​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

The IPA Drafts a Comment Letter on the Proposed Interpretive Rule on Reg. E – Comments Due 3/31 
 
The IPA has prepared a comment letter on the Consumer Financial Protection Bureau’s (CFPB) proposed Interpretive Rule on Regulation E.
 
Key aspects of the rule include:

• Clarifying the scope of Regulation E to include digital assets like stablecoins and nonbank payment providers.
• Ensuring consistent consumer protections, such as safeguards against unauthorized transactions and error resolution rights, across both traditional and emerging payment systems.

 
IPA is asking for the rule to be withdrawn because it is overly broad and does not take into account different aspects of the products it seeks to cover. The rule was proposed on Jan. 10, before the inauguration, so it may end up withdrawn by the new administration. 
 
The IPA is Preparing for its Annual Innovative Payments Conference
Make plans to join us in Washington DC from April 29 through May 1 for the Innovative Payments Conference to hear from legislators, regulators, and industry experts about the forces shaping your business. 
Sessions will include discussions about fraud prevention with Visa, the future of federal payments, and a fireside chat with former FDIC Director Jelena McWilliams, and Avy Malik, General Counsel, the California of Financial Protection and Innovation. 

Learn more and register here: Innovative Payments Conference
​

The Senate Approves the Larger Participant Congressional Review Act Resolution
A Congressional Review Act (CRA) resolution aimed at overturning the Larger Participant rule from  the CFPB was introduced in the Senate by Senator Pete Ricketts (R-NE) and in the House by Rep. Mike Flood (R-NE-01) on Feb. 27. 
 
This rule, which took effect in January 2025, expanded the CFPB's authority to supervise nonbank consumer payments fintechs. These "larger participants" include companies like payment apps and digital wallets that handle at least 50 million consumer payment transactions annually.
 
The Senate's approval of this CRA resolution moves the rule one step closer to nullification. The resolution also must pass in the House of Representatives and be signed into law by the President. Proponents of the resolution argue that the CFPB's rule imposes unnecessary regulatory burdens on an already well-regulated industry, potentially stifling innovation and increasing costs for consumers. Critics, however, believe that the rule provides essential oversight to protect consumers from fraud and other risks associated with digital payment services.
 
The next steps involve the House of Representatives voting on the resolution. If it passes there, it will go to the President for approval or veto. If signed into law, the CFPB's rule will be overturned, and the agency will be restricted from issuing a substantially similar rule in the future without new legislation.
 
You can find an overview of the Congressional Review Act Process here: The Congressional Review Act (CRA): A Brief Overview | Congress.gov | Library of Congress.
 
House Financial Services Committee Approves Overdraft CRA Resolution
On Feb. 13, House Financial Services Chair, French Hill (R-AR-02) introduced a resolution to disapprove and nullify the "Overdraft Lending: Very Large Financial Institutions" rule issued by the CFPB. The rule aimed to cap overdraft fees charged by large financial institutions.
On March 5, 2025, the committee voted to report the resolution to the full House for further consideration.
Supporters of the resolution argue that the CFPB's rule imposes unnecessary price controls, which would limit financial institutions' ability to offer overdraft services. Critics of the resolution believe that the CFPB's rule is necessary to protect consumers from excessive fees and promote fairness in financial services.
The resolution would still need to pass the Senate and be signed by the president. 

McKernan Nomination for CFPB Director Advances to Full Senate
Jonathan McKernan's nomination to be the director of the Consumer Financial Protection Bureau (CFPB) passed the Senate Banking Committee on March 6, in a 13-11 party-line vote.
Currently, the CFPB is led by Treasury Secretary Scott Bessent, who was appointed as Acting Director on Feb. 3, following the dismissal of Rohit Chopra.

Michelle Bowman Nominated to be Next Fed Vice Chair of Supervision
Michelle Bowman has been nominated by President Trump to fill the Vice Chair for Supervision role which has been vacant since Fed Gov. Michael Barr stepped down from the post Feb. 28. Bowman had been seen as a front-runner to replace Barr since Trump was elected in November. 
Bowman must go through the typical nomination process: a hearing in front of the Senate Banking Committee, whose members will then vote on whether to advance the nomination to the full Senate, which then must confirm her.
Sen. Tim Scott, R-SC, the Senate Banking Committee’s chair, called Bowman “an important voice on the Federal Reserve Board in pushing back on burdensome rules and regulations that stifle economic opportunity. 

The FDIC Withdraws Four Proposed Rules
On March 3, the Federal Deposit insurance Corp. (FDIC) announced that it was withdrawing three proposed rules: the brokered deposits restrictions, guidelines for corporate governance, and regulations implementing the Change in Bank Control Act.
The proposed brokered deposits rule would have overturned earlier changes won by the IPA that led to the primary purpose exemption from brokered deposits rules. 

The CFPB Ends its Lawsuit Against Zelle
In December, the CFPB sued Early Warning Services, which operates peer-to-peer payments service Zelle, along with three of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo, alleging that the companies did not investigate fraud and reimburse consumers for fraud and error. 
In March the CFPB said it was dropping its lawsuit “with prejudice,” according to CNBC. This was one of six suits that the Bureau has dropped since its previous director, Rohit Chopra was fired. 

OCC Oks Banks to Engage in Crypto Activities
 On March 7, the Office of the Comptroller of the Currency published Interpretive Letter 1183 to confirm that crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations. The letter also rescinds the requirement for OCC-supervised institutions to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.
“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” said Acting Comptroller of the Currency Rodney E. Hood. “Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology. I will continue to work diligently to ensure regulations are effective and not excessive, while maintaining a strong federal banking system.”

Podcasts, Press, and Education

• IPA Book Club: Plato’s Republic
• IPA Pod: Gift Card as Stress Relievers
• IPA Blog: Regulatory Chessboard Reconfigured
• IPA Pod: Elon Musk’s Access to Federal Payments System
• IPA Pod: The First Regulatory Moves of the New Administration

 
​ Upcoming Events and Calls
o          Next IPA Weekly GRWG Call – March 24, 2025
o          Next IPA Monthly GRWG Call – March 20, 2025

2025 Industry Outlook and New Regulatory Shifts: How IPA is Shaping the Future of PaymentsAs we enter 2025, the payments industry finds itself at a pivotal juncture, shaped by shifting regulatory landscapes and evolving political priorities. With a new administration and the 119th Congress taking office, the Innovative Payments Association (IPA) is doubling down on its commitment to advocate for clear policies and promote innovation in financial services.

The recent Republican sweep of the White House and Congress has sparked debates about deregulation and reshaping financial oversight. Proposals to repeal existing regulations through the Congressional Review Act (CRA), calls to eliminate the Consumer Financial Protection Bureau (CFPB), and other deregulatory measures suggest significant changes may be on the horizon. However, industry leaders must temper their expectations. History shows that even in a politically aligned government, regulatory shifts are rarely straightforward or absolute.

While deregulatory measures such as revisiting the Open Banking Rule may gain momentum, their implementation faces procedural and legal challenges. Additionally, the CFPB, often seen as a target for reform, may remain a key player under the new administration. With its record of bipartisan enforcement actions and new authority to regulate big tech, the agency may adapt rather than disappear.

In this uncertain landscape, the payments community must maintain robust compliance and advocacy strategies. At the same time, leaders in Congress and the administration must recognize the vital role of financial technology in driving economic growth.

Unleashing the Potential of Payments Innovation
The payments industry has long been a cornerstone of financial inclusion, empowering millions of Americans with tools to manage their finances, save money, and achieve their goals. Yet inconsistent regulatory approaches have stifled the full potential of financial technology (fintech) products such as earned wage access, mobile wallets, and fintech debit accounts.

Despite challenges, the industry has achieved remarkable milestones. The FDIC’s latest report shows that 96% of American households are banked—the highest level in nearly 20 years—thanks in part to diverse fintech offerings. These innovations have brought more people into the mainstream financial system than ever before.

However, contradictory regulatory signals remain a barrier. For example, while the CFPB mandates data sharing between financial institutions and fintechs, it also warns consumers to approach fintech products with caution. Similarly, the FDIC proposes rules that could increase costs for these same products, undermining their accessibility and impact.

The payments industry supports reasonable, evidence-based regulation that balances consumer protection with innovation. To truly harness the promise of fintech, policymakers must move beyond political agendas and work collaboratively with the industry to establish clear, consistent, and practical guidelines.

IPA’s Vision for 2025
The Innovative Payments Association is ready to play a central role in shaping the future of payments. Through strategic advocacy, education, and collaboration with stakeholders, the IPA aims to:

• Advocate for policies that promote competition, innovation, and consumer protection.
• Encourage the adoption of a national regulatory framework that supports fintech growth.
• Provide resources and insights to help members navigate the evolving political and regulatory landscape.

 
Now is the time to unleash the potential of financial technology to improve lives and support economic growth. By working together, policymakers, regulators, and the payments community can build a stronger, more inclusive financial system that benefits all Americans. 

55% of Payments Firms Say Compliance Function is Overwhelmed at Least 1x Month

As we step into the new year, many payments firms are already feeling the weight of their compliance burdens, with an expectation that it will only increase in 2025. 

Staying ahead requires real-time insights into regulatory changes, industry trends, and technological advancements to make informed decisions and tackle compliance challenges effectively.

To help you navigate this landscape, IPA member Vixio Regulatory Intelligence surveyed 127 payments organizations worldwide and created this forward-looking report to give you actionable insights into the evolving regulatory environment.

