​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP.
Please address comments and suggestions to: [email protected].

​Innovative Payments Conference Coming Online in April 2021
 
The IPA’s Innovative Payments Conference is the must-attend annual event for the payments community. Benefit from two weeks of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in prepaid compliance, legislation, regulation and innovation!
 
​​Stay tuned as we build out the agenda and speaking faculty. We’re looking forward to putting on another great event for you. And even better, if you already know you’d like to attend, subscribe to our updates today so you will be one of the first to hear when our Early Bird rate launches.
 
The IPC program is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow's payments environment. Year after year, the event is an unqualified success, attracting hundreds of attendees from across the country. Download the brochure today to learn more about what to expect at IPC 2021!
 
Click here for additional information.

​IPA Podcast: ​Real Time Payroll – PayActiv Wants to Make Wage Payments Faster
 
The payroll process needs to catch up to the rest of the payments world by becoming real time, according to Safwan Shah, the founder and CEO of Payactiv, an IPA member.
 
The company wants to help workers get money as they need it by providing access to wages they have earned sooner than a traditional two-week or monthly pay cycle would allow. The company does this by working with employers to track how much employees earn and offer the ability to get a percentage of those wages on as needed basis. 
Workers can use PayActiv’s card to receive earned wages, have those wages deposited into an account, or even pay bills directly through PayActiv’s app.
 
In this episode we cover how the process works, and how earned wage access is different than other forms of early wage access.
 
Listen here!

​FEDERAL RESERVE
 
IPA Letter to Fed on Durbin Amendment
 
A notice was recently added to the Federal Reserve’s website regarding a letter from/meeting with The Clearing House Association on the Durbin Amendment. In brief, TCH raised strong concerns about how small issuers are evading Durbin by partnering with FinTechs/program managers and, in some cases, how the 3rd parties are bigger than the issuer.  
 
The IPA is preparing a letter to the Federal Reserve in response. In brief, the letter highlights the growth and importance of prepaid account products to the financial services industry, that changes to Regulation II have the potential negatively impact consumers and financial services providers, and finally urges the Federal Reserve to ensure that any revisions to Regulation II or its interpretation are made pursuant to a transparent process that includes open and public debate.
 
The IPA plans to work the members of the associations Executive Committee to close out the letter. Thank you to all who provided feedback throughout the drafting process.
 
FEDERAL DEPOSIT INSURANCE CORPORTATION (FDIC)
 
FDIC Appoints First Chief Innovation Officer
 
On February 16, the Federal Deposit Insurance Corporation (FDIC) named Sultan Meghji as the agency’s first Chief Innovation Officer, charged with leading the FDIC’s efforts to promote the adoption of innovative technologies across the financial services sector.
 
“As a recognized expert in financial technology, Sultan brings years of technical knowledge and an entrepreneurial spirit to our FDiTech team,” said FDIC Chairman Jelena McWilliams. “Under his leadership, I am confident we will find innovative ways to utilize technology to modernize our bank supervision, enable community banks to adopt technological solutions, and bring more underserved people into the financial fabric of our nation.”
 
“I am immensely honored to join a team that is working towards finding innovative ways to meet the challenges of tomorrow,” said Mr. Meghji. “It is important that the FDIC leads at this transformative moment in our nation’s banking history. My personal mission is to engage both public and private sector partners to ensure the financial system of the future is innovative, resilient, and equitable.”

Mr. Meghji co-founded Neocova, a financial technology firm providing secure, cloud-native, artificial intelligence-based software for community banks and credit unions. In addition, he worked on an aid mission to help implement digital banking in Kenya, Tanzania, and Uganda, and worked with fintechs and central banks to create peer-to-peer banking solutions for hundreds of thousands of people in underserved areas of Africa and Central Asia.
 
