​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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: gr@ipa.org.

IPA Podcast: IPA’s Government Update for July 2021
 
Capitol Hill has been taking an active interest in the payments industry. Overdraft, buy now pay later products, and even a possible computer chip shortage have all drawn lawmakers’ attention. 
 
On top of all that, the Durbin Amendment has resurfaced as a topic of conversation, and there are rumors that it may be extended to other types of payments. 
 
We cover all of this and more in our latest podcast episode with the IPA’s CEO, Brian Tate, and our Government Relations Director, Grant Hannah.
​
To learn more about the forces shaping the payments industry, we encourage our listeners to join the IPA for its Summer of Learning Webinar series, where we talk with regulators, industry leaders, and analysts about what they see coming in the world of payments innovation. 
 
Listen here!

IPA Summer of Learning
Please join the IPA on July 27th when we will be joined by the Honorable Warren Davidson, U.S. Representative (R-OH).  U.S. Representative Davidson, the Ranking Member of the House Financial Services Committee’s Task Force on Financial Technology, will discuss cryptocurrencies, blockchains, and the future of payments. This conversation is only for members of the IPA. 
Speaker:  Honorable Warren Davidson, U.S. Representative
When: July 27th, 2pm Eastern

Register Now

FEDERAL RESERVE (THE FED)
 
Federal Banking Agencies Request Comment on Proposed Risk Management Guidance for Third-Party Relationships
 
On July 13, three federal bank regulatory agencies (FDIC, Federal Reserve, and OCC) requested public comment on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance is intended to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance.
 
A copy of the proposed guidance can be found here. Comments are due by September 17, 2021. 
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Releases Blog on Buy Now Pay Later Products
On July 8, the CFPB released a blog on Buy Now Pay Later (BNPL) products. This represents some of the first public statements we’ve heard from the CFPB on BNPL. The blog post discusses how BNPL works generally, how late fees work, consumer protection and credit reporting issues, and more. 
 
When it comes to consumer protection, the blog highlights that buy now pay later BNPL loans currently lack the consumer protections that apply to other forms of payment. It also discusses issues consumer could face when returning merchandise bought with a BNPL loan.
 
It is expected that the CFPB as well as other regulators and Congress will increasingly take closer looks at BNPL products. The full blog post can be accessed here. 

President Biden Issues Executive Order on Competition
 
On July 9, President Biden signed an Executive Order (EO) aimed at promoting competition in the American Economy. The EO includes 72 initiatives that will direct more than a dozen federal agencies to address issues of competition across the economy. The White House says that President Biden is taking this action to, “…reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses.” 
 
Included in the EO is a “banking and consumer finance” section which discusses branch closures and consolidation in the banking industry and difficulties faced by consumers who want to move banks due to issues with the portability of financial transaction history data. 
 
The EO seeks to address these issues by:

• Encouraging DOJ and the agencies responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.
• Encouraging the Consumer Financial Protection Bureau (CFPB) to issue rules allowing customers to download their banking data and take it with them.

 
In addition to the provisions around bank mergers and the portability of financial transaction history data, there is an additional requirement that the Secretary of the Treasury submit a report to the Chair of the White House Competition Council, not later than 270 days after the date of the order, assessing the effects on competition of large technology firms’ and other non‑bank companies’ entry into consumer finance markets. Given the 270-day timeframe, the report would come out no later than early April of next year.
 
A fact sheet with a full overview of the EO can be found here.
 
Senate Banking Republicans Send Letter to CFPB Nominee
 
On July 13, all Republican members of the Senate Banking Committee sent a letter to CFPB Director Nominee Rohit Chopra expressing their concern, “…with [his] refusal to respond to a congressional request seeking information about potential violations of law at the Consumer Financial Protection Bureau (CFPB).” Senate Banking Republicans had previously sent Mr. Chopra and CFPB Acting Director Dave Uejio a letter asking them to respond to reports last month that senior career civil servants at the CFPB were being pressured to quit to make room for political allies to be installed at those positions.
 
A copy of the letter can be accessed here. 
 
House Republicans Request Information from CFPB Acting Director
 
On July 15, Republican Members of the House Financial Services sent a letter to CFPB Acting Director David Uejio requesting additional information on actions he’s taken related to issuing new rules, guidance, and policy statements; delaying the implementation date of multiple major rulemakings; reversing and rescinding policy statements and guidance; and undertaking nine enforcement actions against financial services companies. The members additionally express concerns that, “…the CFPB is conducting business as usual without a Senate-confirmed Director and without proper oversight.”
 