What’s inside?
➡️ The biggest challenges payments organizations are facing
➡️ Key growth opportunities for 2025
➡️ Practical strategies to navigate challenges and ensure compliance
...and more!

Download your copy here: https://discover.vixio.com/paymentscompliance-pc-outlook-report-2025-ipa/ 

Trump Issues Regulatory Freeze
Within a few hours of his swearing in, President Trump issued a number of Executive Orders. Among the dozens of EO’s signed by the President was an EO entitled, “Regulatory Freeze Pending Review.” You can read the full order below or here: Regulatory Freeze Pending Review – The White House
 
By the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby order all executive departments and agencies to take the following steps:
 

1. Do not propose or issue any rule in any manner, including by sending a rule to the Office of the Federal Register (the “OFR”), until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule.  The department or agency head may delegate this power of review and approval to any other person so appointed or designated by the President, consistent with applicable law.  The Director or Acting Director of the Office of Management and Budget (the “OMB Director”) may exempt any rule that he deems necessary to address emergency situations or other urgent circumstances, including rules subject to statutory or judicial deadlines that require prompt action.
2. Immediately withdraw any rules that have been sent to the OFR but not published in the Federal Register, so that they can be reviewed and approved as described in paragraph 1, subject to the exceptions described in paragraph 1. 
3.  Consistent with applicable law and subject to the exceptions described in paragraph 1, consider postponing for 60 days from the date of this memorandum the effective date for any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.  During this 60-day period, where appropriate and consistent with applicable law, consider opening a comment period to allow interested parties to provide comments about issues of fact, law, and policy raised by the rules postponed under this memorandum, and consider reevaluating pending petitions involving such rules.  As appropriate and consistent with applicable law, and where necessary to continue to review these questions of fact, law, and policy, consider further delaying, or publishing for notice and comment, proposed rules further delaying such rules beyond the 60-day period.
4. Following the postponement described in paragraph 3, no further action needs to be taken for those rules that raise no substantial questions of fact, law, or policy.  For those rules that raise substantial questions of fact, law, or policy, agencies should notify and take further appropriate action in consultation with the OMB Director.
5. Comply in all circumstances with any applicable Executive Orders concerning regulatory management.

 
As used in this memorandum, “rule” has the definition set forth in section 551(4), title 5, United States Code.  It also includes any “regulatory action,” as defined in section 3(e) of Executive Order 12866 of September 30, 1993, as amended, and any “guidance document” as defined in section 2(b) of Executive Order 13891 of October 9, 2019 (Promoting the Rule of Law Through Improved Agency Guidance Documents), when that order was in effect.  Thus, the requirements of this memorandum apply not only to “rules” as defined in section 551(4) of title 5, but also to any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking.  They shall also apply to any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.
 
The OMB Director shall oversee the implementation of this memorandum, and any communications regarding any matters pertaining to this review should be addressed to the OMB Director.  The OMB Director is also authorized to establish a process to review pending collections of information under the Paperwork Reduction Act of 1995, as codified in chapter 35, title 44, United States Code, and to take actions that the OMB Director deems appropriate based on that review, consistent with applicable law.
 
Should actions be identified that were undertaken before noon on January 20, 2025, that frustrate the purpose underlying this memorandum, I may modify or extend this memorandum, to require that department and agency heads consider taking steps to address those actions.
 
The OMB Director is authorized and directed to publish this memorandum in the Federal Register.
 
This memorandum shall be implemented consistent with applicable law.
 
Trump Elevates Hill to Acting FDIC Chairman 
President Trump has elevated FDIC Vice Chair, Travis Hill, to Acting Chairman of the agency.  On his first day in his new position, Acting Chairman Hill released the following statement: “It is my honor and privilege to serve as Acting Chairman of the FDIC.  While the FDIC faces a broad range of issues, and as always will fulfill our mandate to promote a safe, sound, and resilient banking system, below is a list of matters I expect the FDIC to focus on in the coming weeks and months.”  
 
Amongst the several changes the new Acting Chair would like to implement are: 
 

• Adopt a more open-minded approach to innovation and technology adoption, including (1) a more transparent approach to fintech partnerships and to digital assets and tokenization, and (2) engagement to address growing technology costs for community banks.
• Withdraw problematic proposals from the past three years, such as proposals on brokered deposits and corporate governance.

To read the Acting Chairman’s full statement please visit the FDIC’s website here. 
 
Chopra Remains CFPB Director Post Inauguration 
Prior to January 20th, the prevailing conventional wisdom was that President Trump would move to immediately remove Rohit Chopra as Director of the Consumer Financial Protection Bureau.  As of this writing, Director Chopra still leads the CFPB.  However, it is widely expected that Trump will soon take steps to relieve Chopra of his duties. There are several theories why this has not taken place yet.  One is that the Trump administration could be waiting to have a few more Senate-confirmed officials, such as Scott Bessent at Treasury or Russ Vought at OMB before taking the affirmative steps to officially nominate someone to replace Chopra. 
 
IPA Responds to FEC Notice on Payment Forms
On January 27, 2025, the IPA filed comments responding to the Federal Election Commission’s published notice in the Federal Register entitled, “Contributions Through Untraceable Electronic Payment Methods.” The FEC sought public comment on whether it should proceed with such a full rulemaking. Comments were due to the FEC by January 27, 2025.  
 
The FEC released its request at the behest of Texas Attorney General Ken Paxton wrote the FEC petitioning it “to amend its regulations concerning the use of credit cards to make contributions, to address the potential use of prepaid cards to circumvent contribution amount limitations and source prohibitions.”  
 
The Petition asks the Commission to adopt two amendments to its regulations which would require that when contributions are made by credit, debit, prepaid or gift card, the campaign committee must “cross-check” the donor’s name and address with that information held by the issuer and contributions cannot be accepted from prepaid or gift cards unless the information from those prepaid or gift cards has been cross-checked. 
 
In brief, the IPA’s comments outline how heavily regulated payment products are by their primary regulator and the CFPB.  Thus, we urge the FEC not to take steps add an additional layer of regulation since payment products are used by millions of Americans to make campaign contributions. 
 
CFPB Rescinds 2020 EWA Advisory Opinion 
On January 6, 2025 the CFPB quietly, without any public announcement published an advisory opinion on its website to rescind the advisory opinion it issued in November 2020 related to EWA.  In brief, the CFPB states it “is rescinding the 2020 Advisory Opinion for two fundamental reasons: (i) its legal analysis is significantly flawed in numerous respects; and (ii) it engendered substantial regulatory uncertainty.”
 
More specifically, the CFPB writes that the 2020 Advisory Opinion was flawed due to: 
 

• “The first analytical flaw of the 2020 Advisory Opinion is that its consideration of the meaning of “debt” under state law was insufficient.”
• Second, the 2020 Advisory Opinion inferred that the consumer does not incur a liability when using the narrowly limited type of earned wage product covered by the opinion, but did not sufficiently justify the inference.
• Third, the 2020 Advisory Opinion did not consider all relevant factors as part of the “totality of the circumstances” approach it applied to determine what is “credit.”
• Fourth, the opinion’s claim that it was supported by certain statements in the 2017 Payday Rule is unpersuasive.

 
The advisory opinion is in effect as soon as it is published in the Federal Register. 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

Dear IPA Member:
 
As we start wrapping up an eventful year, we are proud to share the Innovative Payments Association’s 2024 Annual Report. This year, we’ve made significant strides in advocacy, regulatory engagement, and industry leadership to support the growth and innovation of the payments industry.
 
From driving meaningful discussions on regulatory changes to expanding educational initiatives like the Summer of Learning and Compliance Boot Camp, 2024 has been a year of impactful achievements made possible by your continued support.
 
We'd like to invite you to explore our Annual Report, highlighting key milestones and sharing insights into 2025. Read the report here.
 
Thank you for being an essential part of our community. We look forward to working together in the year ahead to continue driving innovation and success in the payments industry.
 
Sincerely,

Brian C. Tate
President & CEO
Innovative Payments Association

President Trump Reelected
On November 5, 2024, former President Trump was reelected President of the United States. Trump will be inaugurated on January 20, 2025.  

One week after the election the IPA held a post-election review with IPA members.  The review was accompanied by a post-election analysis conducted by OGR.  

President-elect Trump has started the process of nominating people for Cabinet positions and other key national level posts, such as: Scott Bessent for Treasury Secretary, David Sacks for AI & Crypto Czar , and Paul Atkins for SEC Director. As of this writing, the incoming President has not nominated any one to fill positions at the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporations, of the Office of the Comptroller of the Currency.  Nominees for the prudential regulators and the CFPB will likely be made prior to Inauguration Day in January.  


French Hill Named Chair of the House Financial Services Committee
Last week U.S. Representative French Hill (R-Arkansas) was named the next Chairman of the House Financial Services Committee.  You can learn more about the new Chairman by visiting his website at: https://hill.house.gov/

Chairman Hill has an extensive financial services background. In the 118th Congress he serves as the Vice Chairman of the House Financial Services Committee and as Chairman of the new subcommittee tasked with overseeing all areas related to digital assets and financial technology. 

Prior to his congressional service, Congressman Hill was founder, Chairman, and Chief Executive Officer of Delta Trust & Banking Corporation. From 1989 to 1991, he also served as Deputy Assistant Secretary of the Treasury for Corporate Finance. After the fall of the Berlin Wall, Rep. Hill led the design of U.S. technical assistance to the emerging economies of eastern and central Europe in the areas of banking and securities. In 1991, President Bush appointed Rep. Hill to be Executive Secretary to the President’s Economic Policy Council (EPC), where he coordinated all White House economic policy.  
The IPA has a long-standing relationship with Chairman Hill and his staff.  Please note that Chairman Hill spoke at the IPA’s 2019 Innovative Payments Conference.   We wish Chairman Hill good luck in his new role. 
 
