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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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U.S. Faster Payments Council Announced

The Federal Reserve today announced the formation of the U.S. Faster Payments Council (FPC), a new industry forum organized to help promote faster payments in the United States. FIN has participated as a member of the Fed’s Governance Framework Formation Team (GFFT) and commends the accomplishments of this group.

The announcement highlights the FPC’s focus on improving the adoption of faster payments through a collaborative approach that emphasizes inclusiveness and diversity. The FPC is a member-driven organization that is open to all stakeholders in the U.S. payment system. Notably, the FPC’s relatively equal board structure is novel and much needed in payments industry governance. 

Since 2015 FIN has called for real-time payments to be widely available in the U.S. by 2020. The FPC can help achieve that goal.

Payments Industry Leaders Launch U.S. Faster Payments Council
Organization aims to accelerate U.S. adoption of faster payments

CHICAGO, IL – (November 13, 2018) – A key group of payments industry leaders today announced the formation of a newly incorporated organization, the U.S. Faster Payments Council (FPC), to work toward the goal of a ubiquitous, world-class payment system that allows Americans to safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability.

“The industry has clearly signaled that, while our nation’s faster payments system capabilities are rapidly innovating, there’s much to be done to promote ubiquity and faster payments adoption,” said Douglas Berg, Senior Vice President of Payment Industry Relations for Wells Fargo Bank. “We encourage our nation’s payments leaders to lend their voices to the future of faster payments by joining the FPC and sharing their insights and expertise to further this important work.”

The mission, structure and focus of the FPC reflect the broad perspectives of the 27-member Governance Framework Formation Team (GFFT), which developed the framework for the FPC after months of deliberations and industry input. The GFFT’s proposed operating vision for the FPC, published last spring, generated more than 1,000 comments from industry stakeholders across the payment ecosystem. The feedback was instructive in helping the GFFT evolve the framework in a way that best serves the industry’s needs in the early stages of this new payment system’s development.

“The Federal Reserve applauds this next step in the evolution of the U.S. payment system,” said Sean Rodriguez, Federal Reserve Executive Vice President and Faster Payments Strategy Leader. “We commend the GFFT’s efforts to come together and embrace the need for a new organization that will help facilitate efforts to modernize our country’s payments system and allow everyone – providers, consumers, businesses, and more – to benefit from faster payments.”

Geared for Problem Solving

The FPC will be focused on private-sector approaches to solving problems and addressing issues that inhibit adoption of faster payments. Through dialogue, collaboration and education the FPC will channel its resources toward the most pressing challenges and opportunities. Its specific priorities over the next two years include:

  • Supporting adoption of practices that enhance safety and security for service providers and users of faster payments
  • Identifying, developing and supporting principles, guidelines and market practices that will address opportunities and emerging issues in an open and collaborative way
  • Developing an educational and awareness program to foster better understanding of faster payments

“Walmart is pleased to collaborate with other payments stakeholders as the United States transitions toward faster payments,” said Reed Luhtanen, Senior Director, Global Treasury at Walmart. “We fully support the FPC’s objectives and through open dialogue, we look forward to helping inform and drive practices that will benefit our customers and stores through faster, more efficient and securepayments.”

Driven by Shared Goals

As a member-driven organization, the FPC is open to all stakeholders in the U.S. payment system, from payment service providers to businesses and other end users. Its structure, operations and activities are designed to adhere to the FPC’s fundamental principles of inclusiveness, fairness, flexibility,responsiveness and transparency. Through unprecedented diverse representation on the FPC’s Board and open opportunities to serve on committees and work groups, all active members will have a voice in the direction of the work and will be informed by the perspectives of other members.

“At Mastercard, we value the perspectives of all players across the payments industry,” said Andrea Gilman, Senior Vice President, Product Management, Mastercard. “The FPC’s mission is to provide a unique forum for all stakeholders to come together and discuss strategies for developing a faster payments infrastructure that will shape the future of payments in the United States. I encourage all of our customers and partners to participate in this important dialogue.”

Next Steps

Today’s launch of the FPC marks the start of a new member drive as well as a search for an executive to lead the organization. A majority of GFFT members have already committed to being founding members of the FPC and will lead establishment activities for the organization.

“Early Warning is proud to be a founding member of the FPC. We’re eager to work with other payment innovators to remove the barriers to adoption, scale the service offering, and achieve the goal of faster payments ubiquity by 2020 through collaboration and education,” said Lou Anne Alexander, Group President of Payment Solutions, Early Warning Services.

Sponsor* and Founding members of the FPC as of today’s release include:

American Bankers Association (ABA)
Accredited Standards Committee X9
Bankers’ Bank
Commerce Bank
Corporate One Federal Credit Union
Early Warning Services
Icon Solutions
Jack Henry & Associates Inc.
James Angel, Ph.D., CFA
JPMorgan Chase Bank
Mastercard
NACHA – The Electronic Payments Association
North American Banking Company*
Open Payment Network
Reinvestment Partners
The Bankers Bank
The Clearing House
SHAZAM*
Tiller Endeavors
Visa Inc.*

Walmart
Wells Fargo Bank

For additional information on the FPC, including how to join, organizations are encouraged to visit: www.FasterPaymentsCouncil.org

About the Governance Framework Formation Team

The Governance Framework Formation Team (GFFT) is a short-term work group of 27 industry participants established by the Faster Payments Task Force in mid-2017 and facilitated by the Federal Reserve. The recommendation to develop and establish a faster payments governance framework was the leading directive of the task force, as noted in its final report published last July. For more information on the Governance Framework Formation Team or its predecessor, the Faster Payments Task Force, go to FedPaymentsImprovement.org or FasterPaymentsTaskForce.org.

