March 6, 2024

The Government Update

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

Register Now for the IPA’s 2024 Innovative Payments Conference – Unlocking the Future of Payments
The IPA’s 2024 annual conference, the Innovative Payments Conference is just two short months away! All members of the IPA are welcome to attend. The IPC, scheduled May 5-7, 2024, will take play at the Grand Hyatt in Washington, DC.  The PIC is the place to immerse yourself in three days of groundbreaking insights, cutting-edge technology, and networking opportunities for payments leaders. Headliners include: 

• FDIC Vice Chair, Travis Hill; 
• Treasury Department, Deputy Assistant Secretary for Financial Institutions, Jeannette Quick; 
• Homeland Security, Cross-Border Financial Crime Center, Brian Davis; 
• U.S. Representative Mike Flood (R-NE); and 
• The Cook Report’s, Amy Walter. 

 
Get your tickets now. To register for the conference, please click here. 

IPA Files Interchange Comment
On January 22nd the Federal Reserve Board of Governors issued a press release announcing they have extended the comment period for their Regulation II  proposal until May 12, 2024. As previously reported the proposal would amend the current debit interchange fee cap downward.  In response to the proposal the IPA filed a comment letter outlining our concerns with the proposal. Specifically, the IPA stated that although the proposal directly applies to financial institutions over $10 billion, the Association is concerned that downward pressure will eventually be placed on financial institutions under $10 billion. The IPA urges other institutions concerned with the proposal to consider filing comments ahead of the comment period deadline. 
 
IPA Files 3rd Comment with DPFI
On February 2nd, the IPA filed our third comment with the California Department of Financial Protection and Innovation.  The IPA’s letter was in response to the DFPI’s Second Modification to its proposed registration requirements for EWA which were initially released in March 2023. The IPA remains concerned that despite three versions of the proposed rule DFPI continues to categorize all EWA products as loans. In addition, the IPA is concerned that DFPI’s proposal appears to be asserting that fees from disbursement devices, such as a prepaid card, may be counted as fees associated with EWA.  The deadline to submit comments to the DFPI was Feb. 6th.   
 
IPA Shares Draft Comment(s) Responding to CFPB’s Proposals on Overdraft and NSF Fees. As previously noticed, on January 17th the Consumer Financial Protection Bureau released its proposed rule on Overdraft Protection services. In brief, the proposed rule would apply credit protections via TILA to overdraft services offered by covered financial institutions. A covered financial institution is a bank with assets of $10 billion or more. Consumers receiving covered overdraft credit from a covered financial institution would receive the loan disclosures required under TILA. Moreover, the protections that apply to traditional credit cards would apply to a covered overdraft credit issued by a covered financial institution that is accessed by debit cards or routing/checking account numbers.  Comments are due to the CFPB by April 1st.
 
Accordingly, later in January the CFPB released a proposal on Non-Sufficient Fund Fees (NSF). In short, the proposal would cover NSF fees when a consumer tries to make a payment but does not have enough money in their account at the point of sale. Further, the proposal would apply to debit card and prepaid card purchases, ATM withdrawals, as well as some declined peer-to-peer payments. Comments are due to the CFPB on or before March 25, 2024. 
 
The IPA has drafted responses to each proposal. The Association also held a conference to review each comment and urges members to review the drafts and send in their comments as soon as possible due to the upcoming deadlines.  
 
Steil Introduces EWA Bill 
U.S. Representative Bryan Steil (R-WI) has formally introduced his EWA bill, H.R. 7428.  It is important to note that H.R. 7428 has been cosponsored by the U.S. Representative French Hill (R-AR). Hill is also the Chairman of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion.
 
Steil released a  discussion draft last fall before the House Financial Services Committee’s October hearing on fintech.  Accordingly, similar to the discussion draft sought to regulate EWA (Employer and D2C Models), including disclosure requirements, dispute resolution policies, and limitations related to fees. In addition, the bill also has a new section requiring providers who may charge fees (for instance, expedited services) to also make a free version available.  
 
H.R. 7428 was expected to be included in the list of bills marked up by the House Financial Services Committee on February 29th.  However, due to a scheduling change in the House of Representatives, the markup proceeded without reviewing H.R. 7428. The IPA will share with members when the Committee schedules a markup which includes H.R. 7428. 

Hosted by the IPA, the Payments Podcast is designed to keep you ahead of an ever-changing industry and position you to succeed in tomorrow’s payments environment. Join us for thought-provoking discussions on the most pressing issues of the day. Listen to recent episodes below and subscribe using the app of your choice.
 

• IPA Pod: Feb. 2024 GRWG Update
• IPA Pod: Illegal Transactions Hiding in Plain Sight
• IPA Pod: Immediate Uses EWA to Build Financial Health 

 
Upcoming GRWG Calls

• Next IPA Weekly GRWG Call – March 11, 2024
• Next IPA Monthly GRWG Call – March 14, 2024