IPA Responds to FDIC Proposed Rule on Brokered Deposits
At the end of July the FDIC released a Proposed Rule on Brokered Deposits.  The FDIC also released a statement regarding the proposal you can read here. 
 The FDIC’s proposal makes significant changes to current regulation, including the “Enabling Transactions” exception to the brokered deposit regulations for third party relationships that was included in the 2020 Brokered Deposits Final Rule. (This exemption came about through efforts led by the IPA and its members.)   As expected, Chairman Martin Gruenberg’s remarks at the FDIC’s Board Meeting referenced the failed business arrangements connected to Synapse, SVB, Voyager, and others as reasons for the changes. 
Below are some key changes the proposal makes to the current brokered deposit regulations:

• It revises the definition of “deposit broker” to combine the “placing” and “facilitation” prongs into a single definition with single set of factors for determining when a third party acts as a deposit broker.
• It eliminates the exclusive deposit placement arrangement exception.
• It eliminates the “enabling transactions” test for application of the primary purpose exception.
• It removes the ability for third parties to apply for application of the primary purpose exception. Under the proposal, only the IDI would be able to apply. 
  
  

The IPA has filed our response to the FDIC in November 2024.  The IPA’s letter focused on several key points, including, but not limited to, treating fintech-bank accounts as de facto “brokered” is not consistent with Federal Deposit Insurance Act or the history and intent of the brokered deposits regulatory framework based on FIRREA. In addition, the FDIC’s proposed classification of fintech-bank accounts as de facto “brokered” is not supported by the FDIC’s own rationale which is grounded in unrelated bank failures.  You can read the IPA’s letter here.
 
IPA Files Comment Response to Bank-Fintech Ledger
The IPA has finalized and filed our comments responding to the FDIC’s proposed rule entitled, “Recordkeeping for Custodial Accounts.” In brief, the proposal would require all banks partnered with a third party to either maintain a ledger of FBO accounts via third-party fintechs or have direct access to a ledger maintained by a fintech so they can reconcile the accounts each day.  The deadline for the public to submit comments to the FDIC is January 16, 2025. 
 
The IPA’s comments outline our concerns with the proposal, including concerns regarding the scope of the proposal which we believe would extend to products the FDIC did not intend to cover, including gift cards, corporate cards, savings accounts, and wealth management accounts. Lastly, the IPA believes the FDIC needs to sync up their proposed changes to FDIC section 370 and the current 370 requirements, so banks aren’t subject to two sets of requirements that are similar in certain respects but different in other respects.   
 

FDIC Releases 2023 Unbanked and Underbanked Study
On November 12, 2024, the FDIC released its biannual national survey on the unbanked and underbanked. The 2023 FDIC National Survey of Unbanked and Underbanked Households found that nearly 96 percent of all U.S. households were banked in 2023,

In addition, the FDIC survey found two-thirds (66.2 percent) of unbanked households relied entirely on cash while a third (33.8 percent) of unbanked households relied upon a combination of prepaid cards or nonbank online payment services such as PayPal, Venmo or Cash App to conduct transactions.
Other key findings include:

• The Underbanked Rate – 14.2 percent of U.S. households (representing 19.0 million households) were underbanked in 2023, meaning these households had a bank or credit union account yet primarily used nonbank products and services to meet their financial needs.
• Mobile Banking – Nearly half of banked households (48.3 percent) used mobile banking as their primary method to access their accounts. 
• Nonbank Online Payment Services and Prepaid Cards – Between 2021 and 2023, use of nonbank online payment services such as PayPal, Venmo, or Cash App increased, while the use of general purpose reloadable prepaid cards decreased. 
• Credit Cards – 76.4 percent of all households had a credit card in 2023. However, about one-in-six households (15.7 percent) had no access to mainstream credit, down from 20.0 percent in 2017. 
• Buy Now, Pay Later –In 2023, 3.9 percent of all households used BNPL in the past 12 months.
• Crypto –In 2023, 4.8 percent of U.S. households owned or used crypto or digital assets in the previous 12 months. 

 
CFPB Issues Overdraft Final Rule 
On December 12th  the CFPB issued a final rule amending their current rules, Regulations E and Z, in part, to treat overdraft products as credit, unless the overdraft fee is capped at $5 or an amount that covers a financial institution’s costs and losses. Banks and credit unions over $10 billion will need to comply with Regulation Z’s requirements for loans, including providing consumers with a choice on whether to open a line credit. In addition, financial institutions will have to give consumers disclosures, periodic statements, and allowing consumers to decide whether to pay automatically or manually. The final rule will go into effect on October 1, 2025.

 
FEC Seeks Feedback on Payment Forms
The Federal Election Commission recently published a notice in the Federal Register entitled, “Contributions Through Untraceable Electronic Payment Methods.” The FEC is seeking public comment on whether it should proceed with such a full rulemaking. 
 
In brief, Texas Attorney General Ken Paxton wrote the FEC petitioning it “to amend its regulations concerning the use of credit cards to make contributions, to address the potential use of prepaid cards to circumvent contribution amount limitations and source prohibitions.”  The Petition asks the Commission to adopt two amendments to its regulations which would require that when contributions are made by credit, debit, prepaid or gift card, the campaign committee must “cross-check” the donor’s name and address with that information held by the issuer and contributions cannot be accepted from prepaid or gift cards unless the information from those prepaid or gift cards has been cross-checked. Comments are due to the FEC by January 27, 2025.  
 
The IPA will continue to review the FEC’s request and is planning to draft a response.  In the interim, please send any questions to Brian Tate ([email protected]). 
​

Shield Act Passes House 
U.S. Representative Bryan Steil (R-WI), Chairman of the House Committee on House Administration, 
and sponsor of the Secure Handling of Internet Electronic Donations (SHIELD) Act released a press 
release announcing the bills passage in the House of Representative by Voice Vote.  In brief, 
The SHIELD Act prohibits political committees from accepting online contributions from debit or credit 
cards without the disclosure of the card verification value, or CVV, and the billing address associated 
with the card.  The IPA has had several conversations with Chairman Steil’s office and remains 
concerned about additional regulation being layered on already heavily regulated prepaid account 
products.  

Key 2025 Election Dates

• January 3, 2025: 119th Congress Swearing In
• January 20, 205: Inauguration Day

 
2025 Congressional Calendars

• 2025 House Calendar
• 2025 Senate Calendar

 
Podcasts, Press, and Education
 
IPA Mentions/Reports:

• IPA Blog: The FDIC Should Look Inward Before Pointing Fingers Out

• IPA Pod: Is Pay By Bank the Future of Payments
• IPA Pod: Think Like and Innovator 
• IPA Pod: Nov. 2024 Government Update 
• IPA Blog: Challenge Your Assumptions About the Election 

Articles and Reports:

• Digital Transactions: 
• Payments 3.0: Humanity And the War on Gift Card Fraud – Digital Transactions

 
Upcoming Events and Calls

• Next IPA Weekly GRWG Call: January 6, 2025 (tentative)

​IPA Releases Bank-Fintech Guide
On September 17, 2024, the IPA released a game-changing resource: "IPA's Guide to Developing a Bank-Fintech Regulatory Compliance Plan." As financial institutions work more with fintech companies, regulatory compliance is more important than ever. This guide offers a detailed look at the critical legal and regulatory issues that banks and fintechs must address. It is an essential resource for any organization looking to innovate in the financial sector while meeting strict regulatory requirements.

The guide covers vital topics, including:

• The roles and responsibilities of banks and fintechs in maintaining compliance.
• An overview of relevant regulations such as Regulation E, Regulation Z, the Bank Secrecy Act, and others.
• Practical considerations for developing a robust compliance plan.
• Guidance on third-party risk management, drawn from recent statements and guidance from federal banking agencies.

 
The guide is not meant to replace legal advice but to offer a framework to help companies develop comprehensive compliance programs, which protect both their interests and those of their partners and customers. IPA members can download a copy of the guide in the “Members Only” section of the IPA’s website: www.ipa.org. 
 
IPA’s 2024 Compliance Boot Camp is a Success
On September 11, 2024, the IPA held its annual Compliance Boot Camp in Chicago. This year’s event was the IPA’s largest compliance event to date. First, the IPA would like to thank everyone who traveled to Chicago to participate, including attendees and presenters. Next, the IPA would like to thank our gracious hosts at Discover. We look forward to hosting additional compliance events in the future, but in the meantime, please review IPA COO Ben Jackson’s recap of the event on the IPA’s Blog. 

​Congress in Recess – Lame Duck Session After Election
At the end of September, the House and Senate went into a month-long recess. Congress is expected to return to conduct a lame-duck session after the elections on November 5th. The post-election session of Congress is expected to run into early December. Major issues Congress is likely to address will focus on must pass legislative issues such as funding for the federal government.  In addition, Committees may hold hearings while Congress is in session. At the time of this writing, the House Financial Services Committee and Senate Banking Committee, respectively, are expected to hold hearings featuring the prudential regulators (FDIC, OCC, the Federal Reserve), and the CFPB. Additional details will be provided as developments occur. 
 