Mr. Meghji is a nonresident scholar in the Cyber Policy Initiative at the Carnegie Endowment for International Peace. His research focuses on the architecture of the global financial system, cyber and critical infrastructure security, and the impact of artificial intelligence and quantum computing. He is also an adjunct professor at Washington University’s Olin Business School, and a distinguished member of the Bretton Woods Committee and the Missouri Advisory Committee for the U.S. Global Leadership Coalition. Mr. Meghji has served as an advisor to the U.S. Treasury, the Group of Seven (G7), the Office of the Comptroller of the Currency (OCC), and the Federal Bureau of Investigation (FBI) in the areas of cybersecurity, quantum computing, and artificial intelligence.
 
Additional information can be found here.


OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
 
State AGs File Opposition to OCC’s Summary Judgment Motion
 
Last month, the Attorneys General of California, Illinois, and New York filed opposition to the OCC’s cross-motion for summary judgment in their lawsuit to enjoin the OCC’s final rule addressing the Madden decision, which deals with the portability of interest rates from banks to non-banks. The proposed rule seeks to address confusion that the Madden decision caused concerning a loan’s permissible interest rate when a bank originates the loan and then assigns it to a third-party non-bank entity.
 
This is a rule was finalized and lawsuit that was defended under the Trump Administration, so it is unclear how a Biden Administration OCC will respond.
 
The OCC must respond to the state AG’s filing by February 25, 2021. The OCC’s response could be first time the Biden Administration takes action on a fintech issue and may provide some insight into how the Administration will be approaching banking, fintech, and bank-fintech partnerships. 
 
Additional information can be found here.

​IPA to Support Reintroduction of Stop Senior Scams Act
 
In the last Congress, Sen. Bob Casey (D) of Pennsylvania introduced the Stop Senior Scams Act, which would create a federal advisory council to develop educational materials for retailers, financial institutions, and other stakeholders to use to train employees on how to spot and stop financial scams at the point of sale.
 
The IPA supported this legislation and sent a letter to that effect to Sen. Casey in July 2019. Sen. Casey plans to reintroduce it again in this Congress and the IPA will again lend its support.
 
The bill has not been formally introduced yet, but a draft of the bill text can be found here.

​The full report can be accessed here.
Brookings/Financial Health Network Report on EIPs
On February 17, The Brookings Institution and the Financial Health Network published a report on Economic Impact Payments (EIPs). In this report, the Financial Health Network draws upon publicly available data and their own U.S. Financial Health Pulse to estimate how long recipients waited to receive their EIP, what fees some might have paid to access their EIP, and how recipients used their EIP. The report also compares EIPs under the CARES Act to the more recent round of $600 direct payments created by the Consolidated Appropriations Act enacted at the end of 2020.
 
The report contains the following findings and recommendations:

• One in 20 eligible recipients still had not received their CARES Act EIP after six months.
• It took almost four months to distribute 90 percent of CARES Act EIPs. Under the Consolidated Appropriations Act, it took less than three weeks.
• One in 10 Americans received a paper check under the CARES Act, despite having a bank account.
• Over three million paper checks from the CARES Act were cashed through check cashers.
• CARES Act EIP recipients paid an estimated $66 million in check cashing fees.
• The Treasury Department struggled to adequately inform consumers of the EIP Card pilot program’s existence, resulting in many cards being ignored or even thrown away after being mistaken for a scam.
• If prepaid cards are deemed to be preferable or a useful supplement to checks for the disbursement of tax refunds or other benefits, they should be carefully introduced during normal times to ensure that recipients can become familiar with them. 
  
  ​The full report can be accessed here.

State Legislation on Interchange & IPA Letter in Opposition
 
Similar bills were introduced in the Mississippi (HB 1076 & SB 2856), Oklahoma (HB 2181 & SB 798), and Tennessee (HB 375) legislatures that would require that state and local taxes and fees be excluded from the calculation of interchange fees by payment card networks. Below is the pertinent legislative language, taken from the Tennessee version. 
 
