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FIN Calls on Congress to Help Small Businesses ASAP – Use Speedy Alternative Lenders to Distribute Stimulus Loans

March 19, 2020 – In response to the COVID-19 economic crisis, Financial Innovation Now today called on Congress to help small businesses immediately by using alternative lenders to help distribute loans digitally. FIN is concerned that many small businesses will run out of working capital in less than three weeks. Small businesses are not well served by traditional financial institutions, nor will existing federal small business loan programs deliver funds soon enough.

FIN’s letter is below and linked here: http://financialinnovationnow.org/wp-content/uploads/2020/03/fin-coronavirus-alternative-lender-stimulus-letter-final.pdf

March 19, 2020

Dear Speaker Pelosi, Leader McConnell, Leader McCarthy and Leader Schumer,

Thank you for your bipartisan work to keep Americans safe from COVID-19 and mitigate this unprecedented economic crisis. The member companies of Financial Innovation Now (FIN) are committed to working with lawmakers to help ensure that economic stimulus measures are effective and expeditious, particularly for small businesses.

FIN strongly supports Treasury’s proposal to create a small business loan interruption program. However, millions of truly small businesses, those most likely to fail in the coming weeks, will not be well-served by loan guarantees made available exclusively through financial institutions. Small businesses need capital immediately. Small businesses are shut down, business owners are isolated in their homes, and many physical bank branches are closed. Any federal small business loan program must leverage digital advances in the marketplace to ensure that stimulus can reach those business most in need.

Alternative online lenders, such as Square, PayPal, Stripe, Intuit and many others, have pioneered fast and accessible working capital programs that have served tens of millions of small businesses. FIN companies alone have made over $10 billion available in the past several years. Alternative online lenders have the reach, relationships, and digital capabilities to reach those businesses most vulnerable – right now.

To ensure the success of the proposed small business loan interruption program, FIN urges Congress to direct Treasury to 1) provide conditional capital to alternative online lenders; 2) permit these non-bank lenders to disburse loans, including via partnership with financial institutions; and 3) allocate a portion of funds for distribution via these lenders.

An emergency Treasury facility will get funding to small businesses in a timely manner. FIN welcomes Congressional efforts to dramatically streamline Small Business Administration loans and include alternative lenders in this process as well.

Collectively, FIN member companies alone have a direct deposit and underwriting capability with over 20 million small business. FIN estimates that our companies could rapidly disburse approximately $100 billion in capital to vulnerable small businesses, in many cases within weeks. Through payment processing data and other technologies,[2] these alternative online lenders have direct visibility into real-time hardship of a small businesses and they have the credit models and the digital infrastructure to move money rapidly.

FIN deeply appreciates the work of you and your staff during a remarkably challenging moment in our nation’s history. FIN member companies look forward to our continued partnership and mutual efforts meet the challenges of this pandemic.

Respectfully,
Brian Peters
Executive Director
Financial Innovation Now

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Release: FIN Consumer Survey on Payment Apps

Payment Apps Are a Vital Part of Everyday Life for Millions of Americans

  • Two in three Americans (66%) use payment apps or have used them in the past
  • Usage is common across all ages, urban and rural populations, Democrats and Republicans, and across race and ethnicities – including higher adoption within minority communities such as African American / Blacks and Hispanic / Latino
  • Usage is particularly strong among Americans who are “financially at risk” and 79% agree that payment apps are a “vital tool” used to manage finances

WASHINGTON – February 11, 2020 – Two in three Americans (66%) use payment apps or have used them in the past, according to a new survey conducted by PSB on behalf of Financial Innovation Now, a public policy coalition comprised of Amazon, Apple, Google, Intuit, PayPal, Square, and Stripe. The survey, released today, shows that four in five (83%) agree that “payment apps created by technology companies help address consumer needs that are unfulfilled by traditional financial institutions.”

Download the Infographic and the Key Findings Memo.

“Technology companies are leading the way with innovative payment apps that are a vital part of everyday life for millions of Americans, especially the underserved,” said Brian Peters, Executive Director, Financial Innovation Now. “Millions of American rely on fast and innovative payment apps to make their life better and easier every day, and consumers trust technology companies to build and deploy the most advanced measures to protect their customers.”