IPA Files Comment on CFPB Proposed Interpretive Rule for EWA 
On July 18th the CFPB released their “Proposed Interpretive Rule” on EWA. The CFPB also published a report examining employer-sponsored paycheck advance loans.  In brief, the proposal identifies two primary types of EWA products: employer-partnered and direct-to-consumer. Further, the proposal addresses the application of certain Regulation Z and TILA provisions. Other key points from the proposal include: 

• The Interpretive Rule will replace the CFPB’s 2020 Advisory Opinion. 
• It mischaracterizes EWA products as a loan and EWA providers as “lenders.” 
• It applies Regulation Z to EWA, and accompanying Disclosures.
• Fees for “tips” and expedited delivery will be finance charges under TILA. 

 
Accordingly, the IPA responded to the proposal by filing a comprehensive comment which outlines our concern with how EWA does not resemble credit, the benefits of EWA, and a request for the CFPB to conduct additional study before finalizing their proposal. In addition, the IPA met with the CFPB in September to seek out additional details and to inform the agency that implementation will require more clarification since the proposal was limited in its requirements. 
 
Prudential Regulator RFI on Fintechs
In late July, the Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency released a statement on the potential risks associated with third-party bank relationships and the responsibilities of financial institutions to take note of all applicable laws, rules, and guidance. In addition, the agencies also issued a Request for Information to learn more about bank-fintech arrangements, including deposits, payments, lending services and risk management.  
Please note the IPA believes this RFI is the first step in additional requests and rulemakings for the payments community. 
 
The IPA has recently filed our comments responding to the prudential regulators. In brief, the IPA’s comment letter discusses the current responsibilities of financial institutions who partner with third parties, including the laws and regulations in place today that extend to payment products overseen and enforced by the prudential regulators and the CFPB. If you are planning to file your own comment in response to the proposal, please note that the deadline for submissions to the prudential regulators is October 30th. 
 
FDIC Rolls Back Exceptions to Brokered Deposits
At the end of July the FDIC released a Proposed Rule on Brokered Deposits.  The FDIC also released a statement regarding the proposal you can read here. 
 
The FDIC’s proposal makes significant changes to current regulation, including the “Enabling Transactions” exception to the brokered deposit regulations for third party relationships that was included in the 2020 Brokered Deposits Final Rule. (This exemption came about through efforts led by the IPA and its members.)  Accordingly, Chairman Martin Gruenberg’s remarks at the FDIC’s Board Meeting referenced the failed business arrangements connected to Synapse, SVB, Voyager, and others as reasons for the changes.
 
Below are some key changes the proposal makes to the current brokered deposit regulations:

• It revises the definition of “deposit broker” to combine the “placing” and “facilitation” prongs into a single definition with single set of factors for determining when a third party acts as a deposit broker.
• It eliminates the exclusive deposit placement arrangement exception.
• It eliminates the “enabling transactions” test for application of the primary purpose exception.
• It removes the ability for third parties to apply for application of the primary purpose exception. Under the proposal, only the IDI would be able to apply.

 
At the time of this writing the IPA is preparing a response to the FDIC that will focus on several key points, including, but not limited to, treating fintech-bank accounts as de facto “brokered” is not consistent with Federal Deposit Insurance Act or the history and intent of the brokered deposits regulatory framework based off of FIRREA. In addition, the FDIC’s proposed classification of fintech-bank accounts as de facto “brokered” is not supported by the FDIC’s own rationale which is grounded in unrelated bank failures. 
Comments are due to the FDIC by October 22, 2024. 

IPA Mentions

• Digital Transactions: Payments 3.0: Humanity And the War on Gift Card Fraud – Digital Transactions
  
• IPA Op-Ed: Brokered Deposits (Amer. Banker pay wall) 
  
• IPA Pod: September 2024 Government Update

Articles and Reports

• • Digital Transactions - July: Can Fintechs Control Their Destiny
  • Digital Transactions - June: Time for Second Thoughts on Fintechs 

 
Upcoming Events and Calls 

Events

• Save the Date: Money 2020 Reception - Oct. 29, 2024
  
  

GRWG Calls

• IPA October Monthly GRWG Call: October 17, 2024
• IPA November Monthly GRWG Call – November 14, 2024

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

The IPA's Compliance Boot Camp is coming to Chicago, Illinois, and act fast—37% of the seats have already sold!
Register now to secure your spot at this one-day, in-person event packed with valuable sessions tailored to the payments community. This is the lowest rate you will find for earning up to 6 CLEs. Here's a glimpse of what awaits you:

• Gain insights into recent CFPB enforcement activity and compliance tips from industry experts Matt White and Timothy Butler of Greenberg Traurig.
• Explore the future of Open Banking with Brian Montgomery from Pillsbury and learn how to prepare for the upcoming regulatory changes.
• Stay ahead of the curve with updates on Earned Wage Access services and regulatory implications from Eli Rosenberg of Baird Holm LLP.
• Navigate the legal complexities of providing banking services to cannabis companies with insights from Brian Axel.
• Understand the importance of third-party oversight and its impact on both Banks and FinTechs with Joyce Mehlman from iLEX.
• Dive into the regulatory and legal landscape surrounding Artificial Intelligence in the financial services industry with K.C. Halm from Davis Wright Tremaine LLP.

Podcasts, Press, and Education
IPA Mentions:

• IPA Blog: Business is Personal 
• IPA Pod: The CFPB is Here to Stay 
• IPA Blog: Cybersecurity is as Much About Culture as Tech
• IPA Op-Ed in Payments Dive – CFPB Should Reconsider the Prepaid Rule
• IPA Pod: The Next Generation of Fintech 
• IPA Blog – EWA Report Only Tells Have the Story

• IPA Pod: The Company in Everyone’s Wallet
• IPA Book Club: Going Infinite

 Upcoming GRWG Calls 

• IPA Weekly GRWG Call: June 10, 17, 24
• IPA June Monthly GRWG Call – June 10, 2024
• IPA July Monthly GRWG Call – July 11, 2024

​On May 16, 2024, the U.S. Supreme Court released its opinion in CFSA v. CFPB. The case focused on whether the CFPB’s current funding structure is constitutional.  You can read a copy of the Court’s Opinion here.  Below is the Court’s holding in the case: 

• Held: Congress’ statutory authorization allowing the Bureau to draw money from the earnings of the Federal Reserve System to carry out the Bureau’s duties satisfies the Appropriations Clause. Pp. 5–19, 22. 
  
  

(a) Under the Appropriations Clause, an appropriation is a law that authorizes expenditures from a specified source of public money for designated purposes. 
 
(1) The Bureau’s funding is “drawn from the Treasury” and is therefore subject to the requirements of the Appropriations Clause. The issue is whether the Bureau’s funding mechanism constitutes an “Appropriatio[n] made by Law.” The Court concludes that the answer is yes based on the Constitution’s text, the history against which that text was enacted, and congressional practice immediately following ratification. Pp. 5–15
 
To learn more about the decision and its impact on the payment’s community please listen to the IPA’s Podcast episode entitled, “The CFPB is Here  to Stay.” 

Text of California EWA Regulation Released
In May, the California DFPI released the text of its EWA Final Rule. A copy of the final rule can be found here (see section on Income Based Advances). At first glance, similar to the proposed rule, the final rule continues to categorize EWA services as loans.  In addition, the final rule still requires EWA providers to register with the state.  However, if an EWA provider registers with the state, the EWA provider is exempt from the fee restrictions and rate caps normally imposed on lenders in the state of California. DFPI also posted a Final Statement of Reasons in which the agency outlines their reasoning for removing the fee restrictions and fee cap restrictions.  However, it is important to keep in mind the DFPI does not foreclose the possibility of the imposition of fee caps and/or fee restrictions in the future. 

You may recall that the State of California Office of Administrative Law rejected the California Department of Financial Protection and Innovation’s submission of the agency’s EWA final rule.  Please note that DFPI will have to address the issues raised by the OAL when it rejected the DFPI’s submission.  Thus, it is still possible parts of the final rule could change after DFPI makes amendments.  
 
Lastly, as a reminder, the IPA filed three comments in response to the proposed rule (and amendments).  You can find a copy of the letters the IPA filed with DFPI in response to their EWA proposals here: https://www.ipa.org/ewa.html
 
CFPB Finalizes Rules for BNPL
Just before Memorial Day 2024 the CFPB issued an interpretive rule that confirms that Buy Now, Pay Later providers are credit card providers. Thus, BNPL providers must follow the regulations that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with BNPL. Today’s release outlines how BNPL products meet the criteria for credit card providers, under TILA. As a result, BNPL providers must:

• Investigate disputes: Buy Now, Pay Later lenders must investigate disputes that consumers initiate. Lenders must also pause payment requirements during the investigation and sometimes must issue credits. 
• Refund returned products or cancelled services: When consumers return products or cancel services for a refund, Buy Now, Pay Later lenders must credit the refunds to consumers’ accounts. 
• Provide billing statements: Consumers must receive periodic billing statements like the ones received for classic credit card accounts.

 
The CFPB is collecting comments on this interpretive rule. Comments are due 60 days after the rule is published in the Federal Register.  
 
