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FIN Supports FedNow, Urges Federal Reserve to Act Quickly

November 7th, 2019 – Financial Innovation Now today joined many other industry stakeholders in support of the Federal Reserve’s work to build FedNow, a real-time bank settlement system, and called on the Federal Reserve to act swiftly.

In a letter to the Federal Reserve Board of Governors, FIN stated:

“We strongly support the Board’s decision to develop FedNow. FIN believes FedNow is critical because: 1) consumers and small businesses, particularly the underserved, need accessible and affordable options, and they have twenty-first century expectations for their money; 2) innovation in the United States will flourish through two or more settlement networks, helping to mitigate the harm of proprietary standards and rules; 3) America’s payment infrastructure is long overdue for an upgrade, while other countries are outpacing the United States in adopting real-time payments; and 4) ubiquity can only be achieved by the Federal Reserve, which is uniquely positioned to connect all financial institutions in the United States…. FIN urges the Board to move expeditiously to make the core FedNow settlement infrastructure available as soon as possible, and set a date certain to ensure all stakeholders can plan appropriately.”

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FIN Applauds Rep. McHenry’s Financial Services Innovation Act of 2019

October 21, 2019 – Today U.S. Rep. Patrick McHenry introduced the Financial Services Innovation Act of 2019, which seeks to improve regulatory coordination among federal financial services regulators and promote new entrants.

The following statement can be attributed to Brian Peters, Executive Director of Financial Innovation Now:

“Financial Innovation Now applauds Congressman McHenry’s introduction of the Financial Services Innovation Act of 2019, aimed at promoting innovation and competition in financial services.  Enhancing federal regulatory coordination is helpful as technology and innovation continue to re-shape the evolving financial services landscape.  Technology companies are bringing competitive financial products to market, and greater coordination among federal agencies is positive.  FIN looks forward to working with Congressman McHenry and his colleagues on this effort.”

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‘FedNow’ Payment Decision is Generational Milestone

August 5, 2019 – Federal Reserve Board Governor Lael Brainard in a speech today announced the Board’s decision to invest in development of “FedNow,” a real-time interbank gross settlement system that will facilitate faster payments across the United States. FIN strongly supports this decision.

The following statement is attributable to Brian Peters, Executive Director, Financial Innovation Now:

“Today the Federal Reserve Board is taking a bold step into the future. Real-time payments can improve the economy, grow small businesses, and help American consumers keep up with everyday needs. FIN has long argued to policymakers that sending money should be as fast and easy as sending a text message. That future will not come for all Americans unless the Fed acts to ensure wide adoption of a real-time payments infrastructure that serves the economy and public interest. America’s payment infrastructure is long overdue for an upgrade, and today we heartily commend the Board’s resolve and leadership, which will result in a foundation for America’s future innovation. FIN looks forward to working with the Federal Reserve on a timely process that benefits all payment system users and stakeholders. This decision is a giant step forward, and history will look back at today’s announcement as the generation’s true payment milestone.”

FIN has long advocated for a more modern payment infrastructure. Last year FIN member companies called on the Fed to speed payments for all Americans. FIN also filed comments arguing that only the Fed is capable of ensuring broad access to real-time payments. The U.S. Treasury has also urged the Fed to take action.

FIN was a member of the Fed’s Faster Payments Task Force, which produced a number of important recommendations. FIN also served on the Fed’s Governance Framework Formation Team, which collectively formed the Faster Payments Council, a broad industry organization that is well positioned to help ensure payment innovation, ubiquity, and interoperability in the future.

Today Governor Brainard announced the Fed will develop “FedNow” a new real-time payment settlement service. The Board also released a federal register notice to further solicit feedback on such a system, as well as an FAQ document. Governor Brainard’s speech is available here and streamed online.

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FIN to Federal Reserve: Expand ACH Payments to Improve Financial Inclusion

July 15, 2019 – FIN today urged the Federal Reserve to expand the operating hours of the ACH Same Day, which enables many new payment applications to interconnect with bank accounts. FIN’s comment letter states:

“Longer operating hours for Same Day ACH will better support the payment needs of both consumers and businesses…The ACH system is uniquely ubiquitous, connecting to all bank accounts across the country today, a critical alternative to credit and debit card networks…. The Fed must continue to support and enhance the ACH system and keep up with the needs of consumers and businesses.”

The full comment letter can be found at: http://financialinnovationnow.org/wp-content/uploads/2019/07/fin-federal-reserve-same-day-ach-final-comment-6.15.19.pdf

Congress Unanimously Passes Legislation to Speed Credit Access via Digital Tax Data; FIN Priority Across the Finish Line

June 13, 2019 – The U.S. Congress today unanimously passed legislation to automate income verification through a modern digital interface at the Internal Revenue Service. FIN has advocated for this legislation since July 2016.