In a separate letter, Ranking Member Patrick McHenry (R-NC) sent a letter to Chairwoman Waters requesting that the Committee hold an oversight hearing with Acting Director Uejio. 
 
Fed Chair Jerome Powell Testifies Before Congress
 
Fed Chair Jerome Powell provided his semiannual testimony before the House Financial Services Committee and Senate Banking Committee on July 14th and July 15th respectively. Inflation, stablecoins, and central bank digital currencies (CBDC) were common subjects of Members’ questions. Chair Powell indicated that the Fed believes that the recent rise in inflation is temporary and that continued economic recovery and growth would bring it down. In addition, Powell mentioned that the Fed’s report on CBDCs will likely be released sometime in September. Finally, he was asked about stablecoins a number of times and, in his responses, discussed their similarities with deposit accounts and money market accounts and called for a similar regulatory framework to be applied. 
 
Capital Clues
 
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:

• The nomination of Rohit Chopra to be the next Director of the CFPB has remained in limbo between the Banking Committee and the Senate floor for nearly four months, but we still expect Leader Schumer to move his nomination, possibly before the August recess or when they return in September.
• On Monday, July 19, House Members joined Senators in DC for what could be a pivotal stretch for two major Biden Administration priorities. Early August recess plans could be impacted should Democratic leaders need more time to secure wins before the extended annual recess next month. 
• As Senator Schumer works to build Democratic support for a $3.5 trillion budget resolution that could pave the way for a second reconciliation package to fund President Biden’s American Families Plan, he announced plans to file cloture on a motion to proceed to the $1.4 trillion Bipartisan Infrastructure Framework (BIF), which has yet to be converted into legislative text.  That would set up a cloture vote on the MTP on Wednesday, July 21. 

 
IPA Draft Letter to the California Financial Regulator on EWA
 
The IPA has drafted a letter to the California Department of Financial Protection and Innovation (DFPI) on earned wage access (EWA). In brief, the letter provides an overview of the industry, discusses principles for regulation going forward that the IPA believes would appropriately balance consumer protection and innovation, and expresses the IPA’s desire to being an ongoing dialogue with DFPI on EWA.  
 
The IPA held a call to review and discuss our initial draft of the letter and is currently working to incorporate feedback received from members. 

New Federal Laws
 
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution)
Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. 
Status: Signed by the President on 6/30/20.
Sponsor: Sen. Chris Van Hollen (D-MD)
 
Pending Federal Bills
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
Status: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021.
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purposes.
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
Sponsor: Rep. Richie Torres (D-NY)
 
H.R. 4277 – Overdraft Protection Act of 2021
Summary: This bill would limit overdraft fees, both in frequency and amount, and would establish a set of practices for overdraft coverage programs.
Status: Introduced and referred to the House Financial Services Committee on 6/30/21.
Sponsor: Rep. Carolyn Maloney (D-NY)

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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: gr@ipa.org.

IPA Podcast: Payments for Good with Blackhawk Network: How a pandemic led to a new vertical for the company
 
The pandemic created problems for individuals, governments, and businesses, but as the old saying goes, every problem brings new opportunities.  
 
For Blackhawk Network, that opportunity began when it channeled its payments expertise into helping distribute relief money for governments and nonprofits. It used both closed-loop and open-loop prepaid cards as a way to deliver aid. The plastic and virtual cards were used to replace checks so that people could get access to funds quickly and inexpensively.  
 
As the pandemic begins to subside, Blackhawk plans to continue working to deliver funds to vulnerable populations. The company has created a new vertical that it calls Payments for Good to work with governments and nonprofits who need new ways to disburse money. 
 
In this episode, we talk with Tyler Gentry, the director of Payments for Good, about the work that led to its creation and the company’s future plans.  
 
Listen here!

IPA Summer of Learning
Join Us Thursday
The Summer Learning Series is provided as a complimentary benefit to the payments community. There is no cost to register for these events. 
 
Join the IPA at our next Summer of Learning event with special guest, Ron Shevlin. 
Ron is the Managing Director of Fintech Research at Cornerstone Advisors, the author of the book Smarter Bank, and a Senior Contributor at Forbes where he authors the Fintech Snark Tank blog.

Please join us on Thursday, July 8th at 2 pm (EST) as Ron shares his insights on the innovations occurring in the financial services marketplace and where things might be headed in the future.
 