Legislative Language
“The amount of a state or local tax or fee that is calculated as a percentage of an electronic payment transaction amount and listed separately on the payment invoice or other demand for payment, or the amount of a tax imposed under chapter 3 of this title, must be excluded from the amount on which an interchange fee is charged for that electronic payment transaction. Such taxes and fees include but are not limited to: (1) Sales and use taxes under chapter 6 of this title; (2) Hotel occupancy taxes under § 67-4-1402 or an applicable private act; (3) Alcoholic beverage taxes under § 57-4-301(c); and (4) Rental vehicle surcharge taxes under chapter 4, part 19 of this title.”
 
On February 17, the IPA submitted the letters opposing the bills in Mississippi, Oklahoma, and Tennessee. In brief, the IPA’s letter expresses the IPA’s opposition to the legislation, discusses the impracticality of what the legislation proposes, and outlines the potential harm that could come to consumers and retailers. 
 
If you would like a copy of the IPA’s letters, please let Grant Hannah ([email protected]) know. 

​New Federal Laws
 
None.
 
Pending Federal Bills
 
None.

​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Grant Hannah, Director of Government Relations, IPA; Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP.
Please address comments and suggestions to: [email protected].

​Innovative Payments Conference Coming Online in April 2021
 
The IPA’s Innovative Payments Conference is the must-attend annual event for the payments community. Take part in three days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in prepaid compliance, legislation, regulation and innovation.
 
​​Stay tuned as we build out the agenda and speaking faculty. We’re looking forward to putting on another great event for you. And even better, if you already know you’d like to attend, subscribe to our updates today so you will be one of the first to hear when our Early Bird rate launches.
 
The IPC program is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow's payments environment. Year after year, the event is an unqualified success, attracting hundreds of attendees from across the country. Download the brochure today to learn more about what to expect at IPC 2021!
 
Click here for additional information.

IPA Podcast: Clearing House Expresses Concerns About Small Issuer Exemption
 
A letter to the Federal Reserve asks the Board to clarify when companies, including Fintechs, are eligible for the small issuer exemption under the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. 
The Clearing House's letter asks the Fed to publish a new Frequently Asked Questions that clarifies when companies are eligible for the exemption, and what constitutes an evasion of the rule. The letter raises concerns that some companies are offering decoupled debit, which should not be exempt, and others are practicing evasion.
 
Listen here!
 
IPA Financial Crimes Task Force Call with Visa
 
Pandemic-related government disbursements have further accelerated the use of prepaid cards due to their ability to deliver money quickly, replace paper checks, and reach recipients without bank accounts.  The Visa Payment Fraud Disruption (PFD) team, whose mission is to detect, disrupt and deter payment card fraud throughout the payments eco-system, continues to monitor the underground activity related to the development of new fraud schemes targeting these government disbursement programs.  In this session, we will share insights from the PFD team including strategies fraudsters have attempted as well as updates that have been put in place to hinder these efforts. We will also discuss Prepaid Clearinghouse Service (PCS) a solution that can help prevent prepaid card fraud across all card brands identifying both low-risk and high-risk activity and has the potential to be effective for these government disbursement programs.
 
We hope you’ll join us on February 16 at 3 PM ET for this important conversation. Registration can be found here. 

FEDERAL RESERVE
 
The Clearing House Letter to Fed on Durbin Amendment
 
A notice was recently added to the Federal Reserve’s website regarding a letter from/meeting with The Clearing House Association on the Durbin Amendment. In brief, TCH raised strong concerns about how small issuers are evading Durbin by partnering with FinTechs/program managers and, in some cases, how the 3rd parties are bigger than the issuer.  
 
The IPA is in the process of drafting a letter in response. A draft of the IPA’s letter is expected to be released for IPA members to review the week of February 15. 
 