CFPB Issues Final Rule on Industry Standard-Setting for Open Banking
This morning the CFPB released a rule finalizing in part its proposed rule on consumer data rights under section 1033 of the Consumer Financial Protection Act. This final rule establishes minimum attributes a standard-setting body must possess to receive CFPB recognition and to issue consensus standards when the full rule is finalized. In its October 2023 proposed rule the CFPB proposed that standards adopted by CFPB-recognized standard setters might be used to facilitate implementation of a final Personal Financial Data Rights rule.  The rule will go into effect 30-days after publication in the Federal Register. According to today’s final rule, standard setters must apply to the CFPB and display the following attributes:

• Openness: The CFPB will not recognize any standard-setting organization that is rigged in favor of any set of industry players. The process must be open to all interested parties, including public interest groups, app developers, and a broad range of financial firms with a stake in open banking.
• Transparency: Procedures must be transparent to participants and publicly available.
• Balanced decision-making: The decision-making power to set standards must be balanced across all interested parties, including consumer and other public interest groups. There must also be meaningful representation for large and small commercial entities. No single special interest can dominate the decision-making process.
• Consensus: Standards development must proceed by consensus, though not necessarily unanimity. Comments and objections must be considered using fair and impartial processes.
• Due process and appeals: The standard-setting body must use documented and publicly available policies and procedures, provide adequate notice of meetings, sufficient time to review drafts and prepare views and objections, access to views and objections of other participants, and a fair and impartial process for resolving conflicting views. An appeals process is also available for the impartial handling of procedural appeals.

 
The IPA will continue to review and analyze the final rule. If you have any questions, please contact Brian Tate ([email protected]). 
 
FDIC Consumer New - Banking with Third-Party Apps
On the last day of May the FDIC posted a newsletter focused on consumer’s who use banking apps to conduct their retail banking.  In brief, the newsletter outlines the differences between banking directly with a financial institution and utilizing banking services through a third party fintech program manager, including when FDIC insurance applies, how to navigate nonbank companies, and how to avoid scams or fake apps.  
 
FDIC Chair to Step Down When Replacement Confirmed
Statement by FDIC Chairman Martin J. Gruenberg
It has been my honor to serve at the FDIC as Chairman, Vice Chairman, and Director since August of 2005. Throughout that time I have faithfully carried out the critically important mission of the FDIC to maintain public confidence and stability in the banking system. In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed. Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture.
 
Prudential Regulators Issue Third Party Risk Guide for Community Banks
In May, the FDIC, OCC, and the Federal Reserve Board issued the following press release announcing their new compliance guide entitled, “Third-Party Risk Management A Guide for Community Banks.” The guide outlines each stage of the third-party relationship and is targeted at community financial institutions. In addition, the guide reinforces the third-party risk management guidance issued by the agencies in June 2023, and please note that the  guidance is not a substitute for the agencies’ prior guidance. If you have any questions, please contact Brian Tate ([email protected]).  
 
IPA Responds to FinCEN RFI 
In late May the IPA filed a comment responding to FinCEN’s CIP RFI.  The deadline to file comments responding to the RFI is TODAY.  As a reminder, FinCEN is seeking comments on the Bank Secrecy Act’s (“BSA”) customer identification program (“CIP”) rule.  The CIP rule requires U.S. banks to collect a taxpayer identification number (“TIN”) from a U.S. person before opening a new account for that person. The RFI requests comments about the potential risks, benefits, and safeguards related to partial collection of SSNs directly from customers and the use of third-party sources to collect customers’ full SSNs.  The IPA thanks the working group for their feedback during the comment drafting process.  A copy of the IPA’s comment can be found here:  https://www.ipa.org/fraud.html
 
IPA Comments on IRS Green Book Proposal on EWA 
Shortly after the release of the President’s proposed Budget for FY 2025 , the U.S. Department of Treasury released the "General Explanations of the Administration’s Revenue Proposals" (also known as the “Green Book).  The Green Book provides an explanation of the Administration's revenue proposals for that specific fiscal year.  Similar to the last two years, this year’s Greenbook again contains a proposal from the Internal Revenue Service (IRS) on the tax treatment of EWA related products (See. p. 232).   Further, the language of this year’s proposal appears to be very similar to the proposals released in prior years.  
 
The IPA responded to the Treasury’s IRS proposal by submitting an unsolicited comment letter to the U.S. Treasury outlining our concerns, including the agency’s mischaracterization of the structure and form of EWA products, and how earned wages are accessed by employees who utilize EWA services.  The IPA is currently engaged in a dialogue with the U.S. Treasury and looks forward to sharing information with the agency regarding the benefits of EWA to millions of American.  A copy of the IPA’s letter can be found here.
 
Interchange State Law Update
Yesterday Gov. Pritzker signed the 2025 IL state budget into law. The new state budget included interchange related provisions to prohibiting interchange on sales or excise taxes and voluntary gratuities in Section 150. The provision, if enacted, would be the first of its kind in the country. The provision was included in the state budget as part of a deal made between leaders in the state legislature and the retailers.  It is not clear at all that this potential change in law will result in any discernable benefit to consumers in the state of IL. 

EWA State Law Update
On May 21, 2024, South Carolina Governor McMaster signed into law the Earned Wage Access Services Act which will require EWA providers operating in the state to register with the state’s Department of Consumer Affairs. The new law also provides exemptions from state lending and other requirements for providers. South Carolina now joins Kansas, Wisconsin, Nevada, and Missouri in establishing a distinct statutory framework for EWAs.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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

Our annual Innovative Payments Conference is around the corner, and we invite you to attend. The IPC, scheduled May 5-7, 2024, in Washington, DC, is the place to immerse yourself in three days of groundbreaking insights, cutting-edge technology, and networking opportunities for payments leaders. To learn more about the conference, please visit: www.ipa.org.

Federal Reserve Extends Interchange Comment Period
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 issued last year. The initial comment period was scheduled to close on February 12th. The new deadline to submit comments to the Federal Reserve is now May 12, 2024. 
 
Next, the Federal Reserve has released additional data related to the interchange fee cap. According to the Federal Reserve, the agency published the data to give the public additional information as they consider the proposal. The additional data are available here. The IPA will review the new information released today and will amend our draft comment accordingly. 
In the interim, please contact Brian Tate ([email protected]) if you have any questions. 
 
CFPB Releases Proposed Rule on Overdraft 
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 loans 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. 
 
The proposed rule would provide for an exception that would permit covered institutions to be able to offer overdraft as a courtesy service where fees do not exceed the institution’s costs, or as a line of credit. The proposal would provide two options for covered financial institutions to operate within this exception—calculating their own costs using a “breakeven standard” or relying on a “benchmark fee” set by the CFPB. Financial institutions may determine the amount of the fee they need to charge to break even using the breakeven standard. Alternatively, financial institutions may charge a benchmark fee, which could be set as low as $3. The CFPB has proposed several options for the benchmark fee, including $3, $6, $7, or $14. 
 
CFPB Proposes Regulation for NFS Fees
On January 24th the CFPB released a proposal on Non-Sufficient Fund Fees (NSF). In brief, today’s 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 is currently analyzing the proposal and plans to discuss the proposal in more detail during our next GRWG weekly call on Monday, January 29th. Please contact Brian Tate ([email protected]) if you have any questions. 
 
IPA Meets with CFPB Regarding EWA  
In November 2023, in an extraordinarily rare move, the CFPB submitted a comment to the California Department of Financial Protection and Innovation in response to the agency’s modified Earned Wage Access registration proposal. In brief, the CFPB’s letter attempts to compare EWA to payday loans, and also alludes to the fact that the Truth in Lending Act (TILA) may apply to some EWA products. In addition, the letter said the CFPB may seek to issue additional guidance to clarify their 2020 EWA Advisory Opinion (AO). 
 
In response to the CFPB’s letter, the IPA requested and received the opportunity to meet with the CFPB staff to discuss issues related to the AO. The IPA met with the CFPB on January 11th and shared our continuing concern regarding the CFPB’s public comments which appear to be inconsistent with the language of the AO. Additionally, the IPA stressed that the AO itself outlines how TILA does not apply to EWA products and how employees have a right to their earned, but not yet received wages, which should not be converted into credit simply because they were accessed before the payday set by their employer. 
 
CA DFPI - Notice of Second Modification to Proposed Regulations (EWA)
The California Department of Financial Protection and Innovation has released a Second Modificationto their proposed rule to require earned wage access providers to register with the state. The initial proposal was released in March 2023, and their second proposal was released in November 2023. As with the first two proposals, today’s amended proposal addresses a wide variety of issues, including EWA. In brief, DFPI’s release amends and seeks to clarify some of the language that was in the previous two versions. The deadline to submit comments in response to the Second Modification is February 6, 2024.  
 
Unfortunately, it does not appear that the DFPI has amended their proposed regulation to reflect IPA’s concerns with the proposal’s classification of EWA products as loans. The IPA will continue to review the DFPI’s proposal to learn if the modifications made to some of the definitions differ in substance from the March 2023 or November 2023 proposals. Due to the extremely tight timeline the IPA requests that the working group review this new version of the proposed rule and send any feedback to Brian Tate ([email protected]) or Eli Rosenberg ([email protected]) as soon as possible. 
 
Montana Opinion on EWA
Just before Christmas, the Montana Attorney General,  Austin Knudsen issued an Opinion on EWA in response to a question posed by Matt Reiger, the Montana Speaker of the House. The questions present to the AG is as follows:  

• Question Presented: Whether an Earned Wage Access ("EWA") product meets the definition of: (1) "consumer loan" in MCA § 32-5-102(2)(a) requiring licensure by the Montana Division of Banking and Financial Institutions under MCA § 32-5-103; or (2) "deferred deposit loan" under MCA § 31-1-703 requiring licensure under MCA § 31-1-795.

 
In brief, the AG’s Opinion is as follows:  
 

• Short Answer: No. So long as the EWA product is fully non-recourse; does not condition an income-based advance on any interest, fees, or other consideration or expenses; and limits income-based advances to income already earned by the consumer.