Speaker: Ron Shevlin, Forbes
When: July 8th, 2pm Eastern
 
Register Now

FEDERAL RESERVE (THE FED)
 
Federal Reserve Board Extends Comment Period on Proposed Changes to Regulation II
 
On June 22, the Federal Reserve Board announced that it will extend until August 11, 2021, the comment period for its proposed changes to Regulation II regarding network availability for card-not-present debit card transactions. Originally, comments were due by July 12, 2021.
 
The IPA sent a letter to the Federal Reserve Board requesting an extension of the comment period on June 11th. In addition, the IPA is working to incorporate feedback received from IPA members into our larger comment letter to the Fed on the proposed rule.
 
Federal Reserve Files Motion to Dismiss / Motion to Transfer N.D. Retailer Interchange Litigation
 
On July 2, the Federal Reserve filed a motion to dismiss or, in the alternative, a motion to transfer to D.C. the litigation brought by North Dakota retailers in the U.S. District Court for the District of North Dakota challenging the Federal Reserve’s Reg. II rulemaking. In the motion, the Fed moves to dismiss or transfer based on a lack of subject matter jurisdiction or failure to state a claim on grounds that the six-year limitations period applicable to this action under the Administrative Procedure Act has expired. In addition, in support of its motion to transfer, the Fed cites that a transfer is appropriate in this case because the ND retailers complaint raises virtually identical claims to those that were fully litigated in litigation brought by the NRF and others previously challenging the Fed’s Reg. II rulemaking in 2011 in the U.S. District Court for the District of Columbia and appealed to the D.C. Circuit, which ordered a limited remand for additional clarification by the Board on one narrow issue without vacating any part of the Final Rule. 
 
The Fed’s brief can be found here. 
 
CONSUMER FIANCIAL PROTECTION BUREAU (CFPB)
 
CFPB Releases July CFPB Consumer Complaint Bulletin
 
On July 1, the Consumer Financial Protection Bureau (CFPB) released a new complaint bulletin covering several areas related to relief provided in response to the COVID-19 pandemic. Specifically, the bulletin focuses on consumer complaints around EIPs, eviction protections, and student loan servicing. 
 
The full bulletin can be accessed here. 
 
Financial Crimes Enforcement Network (FinCEN)
 
FinCEN Completes Assessment on the Use of No-Action Letters
 
On June 30, the Financial Crimes Enforcement Network announced that it has completed a report on its assessment of whether to establish a process for the issuance of no-action letters in response to inquiries concerning the application of the Bank Secrecy Act (BSA) and other anti-money laundering and countering-the-financing-of-terrorism laws to specific conduct. Pursuant to Section 6305 of the Anti-Money Laundering Act of 2020 (AML Act), the report was delivered on June 28, 2021, to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.  FinCEN’s assessment included consultation with the Attorney General, the Federal functional regulators, State bank supervisors, State credit union supervisors, and other Federal agencies, as required by the AML Act.  
 
“FinCEN concludes that a no-action letter process would be a useful complement to its current forms of regulatory guidance and relief,” said Acting Director Michael Mosier.  “FinCEN looks forward to continuing to engage with our government partners and the public during a future rulemaking process to ensure all constructive feedback is considered on this important issue.”
 
A copy of the report can be found attached and additional information can be found here.
 
FinCEN Issues First National AML/CFT Priorities
 
On June 30, the Financial Crimes Enforcement Network issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy (the “Priorities”), following consultation with other relevant Department of the Treasury offices, as well as Federal and State regulators, law enforcement, and national security agencies. The Priorities identify and describe the most significant AML/CFT threats currently facing the United States. In no particular order, these include corruption, cybercrime, domestic and international terrorist financing, fraud, transnational criminal organizations, drug trafficking organizations, human trafficking and human smuggling, and proliferation financing.  FinCEN today also issued two statements (attached) to provide guidance to covered institutions on how to approach the Priorities.  
 
Additional information can be found here.

July House Financial Services Committee Hearing Schedule Announced
On June 28, House Financial Services Committee Chairwoman Maxine Waters (D-CA) announced the Committee hearing schedule for the month of July. Highlights from the schedule can be found below and the full schedule can be found here.
 

• July 14 at 12:00 PM ET: The full Committee will convene for a virtual hearing entitled, “Monetary Policy and the State of the Economy.” (Fed Chair Jerome Powell will appear)
• July 16 at 12:00 PM ET: The Task Force on Artificial Intelligence will convene for a virtual hearing entitled, “I Am Who I Say I Am: Verifying Identity while Preserving Privacy in the Digital Age.”
• July 21 at 10:00 AM ET: The Subcommittee on Consumer Protection and Financial Institutions will convene for an in-person hearing entitled, “Banking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System.”
• July 27 at 10:00 AM ET: The Subcommittee on National Security, International Development and Monetary Policy will convene for an in-person hearing entitled, “The Promises and Perils of Central Bank Digital Currencies.”