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
 
Blog from CFPB Acting Director Dave Uejio
 
The Bureau is taking much-needed action to protect consumers, particularly the most economically vulnerable
 
By Dave Uejio – JAN 28, 2021 
 
Last week, I was honored to have been appointed Acting Director of the CFPB by the President. Having joined the Bureau in 2011, I have seen firsthand the impact of the Bureau’s mission and the incredible work being done by its staff. I know that the Bureau’s staff shares my devotion to the Bureau’s mission, and I look forward to serving in this latest capacity.
In furtherance of that mission, I shared the following statement to everyone at the CFPB. Since our work affects the lives of so many people, I thought it appropriate to share it publicly:
 
Hello all,
I am following up on my initial email reflecting the new priorities and focus of the CFPB. In particular, I would like to convey my broad vision for SEFL in the coming months.
 
But first, I want to thank everyone for their hard work during these trying times. I know it has been a tough year for everyone working and living through a pandemic, and that you all have pushed through despite tragedy and loss. This email conveys a change of direction, but it is not intended as a criticism of how our professional team executed on the prior leadership’s direction.
 
As I noted in my first email, my priorities for the CFPB are (1) relief for consumers facing hardship due to COVID-19 and the related economic crisis, and (2) racial equity.
 
On COVID-19, we need to take swift action now, in order to make sure our actions help people in the middle of the crisis, rather than just cleaning up after the fact. As you know, protecting economically vulnerable consumers is core to the mission of the CFPB and a key reason why the agency was created. It is going to take urgent action for the CFPB to step up to this challenge.
 
One thing we can do immediately is focus our supervision and enforcement tools on overseeing the companies responsible for COVID relief. I am concerned about the findings described in last week’s Supervisory Highlights edition that companies are failing to properly administer relief through the crisis. In a series of Prioritized Assessments last year our examiners found the following:
 

• Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests, and collected and assessed late fees despite having approved forbearances.
• Servicers withdrew money even though consumers were in deferment.
• One student loan servicer denied thousands of forbearance extensions because the loan holder never responded.
• Companies across markets misreported accounts to credit bureaus and violated CARES Act amendments that added protections to the Fair Credit Reporting Act.
• Some banks set off stimulus payments and unemployment insurance benefits in order to cover bank fees and other debts.
• Examiners found that the widely used policy of banks only taking PPP applications from pre-existing customers may have a disproportionate negative impact on minority-owned businesses.

 
These are just a few examples that show the types of harms consumers are suffering and the meaningful impact that strong oversight could have on the country’s recovery effort. Moving forward, the CFPB will take aggressive action to ensure that regulated companies follow the law and meet their obligations to assist consumers during the COVID-19 pandemic.
 
With that in mind, I have directed SEFL to always determine the full scope of issues found in its exams, systemically remediate all of those who are harmed, and change policies, procedures, and practices to address the root causes of harms. For the Prioritized Assessments that do not already do this, I want Supervision to follow up to ensure it is done, without conducting new follow-up exams. Companies that have not already received instructions from our examiners should expect to receive letters in the mail soon.
 
In some cases, penalties may be necessary. I have also directed SEFL to expedite enforcement investigations relating to COVID-19 so that we can take action now to ensure that industry gets the message that violations of law during this time of need will not be tolerated.
 
Over the coming weeks, we will also be reversing policies of the last administration that weakened enforcement and supervision. As of today, it is the official policy of the CFPB to supervise lenders with regard to the Military Lending Act. And we are planning to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.
 
It’s also time for the CFPB to take bold and swift action on racial equity. I know this is close to the hearts of many of you. The country is in the middle of a long overdue conversation about race, and as we all know, practices and policies of the financial services industry have both caused and exacerbated racial inequality. I am going to elevate and expand existing investigations and exams and add new ones to ensure we have a healthy docket intended to address racial equity. This of course means that fair lending enforcement is a top priority and will be emphasized accordingly. But we will also look more broadly, beyond fair lending, to identify and root out unlawful conduct that disproportionately impacts communities of color and other vulnerable populations.
 
The CFPB is uniquely positioned to help consumers in their time of need. I look forward to working with each of you to meet the moment.

