the Fintech industry.
But Plaid is not the only player in the data sharing space. Since companies are not thrilled by their customers handing out login credentials to third parties, a group of financial services companies created the Financial Data Exchange to facilitate secure data sharing through an API. (Visa is a member of the Financial Data Exchange.)
In the latest episode of the Innovative Payments Pod, the IPA talks with Don Cardinal, managing director of the Exchange about its API and how it works. You can find it here or wherever you get your podcasts.
Data sharing is critical to many Fintechs as they work to help aggregate customers’ financial data and help their users make financial choices. The payments industry will no doubt be affected by the outcome of this merger and the outcome of the conflict that is playing out in the background.
The payments industry is entering 2020 with a lot of baggage from 2019. The resolution of many of these carryover issues will shape the business in the years ahead.
The first thing likely to come up is the issue of brokered deposits. While it seems like a technical question about insurance pricing, whether or not a deposit is classified as core or brokered can have a big effect on the costs of bringing new Fintech to consumers. The Federal Deposit Insurance Corporation has released a proposed rule that would formalize its definitions and treatment of brokered deposits. This critical issue will be one of the Innovative Payments Association’s top priorities in 2020.
The FDIC is not the only regulator facing changes in 2020. The Consumer Financial Protection Bureau is facing lawsuits that could alter both its structure and its regulations. This would have ripple effects through out the industry. The CFPB is facing one lawsuit hat argues that its structure is unconstitutional. At the same time, it has been sued by PayPal, which is arguing that the Prepaid Accounts Rule, which went into effect in 2019, also is unconstitutional because its disclosure requirements violate the First Amendment. If PayPal were to win its suit, then the rule would be thrown out for all of the payments products, leaving the industry where it stood in 2012.
Of course, the elephant in the room is the 2020 election. The outcome of the election, especially when it comes to which party controls the House and Senate, could set the stage for new legal and regulatory fights in the future.
In the latest episode of the Innovative Payments Podcast, the IPA’s CEO, Brian Tate, discusses these issues shaping the future of payments in 2020 and beyond. We talk about the future of the CFPB, including the PayPal lawsuit, which could deregulate much of the industry. In addition, we talk about brokered deposits and the FDIC’s proposed regulations. Finally, we don’t ignore the elephant in the room, but talk about the effects that the 2020 election might have the on the future of payments regulation.
If your company is a member of the Association and you need a login for the site, a subscription to one of the newsletters, or more information on your company’s membership, you can contact Steffanie directly at: firstname.lastname@example.org.
Interested in becoming a member? Reach out today and talk to us about the benefits of joining. Go to www.ipa.org to learn more.
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