 
Rep. Maloney (D-NY) Introduces Overdraft Legislation
On June 30, Rep. Carolyn Maloney (D-NY) announced the introduction of the Overdraft Protection Act of 2021. This bill is aimed at limiting overdraft fees and would establish a set of practices for overdraft coverage programs. Rep. Maloney has introduced a version of this legislation since 2009.
 
Specifically, the Overdraft Protection Act of 2021 would:
 

• require that fees be “reasonable and proportional” to the cost of processing these transactions and the amount of the overdraft;
• prevent institutions from re-ordering transactions to artificially increase their fees;
• limit the number of fees that can be charged to 1 per month and 6 per year;
• require that consumers proactively opt-in to overdraft programs – rather than automatically being enrolled;
• improve transparency and disclosures; and
• prohibit charging overdraft fees for “debit holds” that exceed actual transaction amounts, among other strong measures.

 
Legislative text has not been made available yet but will likely be made available here in the next few business days. In the meantime, the bill as introduced in the 116th Congress can be found here.
 
Capital Clues
Below is latest intelligence the IPA has received on recent activity on Capitol Hill:
 

• The Senate is in recess until Monday, July 13. The Senate will begin a four-week session upon its return.
• The House will be in recess July 5-9.
• Significant progress was made the week of June 22 when a bipartisan group of senators, together with President Biden, announced agreement on an infrastructure framework.  President Biden’s support for the deal was clouded, however, when just hours later, he indicated that his support for the deal is contingent upon passage of a larger multi-trillion-dollar budget reconciliation bill.  Things appeared back on track over the weekend with the key negotiators after Biden issued a statement on Saturday clarifying his comments.  
• Beyond infrastructure, there are three policy areas which are generating bipartisan collaboration at the moment: (1) immigration reform; (2) police reform; (3) and China competitiveness. A bill relating to China competitiveness (U.S. Innovation and Competition Act) has cleared the Senate and components have begun moving through the House. Notably, the bill provides $52 billion in emergency subsidies for semi-conductor manufacturers. In addition, there was a bipartisan breakthrough announced on policing reform recently, though some sticking points still remain. Bipartisan discussions continue on immigration reform.

New Federal Laws
 
S.J. Res 15 – A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of Currency relating to "National Banks and Federal Savings Associations as Lenders" (True Lender Congressional Review Act Resolution)
Summary: This disapproval resolution invalidates the OCC’s True Lender Rule, which addressed lending arrangements between banks and non-bank third party lenders. Additionally, the Resolution prevents the OCC from issuing the Rule, or one like it, again. 
Status: Signed by the President on 6/30/20.
Sponsor: Sen. Chris Van Hollen (D-MD)
 
Pending Federal Bills
 
H.R.963 – Forced Arbitration Injustice Repeal (FAIR) Act
Summary: This bill prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
Status: Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law on 04/23/2021.
Sponsor: Rep. Hank Johnson (D-GA)
 
H.R. 1711 – To amend the Consumer Financial Protection Act of 2010 to direct the Office of Community Affairs to identify causes leading to, and solutions for, under-banked, un-banked, and underserved consumers, and for other purpose
Summary: This bill would direct the CFPB to conduct research on barriers to financial inclusion and identify hurdles under- and un-banked consumers. It would also require the Bureau to identify best practices to increase participation in the financial system and included a reporting requirement.
Status: Passed/agreed to in House on 5/18/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 5/19/21.
Sponsor: Rep. David Scott (D-GA)
 
H.R. 1996 – SAFE Banking Act
Summary: This bill would allow marijuana-related businesses in states with some form of legalized marijuana and established regulatory structures to access the banking and payments system.
Status: Passed/agreed to in House on 4/19/21. Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on 4/20/21.
Sponsor: Rep. Ed Perlmutter (D-CO)
 
H.R. 3968 - Municipal IDs Acceptance Act
Summary: This bill would require that the banking regulators update their guidance on Customer Identification Programs to state that an identification card issued by a municipality may be used by a bank to verify the identity of a customer, if such identification card enables the bank to form a reasonable belief that the bank knows the true identity of the customer.
Status: 06/23/2021 Ordered to be Reported from the Financial Services Committee in the Nature of a Substitute (Amended) by the Yeas and Nays: 27 - 23.
Sponsor: Rep. Richie Torres (D-NY)