Best,
Acting Director Uejio

Rep. Peters (D-CA) Letter to IRS/Treasury on EIP Card
 
Rep. Scott Peters (D-CA) recently sent to Treasury Secretary Yellen and IRS Commissioner Rettig concerning EIPs that were made via prepaid cards. In the letter, Rep. Peters says he has heard from dozens of constituents who are unable to activate or use the card. In addition, he raises concerns that there is no way to return the card in order to have the EIP issued through direct deposit or check and that when many constituents attempt to transfer the money on the card into their bank account, they are told their personal information does not match that on file so his constituents are unable to complete the transaction.
 
Finally, he requests the following steps be taken by the IRS:
 
1. A full accounting of how many Americans received their second Economic Impact Payment by debit card and how many of those cards are yet to be a) activated and b) used.
2. Provide a method by which constituents may request either online, over the phone or by mail to have the unused portions of their Economic Impact Payment directly deposited into their bank account or mailed to them in the form of a paper check.
 
The full letter can be found here.

California to Begin Oversight of Earned Wage Access Companies
 
On January 27, the California Department of Financial Protection and Innovation (DFPI) announced that it has signed memorandums of understanding (MOUs) with five earned wage access companies. According to the DFPI, the MOUs pave a path so earned wage access companies can continue operating in California, in advance of possible registration under the California Consumer Financial Protection Law, which took effect this year and defines the companies as newly covered financial services. In addition, the companies have agreed to deliver quarterly reports beginning April 2021 on several metrics, which the department intends to use to gain a better understanding of the products and services being offered and the risk and benefits to California consumers. 
 
Additional information can be found in the article below and in the DFPI’s press release.
 
State Legislation on Interchange & IPA Letter in Opposition
 
Similar bills were introduced in the Mississippi (HB 1076 & SB 2856), Oklahoma (HB 2181 & SB 798), and Tennessee (HB 375) legislatures that would require that state and local taxes and fees be excluded from the calculation of interchange fees by payment card networks. Below is the pertinent legislative language, taken from the Tennessee version. 
 
Legislative Language
“The amount of a state or local tax or fee that is calculated as a percentage of an electronic payment transaction amount and listed separately on the payment invoice or other demand for payment, or the amount of a tax imposed under chapter 3 of this title, must be excluded from the amount on which an interchange fee is charged for that electronic payment transaction. Such taxes and fees include, but are not limited to: (1) Sales and use taxes under chapter 6 of this title; (2) Hotel occupancy taxes under § 67-4-1402 or an applicable private act; (3) Alcoholic beverage taxes under § 57-4-301(c); and (4) Rental vehicle surcharge taxes under chapter 4, part 19 of this title.”
 
The IPA has drafted a template letter to respond to the bills. In brief, the template letter expresses the IPA’s opposition to the legislation, discusses the impracticality of what the legislation proposes, and outlines the potential harm that could come to consumers and retailers. 
 
If you would like a copy of the IPA’s draft letter, please let Grant Hannah ([email protected]) know. 
 
Update on North Dakota Unclaimed Property Bill
 
On January 27, the IPA sent a letter opposing North Dakota Senate Bill 2048. In brief, the IPA’s letter expresses concerns about the potential unintended consequences of Section 47-30.2-04 (201) of SB 2048, which would deem payroll cards as presumed abandoned one-year after the amount becomes payable, essentially treating such products as compensation as opposed to treating them as asset accounts, such as demand deposit accounts (DDA), which are presumed abandoned after five years under the bill. The letter further points out that time periods and the disparate treatment of payroll card accounts and DDAs are inconsistent with the Revised Uniform Unclaimed Property Act (RUUPA). Finally, the letter discusses in detail the benefits of payroll card accounts and their similarities with DDAs. 
 
An amended version of the legislation was released on February 2, which adopts the IPA’s suggestions and brings the presumed abandoned period of payroll cards in line with other asset accounts to five years. 

​New Federal Laws
 
None.
 
Pending Federal Bills
 
None.