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FIN Welcomes Regulatory Program for Modern Consumer Disclosures

October 10, 2018 – Financial Innovation Now today called on the Bureau of Consumer Financial Protection to promote better consumer disclosures through the latest technology.

In comments to the Bureau’s proposed changes to the Trial Disclosure Program, FIN states:

“FIN supports and is encouraged by the Bureau’s efforts to make the Trial Disclosure Program more clear and effective, simply because technological change can provide new methods of disclosure that enhance consumer protection … [w]hether it be via smartphone or voice-enabled digital assistants, consumers are taking advantage of many different technologies to more easily access their finances….”

A copy of FIN’s comment is available here: http://financialinnovationnow.org/wp-content/uploads/2018/10/fin-trial-disclosure-program-cfpb-10-10-18.pdf

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FIN Joins Industry Groups Urging Congress to Pass IRS Modernization Legislation this Session

October 2, 2018 – Financial Innovation Now this week joined a coalition of industry organizations calling on Congress to pass legislation to modernize the Internal Revenue Service (IRS) to improve small businesses’ access to capital.

The organizations, including the U.S. Chamber of Commerce, the Marketplace Lending Association, the Consumer Bankers Association, and Accion, sent the following letter to a bipartisan group of Congressional Members.

October 2, 2018

Re: IRS Modernization – Please Pass S. 1958 / H.R. 3860 / H.R. 5444 This Session To Aid Small Businesses

Dear Chairman Hatch, Ranking Member Wyden, Chairman Crapo, Senator Portman, Senator Cardin, Senator Booker, Chairman Brady, Ranking Member Neal, and Deputy Whip McHenry,

We are a diverse coalition of organizations writing in appreciation your strong support for technology modernization at the Internal Revenue Service. You have all been leaders on this issue, which has great potential ensure that taxpayer information is handled more securely and efficiently for the digital age.

We believe that one key area of IRS modernization, S. 1958 and H.R. 3860, the IRS Data Verification Modernization Act of 2017, can bring added security while also helping improve the economy. The IRS data modernization provisions of S. 1958 and H.R. 3860 are also now included in H.R. 5444, which passed by bipartisan a vote of 414-0 and is awaiting Senate action. If signed into law, this bill would help to deliver critically needed access to capital for small businesses and the Main Street economy, while making the IRS third-party income verification process more secure for American taxpayers. As you know, an upgrade to the IRS’s existing data verification program could have profound benefits. In short, replacing the IRS’s current data transfer delays with an up-to-date, real-time system, could provide the country with:

  • Increased access to capital and financial inclusion – By making it possible for tax return data to be accessed instantly as part of a loan application process, many more small businesses could be recognized as creditworthy. This would especially benefit the underserved borrowers overlooked because of their lower credit scores, but whose tax data and income would indicate creditworthiness.
  • Lower prices for borrowers – The addition of rich tax data, delivered securely in real time, would help credit models become more accurate, leading to lower prices.
  • Easier borrowing process – An instant process would reduce paperwork required of busy business owners. They would receive loan proceeds faster, eliminating the current system’s days or weeks of delay.
  • Safer financial system – Instant access to this data could significantly increase the rate of income verification, enable better informed and more responsible underwriting, and reduce the risk of document fraud, further contributing to safer loans and lower costs.

If the Senate can pass any IRS modernization package this Congress with sufficient time remaining before January, we believe a perfected form of the bill can be finalized in a conference with H.R. 5444. With such benefits to small businesses, and strong bipartisan, bicameral support, it would be a great loss if this issue were left aside for a future Congress to grapple with. We urge you to find a way to pass this legislation before this Congress ends.

We thank you again for your leadership.

Sincerely,

The United States Chamber of Commerce
The Marketplace Lending Association
The Consumer Bankers Association
California Association of Micro Enterprise Organizations
Opportunity Fund
Accion
Financial Innovation Now
Electronic Transactions Association
The Responsible Business Lending Coalition
The Innovative Lending Platform Association
Woodstock Institute
Greenlining Institute
California Reinvestment Coalition
The Equipment Leasing and Financing Association
Craft3
Small Business Majority

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FIN Welcomes OCC Fintech Charter Announcement

July 31, 2018 – The Office of the Comptroller of the Currency (OCC) today announced it will begin accepting applications for national bank charters from financial technology firms. FIN has supported the OCC’s two-year effort to foster a national approach to the regulation of financial services.

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

“As outlined by Treasury earlier today, the regulatory landscape must adapt and grow along with changes in technology and customer preferences. The OCC’s decision to issue special purpose bank charters to financial technology companies is a recognition that the current regulatory environment must evolve. FIN appreciates the OCC’s affirmation of a national regulatory approach to technology, and while any one FIN member may not seek a special purpose charter, FIN nonetheless supports the OCC’s leadership and vision in driving this regulatory discussion. We look forward to working with the administration and Congress on multiple national regulatory paths to market.”

The OCC’s announcement today was accompanied by a policy statement clarifying its chartering authority and a supplement to the OCC’s licensing manual. The announcement followed Treasury’s release of an extensive report on the regulation of financial technology, which is available here.

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