Payment app usage – current or in the past – spans many key demographics: age, race, as well as geography, and political affiliation:

  • Though younger Americans are more likely to use payment apps (for example, 83% of those and 18-24 and 81% of those age 25-34), usage is pervasive among older Americans as well. 76% of Americans ages 35-49, and 57% of those ages 50-64 have used payment apps, and 42% of those age of 65 or older have used payment apps
  • As it relates to race and ethnicity, payment apps have been used by 62% of Whites / Caucasians and usage is even higher within minority communities such as Blacks / African Americans (75%) and Hispanics / Latinos (80%)
  • Payment app usage is high regardless of where people live, evident by similar usage from those who live in the suburbs (64%) and in urban settings (70%), as well as those in rural communities (64%)
  • Politics today often draws Americans apart – but not when it comes to using payments apps: 71% of Democrats, 63% of Republicans, and 65% of Independents use payment apps.

Payment apps aren’t just for bill sharing; Americans indicate they are a vital tool to manage finances and pay essential transactions such as rent and utilities:

  • 73% of Americans say payment apps are “a vital tool that people use to manage their finances,” including 30% who “strongly agree”
  • 3 in 4 users (74%) have used payment apps to send money to family members
  • 1 in 3 users – and half of users under age 35 – have used payment apps to pay their rent (33% and 49%, respectively); in addition, over half (52%) have used one to pay their utilities and/or other household bills

Payment apps are especially important to millions of Americans financially at risk:

  • Usage is noticeably strong (68%) among Americans who are financially at risk, such as the one in eight Americans (12%) who say they are “not at all confident” in their households’ ability to pay an unexpected $500 expense such as from an illness or accident
  • In fact, among these financially at-risk Americans, 79% agree payment apps are “a vital tool people use to manage their finances” and 77% say restricting payment apps would “disrupt people’s lives and make it more difficult […] to perform basic financial activities”
  • Those who are financially at-risk are much more likely to have lower incomes (52% have an annual household income at less than $25,000) and are 3x more likely to be unbanked or underbanked (15% have neither a debit nor credit card, compared to 6% of all adults)

Americans agree that tech companies are fulfilling unmet needs not currently addressed by traditional financial institutions:

  • Four in five Americans (83%) agree that “payment apps created by technology companies help address consumer needs that are unfulfilled by traditional financial institutions
  • Americans are 6x more likely to associate innovation with technology companies rather than financial institutions (“innovative”: 73% vs. 12%)
  • Speed is also a major perceived strength of technology companies: 58% of Americans associate “fast” with technology companies over financial institutions (23%)
  • Innovation and speed are key elements of security, and 83% of Americans agree “technology companies are dedicated to building and using the most advanced measures to protect their customers”

Overwhelming majorities of Americans support more integration of tech and finance:

  • 9 in 10 Americans (89%) agree that “consumers benefit when technology companies and financial institutions work together”, including 43% who “strongly agree”

 

METHODOLOGY:

PSB conducted online interviews among n=2,000 US consumers age 18+ from December 10 – 16, 2019. The margin of error for this study is +/- 2.19% at the 95% confidence level and larger for subgroups. Some percentages may add to more or less than 100% due to rounding.

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About Financial Innovation Now

Financial Innovation Now is an alliance of technology leaders, including Amazon, Apple, Google, Intuit, PayPal, Square, and Stripe, that are working together to modernize the way consumers and businesses manage money and conduct commerce. We believe that technological transformation will make financial services more accessible, safe and affordable for everyone, and we promote policies that enable these innovations. To learn more, visit: http://financialinnovationnow.org. Follow us on Twitter: @FIN_Now.

About PSB

PSB is a global strategic communication advisory rooted in the science of public opinion that specializes in messaging and strategy for blue-chip political, corporate, and entertainment clients. For over 40 years, PSB has provided actionable insights and advice to help clients win in highly competitive situations. PSB serves Fortune 100 corporations and has helped elect more than 30 presidents and prime ministers around the world. PSB is a part of Y&R and WPP. Visit http://psbresearch.com

 

FIN Supports OCC and FDIC Rulemaking to Preserve Bank-Fintech Partnerships

February 4, 2020 – Financial Innovation Now filed comments with the OCC and the FDIC supporting both agencies’ efforts to restore national treatment of loans made available via fintech-bank partnerships.

FIN’s letter states “America’s small businesses should have easy access to safe forms of credit. The FDIC’s proposal will restore the valid-when-made principle and maintain a well-regulated option for bringing innovative capital access to underserved borrowers. FIN commends the FDIC’s effort to promote regulatory consistency and financial access throughout the United States.”

 

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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