The following statement is attributed to Brian Peters, Executive Director of Financial Innovation Now:

FIN thanks Congressmen McHenry and Senator Cory Booker for their leadership and commends the whole Congress on this important legislative accomplishment. Digital verification of taxpayer data can help enable convenient and safe access to credit, and we look forward to working with the IRS on its implementation.” 

Today the Senate passed H.R. 3151, the Taxpayer First Act, which contains language originally authored by Reps. McHenry (R-NC) and Blumenthal (D-OR) and Sens. Cory Booker (D-NJ) and Mike Crapo (R-ID), the IRS Data Verification Modernization Act of 2017. As part of the loan and mortgage processes for consumers and small businesses, applicants often must complete an IRS form called a “4506-T,” which gives the lender the right to access a summarized version of their tax transcript. This manual process at the IRS takes days, whereas technology companies and financial institutions are using APIs and other ways to leverage data for nearly instantaneous verification and underwriting. The legislation would automate income verification through a modern digital interface at the IRS.

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FIN Urges States to Work With Congress to Unify Digital Money Consumer Protections

April 12, 2019 – Today FIN applauded state financial regulators for their efforts to streamline digital wallet regulations and urged them to work with Congress towards a federal solution that ensures uniformity.

The following statement is attributable to Brian Peters, Executive Director, Financial Innovation Now:

“FIN strongly commends the Conference of State Bank Supervisors and state regulators for their efforts to modernize and harmonize the regulation of money transmission. FIN believes that a federal mechanism is necessary to ensure consistency among the states, particularly for firms operating at national scale. FIN respectfully urges CSBS and the task force to continue developing a model payments law and simultaneously begin working with the U.S. Congress on legislation that would help ensure uniform adoption and implementation throughout the states. Given the history of inconsistencies in state regulation, now is the time to ensure all U.S. consumers have adequate protections and access to new services under a modern regulatory regime appropriate for the 21st century.”

The Conference of State Bank Supervisors, through its Vision 2020 initiative, recently began work on a model payments law and requested feedback on how states should proceed. FIN responded in support of the endeavor and offered an analysis of the inherent barriers to consistency in state money transmission laws, which invites a role for the U.S. Congress. FIN’s comment letter is available at the following link: http://financialinnovationnow.org/wp-content/uploads/2019/04/fin-csbs-comment-letter-final.pdf

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FIN to California: Focus on Narrow Scope of Payment Regulation

April 9, 2019 – Today FIN told the California financial regulator to maintain a narrow focus when regulating payment services. In a regulatory filing, FIN argued that California should affirm that many transactions are exempt from money transmission regulation, stating:

“Regardless of the specifics of the underlying transaction—whether for payment of an insurance premium, a utility bill, a rideshare ride, a short-or-long term property lease, a loan payment, or a television sold by a retailer through an e-commerce platform—the nature of the agent of a payee transaction is the same.  Receipt of funds by the agent extinguishes the payor’s obligation to the payee, no payor funds are at risk, and the transaction is not money transmission.  This holds true whether the agent is a marketplace or a payment processor, or even a payment processor providing services on behalf of a marketplace….

“Attempting to parse out particular transactions would result in an inconsistent and unpredictable regulatory regime.  This would create confusion for consumers and businesses and stifle innovation in financial products and services. [Instead, California should affirm] that these transactions are exempt, consistent with other types of transactions the DBO has exempted because they do not create risks to consumers or other payors. Doing so will ensure that consumers and business are able to benefit from innovative payments services that facilitate commerce and opportunity for millions of Americans and others around the world.”

The California Department of Business Oversight recently requested feedback on the scope of the exemption from money transmission regulation for an “agent of a payee”. The full text of FIN’s response can be found at: http://financialinnovationnow.org/wp-content/uploads/2019/04/fin-comment-letter-on-ca-payee-agency-1061371-final.pdf

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FIN to Senators Crapo and Brown: Raise the Bar for Everyone on Data Privacy

March 15, 2019 – Today Financial Innovation Now weighed in with the Senate Banking Committee on data protection policy. In response to a request from Senators Mike Crapo (R-ID) and Sherrod Brown (D-OH), FIN voiced support for Congressional efforts to pass comprehensive national privacy legislation, stating that data protection legislation should be comprehensive and raise the bar for everyone.

Full text of the letter is below and available at http://financialinnovationnow.org/wp-content/uploads/2019/03/fin-crapo-brown-privacy-response-final.pdf

 

March 15th, 2019

The Honorable Mike Crapo, Chairman
The Honorable Sherrod Brown, Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Crapo and Ranking Member Brown:

Thank you for the opportunity to submit feedback on data privacy. Financial Innovation Now (“FIN”) is an alliance of leading innovators promoting policies that empower technology to make financial services more accessible, safe and affordable for everyone.[1]

FIN’s members share the Committee’s interest in maximizing data security and protecting the privacy of user information used in offering financial services and products, while at the same time minimizing the potential for fraud in the use of these services and products. As pioneering technology companies, FIN members have been at the forefront of new security capabilities and privacy features. Consumer-facing companies have created features like just-in-time notices or active notices, mobile alerts, granular privacy controls, and data portability; while enterprise and infrastructure companies have enabled similar features for thousands of non-technology companies.

