PayPal’s lawsuit against the Consumer Financial Protection Bureau entered a new phase on
As a reminder, the CFPB is appealing Judge Richard Leon’s opinion in PayPal v. CFPB issued on December 31, 2020. Please note that in its Opening Brief filed in August, the CFPB makes it clear that the “sole question presented by the decision below (in U.S. District Court by Judge Richard Leon) is whether the Bureau has statutory authority to adopt the short-form disclosure requirements.”
In the latest episode of the IPA Payments Pod, we talk with Brian Tate, the IPA’s CEO, and Chris Stromberg, our head of government relations, about the possible outcomes for the case and what the suit might mean in the context of some of the Bureau’s other recent actions.
Once you are done listening, you can find the recording of the oral arguments in the case here: https://www.cadc.uscourts.gov/recordings/recordings2021.nsf/B648C0D7905E3B97852587E50059E02D/$file/21-5057.mp3
B4B Brings a Global Perspective to US Payments: The company wants to help US partners looking to go abroad
London-based B4B Payments embarked on its US expansion at the beginning of 2020. While the pandemic was a bump in the road, nevertheless the company has continued to build out its presence.
In the latest episode of the IPA Payments Pod, we talk with Paul Swinton, B4B’s global CEO, and Kieran Draper, its head of North America, about why the opportunities they see in the United States, and how they can help their American cousins serve large global clients.
We talk about the business-to-business market, how the U.S. market differs from other places in the world, and the future of fintech. Based on what they have seen in the market, they expect a shakeout in the market over the next few years.
Director, Government Relations
On Tuesday, United States Senator Ben Ray Luján’s (D-NM) office announced the senator had suffered a stroke and was recovering from surgery. While he’s expected to make a full recovery, thank goodness, the impact of his absence from the Senate floor cannot be ignored.
With the Senate evenly split between Republicans and Democrats, every vote counts. When senators deadlock on the floor, Vice President Kamala Harris is counted on to cast the tie-breaking vote. Indeed, Harris broke 15 ties during her first year in office, the most ever by a Vice President during a single year.
Unlike the House, which adopted proxy voting during the pandemic, senators must be physically present to vote. Facing unified GOP opposition on most matters, without Senator Luján’s vote Democrats cannot muster enough votes to prevail even on questions that require a simple majority. This is particularly worrisome for Democrats considering the number of important nominations currently pending in the Senate.
It should be noted, however, that Republicans are not without their own Senate absences, and at any one time two GOP absences, like we saw last week, could empower Majority Leader Schumer with enough votes to overcome united GOP opposition without needing Senator Lujan’s vote.
Supreme Court Justice Stephen Breyer has announced his retirement, effective at the conclusion of the Court’s current term in June. While a floor vote on Breyer’s replacement could be months away, the committee process could proceed in Sen. Lujan’s absence, so his absence may not cause a significant delay.
However, several important financial regulatory positions are currently awaiting Senate-confirmation, and Sen. Luján’s absence creates a predicament for the White House and Senate Democrats that, if extended for several months, could create further uncertainty and unpredictability for the financial industry.
Three Federal Reserve Board nominees received a hearing in the Senate Banking Committee this week: Sarah Bloom Raskin to serve as Vice Chair for Supervision, and Lisa Cook and Philip Jefferson to serve as Fed Board Governors. Judging by the reception they received from committee Republicans, it’s likely that one or two of them could fail to earn any GOP support in committee or in the full Senate. Since Rep. Lujan does not serve on the Banking Committee, its process can continue as before. Any delay in processing Banking Committee nominees would occur between the committee and the floor.
In addition to Fed Nominees Jerome Powell, Lael Brainard, Bloom Raskin, Cook, and Jefferson, other financial regulatory nominees are awaiting confirmation, including Todd Harper (NCUA), Sandra Thompson (FHFA), Caroline Pham (CFTC Commissioner), Summer Mursinger (CFTC Commissioner) Kristin Johnson (CFTC Commissioner) and Christy Goldsmith Romero (CFTC). Powell and Thompson would also serve as voting members of FSOC.
Lujan’s absence means, at least theoretically, Republicans at full numerical strength have the power to block all the President’s nominees on the Senate floor. But given the fact that most of his nominees have received at least some degree of GOP support, a full blockade of nominees is unlikely. But at a time when several important financial regulatory positions are awaiting Senate-confirmation, Sen. Luján’s absence creates a predicament for the White House and Senate Democrats that, if extended for several months, could create further uncertainty and unpredictability for the industry.
IPA will continue to update members on the confirmation process and status of these financial regulators. Please reach out to Chris Stromberg (email@example.com) with any questions.
Changes at the top likely mean a new regulatory regime for the industry.
Changes are coming in the leadership of the financial regulatory agencies. The Consumer Financial Protection Bureau got a new director last year. The chair of the Federal Deposit Insurance Corp. has announced she is resigning, and the Office of the Comptroller of the Currency still only has an acting director. As the openings are filled, the regulatory climate will change for the financial services industry.
In this episode Brian Tate, the IPA’s CEO, and Chris Stromberg, the head of government relations, talk about what all these changes might mean and how some of the recent actions by the agencies provide clues as to their priorities.
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.
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