 
The Montana AG’s opinion is consistent with the views other states have expressed regarding EWA, including Neveda, Missouri, and Arizona. 
 
EWA in Maryland 
Maryland House Bill 246 has been recently introduced in the Maryland General Assembly. In short, HB 246 is generally consistent with the EWA Guidance released by the Maryland Office of Financial Regulation last fall and is now in effect. In enacted, HB 246 would also require Direct to Consumer providers to be licensed as lenders, employer-based providers to register with the state. Additionally, HB 246 seeks to limit fees, tips, and other similar costs associated with some EWA models. Please note that HB 246 has the support of the MD Department of Labor. 
 
The MD House Economic Matters Committee held a hearing on Tuesday, January 23, 2024 at 1 pm ESTto review a number of bills, including HB 246. The Committee also released their Fiscal and Policy Note on HB 246 which you can find here. The IPA members and the association testified at the hearing. During the hearing the Committee recognized the need for EWA for Marylanders and appeared to be receptive to continued engagement with all stakeholders, including industry representatives, moving forward. 
 
Washington State Introduces EWA Bills

• HB 2083: Washington State House Bill 2083 was introduced at the start of 2024 legislative session and immediately the Washington State House Committee on Consumer Protection & Business has scheduled a hearing and received public comment. The IPA submitted written testimony to the Committee opposing the bill. If enacted into law, HB 2083 would severely restrict the availability of EWA in the state of Washington. Executive Session hearing was held on January 19th but the Committee did not take any action to move the bill out of Committee. 

 

• SB 6025: On January 16th the Washington State Senate Business, Financial Services, Gaming & Trade Committee held a hearing on to consider a number of bills, including SB 6025. SB 6025 is a companion bill to HB 1874, which was included in the same hearing as HB 2083 in the Washington State House. In brief, a number of IPA members who testified earlier this week in the House expressed concerns that if HB 1874 is enacted, there is the possibility that some regulators may interpret the bills language as extending to EWA products. The IPA testified at the Senate hearing expressing our concern with the potential broad interpretation of the bill’s language. An Executive Session hearing to discuss SB 6025 has been set for January 23rd. 

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: IPA’s GRWG Monthly Update
• IPA Pod: SMI’s Long Range Approach to Innovation 
• IPA Book Club: The Context for Success in Outliers 

 
Upcoming GRWG Calls
 

• Next IPA Weekly GRWG Call – January 29, 2024
• Next IPA Monthly GRWG Call – February 8, 2024

2024 IPA’s Innovative Payments Conference – Unlocking the Future of Payments
Mark your calendar and get ready for an unforgettable experience at the upcoming Innovative Payments Conference. We are thrilled to invite you to this must-attend annual event for the payments community, taking place on May 5-7, 2024, in Washington, DC. Get ready to immerse yourself in three days of groundbreaking insights, cutting-edge technology, and networking opportunities that will change the way you think about payments. To learn more about the conference please visit: www.ipa.org. 

Introducing Our Keynote Speaker: Amy Walter
Prepare to be inspired, informed, and engaged by one of the most influential voices in American politics - Amy Walter. As a popular TV panelist who has graced the screens of Meet the Press, Face the Nation, and PBS NewsHour, Amy has a unique knack for explaining the intricacies of politics and the 'why' behind political decisions. Her expertise in the electoral process, congressional culture, and the D.C. political scene is unmatched. Named one of Washingtonian magazine's "Most Powerful Women" and "Top 50 Journalists," Amy Walter is truly a leader in political analysis and forecasting.

Federal Reserve Board Proposes Changes to Regulation II
On October 25th, the Federal Reserve Board proposed revisions to the Board’s debit interchange fee cap. The proposed rule would lower the cap on debit interchange fees from the total of:  21 cents, 5 basis points multiplied by the value of the debit transaction, and a 1 cent fraud prevention adjustment, to a sum of 14.4 cents, 4 basis points multiplied by the value of the debit transaction, and a 1.3 cent fraud prevention adjustment.  As part of the proposed rule, the Fed is also looking to adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Board from large debit card issuers. 
 
The IPA is currently working with members of the GRWG to develop a response to the Federal Reserve.  The IPA is concerned because although the primary focus of the proposed rule is on banks over $10 billion, the proposed change to the current interchange formula may result in institutions below the $10 billion threshold being negatively impacted once the final rule is implemented. The deadline to submit comments to the Federal Reserve is February 12th.  If you have any questions regarding the Fed’s Regulation II or the IPA’s draft comment, please contact Brian Tate at [email protected]. 
 
Open Banking
In late October the CFPB publicly issued a long-awaited proposed rulemaking on open banking entitled, Required Rulemaking on Personal Financial Data Rights, which was designed to implement section 1033 of the Consumer Financial Protection Act.  In brief, the proposed rule would require depository and non-depository entities, amongst other things, to make available certain data relating to consumers’ transactions and accounts; establish obligations for third parties accessing a consumer’s data; and provide basic standards for data access.  The current deadline for public comment is December 29, 2023.
 
Please note that in the proposed rule from the CFPB the agency makes it clear they are seeking public feedback on their proposal by posing a number of questions regarding the implementation of the rule.  The IPA is currently working with our members in an attempt to identify, highlight, and address key questions in the proposal.  If you have any questions regarding the CFPB’s proposal on open banking before the comment deadline, please contact Brian Tate ([email protected]). 
 
CA DFPI - Notice of Modification to Proposed Regulations (EWA)
On November 6th, the California Department of Financial Protection and Innovation released a proposal which seeks to amend the agency’s March 2023 proposal to require earned wage access providers to register with the state.  Please note, similar to DFPI’s initial proposal, the agency’s release covers a number of issue areas beyond EWA, including Debt Settlement Services, Student Debt Relief Services, and Education Financing.  In brief, DFPI’s proposal appears to amend or modify some of the definitions from the proposal released in March 2023.  
 
The IPA remains concerned that despite the DFPI’s willingness to make changes to their March 2023 proposal, the agency is still classifying all EWA products as loans.  In brief, the IPA’s response submitted on November 27th expresses our concern with the continued classification of all EWA products as loans and urges the DFPI to reconsider this classification before issuing a final rule.  The deadline to submit comments to DFPI was November 27, 2023.  
 
CFPB Submits Comment to DFPI 
In a rare move, the CFPB submitted a comment to the CA DFPI in response to the agency’s modified EWA registration proposal.  In brief, the letter includes the following points: 

• “In both scenarios, and especially when advances are provided and repayment is collected without the involvement of the consumer’s employer, these products share fundamental similarities with payday lending products.”
• “Rigorous supervision of all income-based advance products helps to ensure that the label of a product does not determine how providers are held accountable, or the extent to which consumers are protected, under the law.”
• “By treating these products as loans and including a variety of charges that accompany the advance, DFPI’s proposal takes a similar approach as the Truth in Lending Act and its implementing Regulation Z, which generally applies to extensions of consumer credit and provides that a finance charge ’includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit,’ with certain limited exceptions.”
• “As the CFPB has stated previously, the CFPB plans to issue further guidance to provide greater clarity concerning the application of the Truth in Lending Act in this market. The CFPB’s previous advisory opinion on this topic should not be misrepresented: Products that do not fit within its very narrow scope are not excluded from existing laws. To the contrary, the CFPB supports efforts to subject such products to rigorous oversight for the full scope of existing state and federal consumer protection and lending laws.”

 
It’s important to note that the CFPB did not issue an announcement after their letter was filed with DFPI.  The agency simply posted the letter on their website at:
https://www.consumerfinance.gov/about-us/blog/state-regulatory-developments-on-income-based-advances/.  At the time of this writing the IPA has requested a meeting with CFPB General Counsel Seth Frotman to discuss the CFPB’s comment and EWA issues in more detail. 
 
OMB Fall 2023 Unified Regulatory Agenda
 The U.S. Office of Management and Budget (OMB) has released its Fall 2023 Unified Agendaof Regulatory Actions.  In brief, the Unified Agenda is a list of regulatory actions federal agencies are planning to take in the next 3-6 months.  Please note the Unified Agenda includes actions the Consumer Financial Protection Bureau, the FDIC, and other federal agencies plan to take in the in the short-term.  Amongst the expected actions listed the CFPBis planning includes: 

•  Overdraft Fees
• Fees for Insufficient Funds
• *Sec. 1033 (Issued as a Proposed Rule in October) 

 
Please keep in mind that the CFPB, as well as other agencies, is not limited to just the regulatory activity listed in the Unified Agenda. The Unified Agenda should be viewed as an outline of expected regulatory actions the agency may take in the near-term.  The CFPB, as well as other agencies, may deviate from the items and timelines listed. 
 
FSOC Annual Report 
Late last week the Financial Stability Oversight Council (FSOC) released its annual report, which outlines the risks it sees to the financial system. In November 2023, the Financial Stability Oversight Council (FSOC) amended its framework for designating nonbank financial firms as systemically significant.  It is important to note that firms designated by the FSOC as systemically significant would be regulated by the Federal Reserve and likely face heightened capital/liquidity requirements.  While the FSOC’s report covers a wide range of issues that may cause instability in the financial services marketplace, it is notable that the report includes discreet sections on artificial intelligence (AI) and third-party relationships.  Accordingly, the report lists concerns FSOC has regarding AI, including, general safety and soundness, compliance, and data controls.  With respect to third-party bank relationships, FSOC focused on compliance and liquidity related issues.  While FSOC did not recommend taking action on either issue, it is important to keep in mind that FSOC will likely continue to monitor activity in the AI and fintech space in the future to learn if these areas pose a threat to financial stability in the US. 