Similarly, technology companies have often been the first to develop and adopt new security practices aimed at mitigating fraud in financial services, such as tokenization of payments, end-to-end encryption, and optional multi-factor or biometric authentication. These companies generally have no business other than their digital business, so maintaining user trust is uniquely critical. Additionally, FIN member companies’ financial products and services are subject to a wide range of state and federal regulatory obligations, as well as oversight from the Federal Trade Commission and the Consumer Financial Protection Bureau.

As the Committee examines various policy approaches to privacy and data security in financial services, FIN believes that data protection legislation should be comprehensive and raise the bar for everyone. Technology and financial services are rapidly becoming indistinguishable. As convergence accelerates, it makes little sense for the United States to continue with a sector-specific approach to data, financial or otherwise. Existing U.S. laws for financial privacy and data protection should be enhanced to encourage innovation in privacy and data security features to prevent fraudulent misuse and data breaches.

FIN supports Congressional efforts to enact comprehensive privacy and data breach legislation. Such legislation should pre-empt state laws; preserve data sharing necessary for enhanced security, authentication and fraud prevention; distinguish direct consumer services (“controllers”) from enterprise services (“processors”) acting on behalf of other businesses; and update relevant provisions of existing statutes to ensure consistent consumer expectations across many different services, or avoid duplicative coverage. Finally, Congress should assess whether prudential regulators are appropriate overseers of industry privacy and security, and consider unifying such oversight through comprehensive legislation.

Thank you for your interest in FIN’s views and we look forward to working with the committee on these issues going forward. Please let me know if I can be of further assistance.

Respectfully,
Brian Peters
Executive Director
Financial Innovation Now

[1] Our member companies include Amazon, Apple, Google, Intuit, Square, Stripe, and PayPal. For more information regarding FIN’s policy priorities and principles, please visit https://financialinnovationnow.org

FIN Member Companies Step Up to Help Workers During Government Shutdown

January 25, 2019 — Today in a letter to House Financial Services Committee Chairwoman Waters, Financial Innovation Now highlighted member company efforts to help workers affected by the federal government shutdown. These efforts include interest free loans, credit workout arrangements, donations to food banks, and other assistance. A copy of FIN’s letter can be found at http://financialinnovationnow.org/wp-content/uploads/2019/01/fin-waters-shutdown-response-letter.pdf

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Leading Technology Companies Call on Federal Reserve to Speed Payments for All Americans

December 14, 2018 — Financial Innovation Now today called on the Federal Reserve to lead the development of real-time payments infrastructure for the modern era, available for all Americans.

The following statement is attributed to Brian Peters, Executive Director of Financial Innovation Now:

“These technology leaders believe that no American should have to wait hours or days to pay bills or keep the lights on. Payments should move at the speed of life, and for many American consumers and small businesses, that means ‘right now’. FIN member companies applaud the Federal Reserve Board for thinking boldly and working to serve all Americans by providing them with a safe, real-time payment system. America cannot realize this vision without the Federal Reserve and currently we are falling behind other nations. FIN member companies look forward to a payment platform that accelerates American ingenuity and innovation, particularly services that will help the financially underserved.”

In October, the Federal Reserve requested input on how it should develop a system for real-time payment settlement. Currently it can take days for payments to finally make it into a bank account. In contrast, FIN member companies have innovated payment networks that allow consumers to make many payments instantly. Constraints in the current payment infrastructure hamper the ability of payment systems to be more broadly accessible and move in real-time.

FIN urged the Federal Reserve to move forward expeditiously and develop a real-time system with innovation in mind. The FIN companies argue that a Federal Reserve real-time payment infrastructure is necessary because:

  • Consumers and small businesses, particularly the underserved, need affordable options, and they have twenty-first century expectations for their money.    
  • Existing payment systems can be a barrier to innovation and access to capital.
  • Other countries are outpacing the United States in adopting real-time payments.
  • Ubiquity requires action by the Federal Reserve, which is uniquely positioned to lay the groundwork for safe, convenient and cost effective real time payments.

FIN is an alliance of technology leaders working together on policies that will help modernize the way consumers and businesses manage money and conduct commerce. FIN members include Amazon, Apple, Google, Intuit, PayPal, Square, and Stripe. FIN’s letter to the Federal Reserve can be found at: http://financialinnovationnow.org/wp-content/uploads/2018/12/fin-fed-real-time-payments-docket-op-1625-final.pdf

Media Contact:
Lauren Greenwood
lauren@financialinnovationnow.org
202-922-6303

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