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.
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