CongressSenator Warren Leads Dem Letter to PayPal and Block
Democratic U.S. Senator(s) Elizabeth Warren (D-MA, Sherrod Brown (D-OH), Jack Reed (D-RI) signed a letter addressed to PayPal and Block in mid-December putting them on notice that they remain unsatisfied with the companies’ responses to inquiries regarding how the companies reimburse customers involved in scams on their Venmo and Cash App payments apps. In brief, the Senators collectively urged PayPal and Block to follow Zelle’s lead in reimbursing victims of scams perpetrated using their tools. A copy of the full letter can be found here.
 
Senator Brown Introduces the Close the Shadow Banking Loophole Act
Before the Christmas break, U.S. Senator Sherrod Brown, Chair of the Senate Banking Committee, introduced the Close the Shadow Banking Loophole Act.  In short, the new legislation, if enacted, would require nonbank companies that own an industrial loan company (ILC) to be subject to the same rules as traditional banks. Chairman Brown has been consistent in his concerns regarding regulators permitting large tech companies to own ILCs.  While the bill is unlikely to become law in the current political environment, it does place certain fintech companies who have ILCs, or are considering utilizing ILCs, on notice that the Committee will continue to highlight this issue in 2024. 
 
Senate Warren Letter to OCC on Preemption 
On December 18th U.S. Senator Elizabeth Warren led a group of Democratic US Senators in a letter to Michael J. Hsu, the Acting Comptroller of the Currency (OCC), regarding the agency’s preemption authority.  According to the letter, the Democratic Senators who signed the letter are concerned that the OCC is exceeding its authority, which they argue is limited by Section 1044 of the Dodd-Frank Act.  Section 1044 sets forth three conditions under which federal law preempts state consumer protection law: (1) the state law favors state banks over national banks, (2) the state law “prevents or significantly interferes with” a national bank’s exercise of its powers pursuant to the Supreme Court’s decision in Barnett Bank v. Nelson, or (3) a federal law other than the National Bank Act preempts the state law. Further, the Senators detail that Dodd-Frank requires the OCC to consult with the Consumer Financial Protection Bureau before determining that another state law is substantively equivalent to a state law that the OCC is preempting. To read the letter in detail please click here.
 
Dem Senators Prod CFPB on BNPL
Three Democratic U.S. Senators, Sherrod Brown, Raphael Warnock, and John Fetterman signed a letter addressed to the CFPB expressing their concerns regarding Buy Now Pay Later products.  The letter is a follow-up communication to CFPB Director, Rohit Chopra, who testified last month that the agency has concerns with BNPL.  In their letter, the senators state that they are concerned that BNPL may lead some consumers who are vulnerable to unexpected debt during the holiday season.  The letter closes by requesting that Director Chopra utilize the CFPB’s full regulatory and supervisory authority to protect Americans against any potential harms.

IPA Podcasts
​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 or subscribe using the app of your choice.

• Tis the Season for Gift Cards
• IPA’s Government Update – Nov. 2023
• Handling Corporate Giving at the Holidays and Beyond
  
• What Baseball Can Teach Us About Innovation

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

HFSC Schedules Fintech Hearing
The House Financial Services Committee, Subcommittee on Digital Assets, Financial Technology and Inclusion has scheduled a hearing on October 25th at 10:00am, entitled “Modernizing Financial Services Through Innovation and Competition. It is our expectation that Rep. Steil’s EWA regulatory bill will be introduced ahead of, or concurrently with, the hearing.  
 
A livestream for the hearing can be found here, and additional information such as committee memo, relevant legislation, and a witness list will be updated as the hearing date approaches.
 
CFPB Proposes Section 1033 Rulemaking
The CFPB announced rulemaking to implement section 1033 of the Consumer Financial Protection Act. The proposed rule would require depository and nondepository entities to make available certain data relating to consumers’ transactions and accounts; establish obligations for third parties accessing a consumer’s data; provide basic standards for data access; and promote fair, open, and inclusive industry standards. 
 
The IPA is requesting member feedback as it prepares to submit comments in response to the proposal. Comments are due to the CFPB before December 29th. Please send any feedback to Brian ([email protected]). More information can be found in the proposed rule.
 
Federal Reserve Board to Discuss Interchange at Board Meeting
The Federal Reserve Board announced that at its October 25th Board Meeting it will discuss proposed revisions to the Board’s debit interchange fee cap. We do not yet have an indication of what revisions they will be proposing. The meeting will be open to the public, both in-person and via livestream. More information on the attending the meeting can be found here and we will keep members informed as we learn more. 
 
House, Senate Pass 45-day Government Funding Measure
Only hours before federal government funding expired, the House and Senate voted to approve a Continuing Resolution to fund the government for the next 45 days, averting a shutdown that had seemed inevitable. The agreement included natural disaster funding, a priority for the white house and democratic party, but did not include funding for stricter boarder security, which was a priority for the freedom caucus of the republican party. The bill also did not include additional funding for Ukraine. 
 
Government funding negotiations immediately resumed, as Congress now has until November 17th to reach an agreement on which provisions to include in a long-term spending bill. 
 
Invitation to Join NV EWA Regulation Workshop
The Nevada Financial Institution Division will be holding a workshop on Friday, November 3rd at 10:00am PST/1:00pm EST to solicit comments from interested parties on proposed regulations to implement SB 290, the EWA bill which was signed by the Governor in June. The agenda will include an open workshop, public comment, and a presentation of proposed regulations. More information, including a draft regulation, small business impact statement, and other information, can be found workshop notice here.  
 
CFPB Issues Supervisory Highlights on Fees in Banking
The CFPB released a Supervisory Highlights focused on the Bureau’s efforts to combat “junk fees.” Specifically, the report noted excessive fees for fake paper statements, add-on products for paid-off auto loans, and international remittances. At the same time, the CFPB released a data spotlight highlighting increased supervision of banks that charge non-sufficient fund fees. As a result of the CFPB’s work in these areas, they noted refunds of $140 million to consumers, $120 million of which is for surprise overdraft fees and double-dipping on non-sufficient fund fees. More information can be found in the press release here.
 
CFPB Issues "Junk Fee" Guidance
The CFPB issued an advisory opinion detailing how the CFPB will administer the legal requirements of Section 1034(c) of the Consumer Financial Protection Act. Section 1034(c), enacted as a result of the 2008 financial crisis, requires large banks and credit unions with more than $10 billion in assets to provide account information that is in their control or possession when it is requested by customers. Today’s advisory opinion clarifies that banks and credit unions must provide that information without unreasonable obstacles such as charging excessive fees. The CFPB does not intends to seek monetary relief for potential violations that occur before February 1, 2024. More information can be found in the press release here.
 
California Gift Card Ban Vetoed
California Governor Newson issued a veto of CA SB 728, which would have banned plastic gift cards in the state. The bill has been returned to the legislature where, in theory, the veto may be overridden by a 2/3rd majority vote in both chambers. In practice, however, vetoes from the California governor have almost never been overturned in recent decades. 
 
As is standard practice, Governor Newsom issued a veto message, available here. He notes that:
 
While I support the author's goal to reduce our reliance on single-use plastic materials, I am concerned that an outright ban without any incentives for compliance will disproportionately impact the state's small business community, as digital gift cards may not be a feasible option for many businesses or consumers. 
 
California has successfully implemented many programs to reduce our reliance on single-use plastic while incentivizing businesses to transition towards more sustainable products and materials. I encourage the Legislature to consider alternatives to a statutory, single-product ban to help meet the state's plastic waste reduction goals.
 
The IPA was active in lobbying against the bill in the Assembly and Senate, and we appreciate the assistance we received from members as we prepared comment letters to the committees and legislative leaders who considered the bill.
 
CFPB Issues Guidance on Credit Denials by Lenders Using Artificial Intelligence
The CFPB issued guidance about legal requirements that lenders must adhere to when using artificial intelligence. Specifically, the guidance states that lenders must use specific and accurate reasons when taking adverse actions against consumers, and may not simply point to a “broad bucket” of reasons. This guidance is the most recent of the CFPB’s guidance on the use of artificial intelligence in financial services. More information can be found in the press release here.
 
FDIC Chairman Gruenberg Delivers Remarks on the Financial Stability Risks of Nonbank Financial Institutions
FDIC Chairman Martin Gruenberg delivered remarks in Washington, D.C. on the financial stability of non-bank financial institutions. He noted that non-bank institutions are a critical part of the U.S. financial system, but expressed concern at the regulatory landscape in which they operate. According to Chair Gruenberg, non-banks are not subject to the same degree of regulation and supervision as banks, and as a result, have less transparency and rely on excessive leverage and volatile funding sources. Decreased regulatory oversight combined with market stress can result in risk being transmitted to other parts of the financial system, including the banking organizations which provide funding to support nonbank activity. Chair Gruenberg’s full remarks can be found here. 
 
IPA Drafts Responses to Connecticut and Maryland EWA Guidance
In response to Maryland and Connecticut’s recently released guidance on EWA, the IPA has drafted comment letters as a first step at engaging with the Maryland Office of Financial Regulation and Connecticut Department of Banking. The letters were successful in beginning a dialogue and we have a call scheduled with the Maryland OFR on Thursday morning. We appreciate everyone’s feedback as we drafted our letters. 
 
Since the initial publication of the guidance, the Connecticut Department of Banking published a No-Action Position stating the Department of Banking will not take enforcement action alleging violations of the EWA guidance before January 1, 2024.
 
The IPA also held a meeting with the Connecticut Department of Banking to discuss the guidance. While it was helpful to establish this line of communication, they were clear that they would prefer to meet with EWA providers to discuss the applicability of the guidance to their specific products. Please reach out to the IPA if you would like their contact information. 

New Federal Bills
H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act
This bill, sponsored by Rep. Jason Smith (R-MO-08), would provide financial incentives for states to recover fraudulently paid Federal and State unemployment compensation. The bill was marked up and reported favorably from the House Ways and Means Committee on 2/28/23 by a vote of 20-17. The bill was placed on the floor calendar for consideration on 4/6/23 and passed the House on 5/11/23 by a vote of 230-200.
 
H.R. 1165, Data Privacy Act of 2023
This bill, sponsored by Rep. Patrick McHenry (R-NC-10) would create a federal data privacy standard, and would preempt preexisting state frameworks. This bill was marked up and reported favorably by the House Financial Services Committee on 2/28/23 by a vote of 26-21.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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].

​The IPA Holds Compliance Boot Camp and FBI Chicago Field Office Meeting
IPA members recently gathered in Chicago for two days of timely and impactful events, hosted by Discover Financial Services. During the Compliance Bootcamp, attendees heard from compliance experts and received updates on Reg E, EWA, artificial intelligence, BNPL, crypto and stablecoins, and third-party risk oversight. The following day was filled with briefings from our partners at the FBI Chicago Field Office on such topics as cyber threats, human trafficking, money laundering, and financial crimes. Attendees also had the opportunity to network with industry peers. We appreciate Discover Financial Services for hosting us for another successful event!
 
IPA Mentions in the Media
In addition to our work advocating on behalf of members before state and federal policymakers, the Innovative Payments Association has been active supporting the payments community in the media. Below is a list of media mentions of the IPA, editorials, and IPA podcasts published this year. Feel free to share these internally or on social media. 

IPA in the News 

• ​Five Innovations in Earned Wage Access (Sept 2023) 
• How Businesses Can Stay on Top of Emerging Customer Trends(July 2023) 
• Conflicting Appeals Court Decisions Add Nuance to a CFPB Supreme Court Case (March 2023) 
• A Mixed Payoff for the Megamergers​ (Feb 2023) 

• The CFPB Proposes a Dramatic Cut in Fees for Credit Card Late Payments (Feb 2023) 
• Confronting the CFPB Question(Feb 2023) 
• Negative balance with your California Middle Class Tax Refund debit card? Here’s what that means​​ (Jan 2023) 

 
Editorials 

• BankThink There is no need for the FDIC to tinker with its brokered deposits rule (Sept 2023) 

• Payments 3.0: Five Questions to Ask About AI (Sept 2023) 
• Payments 3.0: How Funds Are Really Protected​ (July 2023) 
• Payments 3.0: Get the Fundamentals Right (June 2023) 
• Give EWA a chance (May 2023) 
• Payments 3.0: Start Thinking About Consumer Protection (May 2023) 

• Payments 3.0: Prepaid Cards, State Aid, And the CFPB (April 2023) 
• Payments 3.0: How to Regulate Earned Wage Access (March 2023) 
• Payments 3.0: An Unfazed CFPB’s Big Agenda for ‘23 (Feb 2023) 
• Payments 3.0: With P2P Fraud, Focus on Before, Not After (Jan 2023) 

 
Podcasts 
All podcasts can be accessed at ipa.org/podcast 
 

• IPA’s Government Update For September 2023 (Sept 2023) 
• The Art of War on Wall Street (Aug 2023) 
• New Payments Rules Are Coming to Canada (Aug 2023) 

• Mastering Customer Service with Ubiquity (Aug 2023) 
• PayPal Versus CFPB Round 3 (July 2023) 
• Payments AI 101 (July 2023) 
• New Technology gives us “Tools and Weapons” (June 2023) 
• Fifth Third’s Innovation Layer Cake (June 2023) 

• IPA June Government Update (June 2023) 
• Lessons Learned on Innovation (June 2023) 
• Why Banks Need to Monitor Change: Galileo explains how to be successful in Banking as a Service (May 2023) 
• Machiavellian Payments (May 2023) 
• Choose Your Own Fintech Adventure (April 2023) 

• IPA’s April 2023 Government Update (April 2023) 
• Innovative Readings: The Age of Cryptocurrency (April 2023) 
• Atomic Unlocks Consumer Financial Data (April 2023) 
• CFPB Remains the Center of Payments Regulation (March 2023) 
• Effective Compliance for Innovators (March 2023) 

• Lessons from The Big Short (Feb 2023) 
• IPA’s February Government Update (Feb 2023) 
• Galileo Launches BNPL for Banks (Feb 2023) 
• Putting the B in Banking as a Service (Feb 2023) 
• Crypto and the Future of Payments (Jan 2023) 

California Passes Plastic Gift Card Ban
The California Assembly passed SB728 by a vote of 53-18-9, followed by a vote in the California Senate of 30-9-1. The bill now heads to the governor’s desk for his signature. The bill will ban the sale or distribution of plastic gift cards in the state beginning on January 1, 2027, but will allow retailers to continue to sell or distribute existing stock of plastic cards until January 1, 2028. A new provision added to the bill will exempt plastic cards used to pay public transit fares. 
 
The IPA was active in the California Assembly and Senate and advocated for the extension of the implementation date and the inclusion of the “sell-through” period.
 
Connecticut Issues EWA Guidance
The Connecticut Department of Banking issued guidance on Earned Wage Access which makes the determination that EWA transactions are credit or “small loans” which may require state licensure if the APR is over 12 percent. In addition, they take an expansive view of the definition of “APR” to include fees or tips. The most relevant part of the guidance reads:
 
"Accordingly, transactions where monies are advanced to consumers for future wages or salary that have been earned but not yet paid, are within the statutory definition of “small loan” when the amount is $50,000 or less and the APR exceeds 12% when taking into account any amounts paid deemed to be finance charges pursuant to P.A. 23-126. The Department understands that there are a variety of business models related to “earned wage access” products and invites providers to contact the Department with any fact specific questions."
 
We are still reviewing the guidance, but our initial reading seems to indicate the Department is targeting tips. The full guidance can be found here.
 
CFPB Ombudsman's Office Releases Mid-Year Update
The CFPB’s Ombudsman’s Office released their 2023 Mid-Year Update. In this update, they highlight their efforts to standardize and streamline the consumer complaint process timeline and share an update on their post-examination survey of supervised entities. The update also describes opportunities to meet with the Ombudsman’s Office in person or virtually.
 
American Banker Article on EWA
American Banker published an article entitled “Five innovations in earned wage access.” The article features statements from IPA President Brian Tate, and highlights recent product developments from IPA members DailyPay, ZayZoon, and Instant, in addition to other innovations in the EWA industry.
 
CFPB Issues Report Highlights Role of Big Tech Firms in Mobile Payments
The CFPB published an issue spotlight highlighting the increasing role of Big Tech companies’ policies governing tap-to-pay on mobile devices. The spotlight notes the rapid growth of tap-to-pay usage, and found that Apple forbids banks and payment apps from accessing the tap-to-pay functionality on their mobile devices, while Google does not. According to the issue spotlight, regulations imposed by mobile operating systems can have an impact on innovation, consumer choice, and the growth of open and decentralized banking in the U.S.
 
IPA Op-Ed on Brokered Deposits
The American Banker published an op-ed by IPA President Brian Tate entitled “There is no need for the FDIC to tinker with its brokered deposits rule.” In the op-ed, Brian reviews the history of the FDIC’s brokered deposits rule and recent statements from the FDIC indicating brokered deposits may have played a role in recent bank collapses. Brian encourages the FDIC, and all bank regulators, to base regulatory solutions on facts and data, rather than the fear of new technology such as fintech debit deposits.  Lastly, if the FDIC were to make changes to their brokered deposits rules it could potentially harm the consumers they are trying to protect by increasing costs, stifle innovation, and limit consumer access. As a reminder, the IPA was very active during discussions and negotiations on the FDIC’s Brokered Deposits rule.
 
FMI/NACS Letter to Federal Reserve on Interchange
We were recently made aware of a December 2022 letter by the Food Industry Association and National Association of Convenience Stores to the Federal Reserve Board petitioning the Fed to open a rulemaking under Section 920 of the Electronic Funds Transfer Act to review the debit interchange rate. Although the letter is from last year, we were only made aware of it, and it was posted online, after the Bank Policy Institute filed a FOIA request. 
 
Additional meetings and letters that the Federal Reserve Board have received on interchange can be found here.

New Federal Bills
H.R. 1163, The Protecting Taxpayers and Victims of Unemployment Fraud Act
This bill, sponsored by Rep. Jason Smith (R-MO-08), would provide financial incentives for states to recover fraudulently paid Federal and State unemployment compensation. The bill was marked up and reported favorably from the House Ways and Means Committee on 2/28/23 by a vote of 20-17. The bill was placed on the floor calendar for consideration on 4/6/23 and passed the House on 5/11/23 by a vote of 230-200.
 
H.R. 1165, Data Privacy Act of 2023
This bill, sponsored by Rep. Patrick McHenry (R-NC-10) would create a federal data privacy standard, and would preempt preexisting state frameworks. This bill was marked up and reported favorably by the House Financial Services Committee on 2/28/23 by a vote of 26-21.