Friday, September 23, 2022
In opening comments, Kelley characterized payments as an innovative, dynamic industry with highly competitive products that power the economy. "ETA member companies from every facet of the industry provide education, advocacy and thought leadership," she said, setting the stage for discussions on innovation, policy issues, financial inclusion, crypto, open banking, cross-border payments and more.
Kelley further noted in a fireside chat with Sen. Mike Rounds, R-S.D., that financial services are becoming simpler and more cost-effective. Many of these services are becoming part of the fabric of how we pay, she stated, while questioning how such services can be regulated.
Rounds responded that regulation has its place, but too much regulation can raise costs and inhibit innovation. "Regulations should be clear," he said. "You shouldn't have to ask permission every time you innovate."
Philip McHugh, president of the ETA's board of directors, characterized payments as a fast-moving industry where form factors change rapidly. In this dynamic space, no one company can go it alone, and companies must partner to win, he stated.
"Cybersecurity is important; investing in this front is tantamount," McHugh said. "We also need to improve accessibility [to financial services] in a digital world." It's easy to get caught in rabbit holes, but focus on specific problems you want to solve because consumers and merchants don't care about payments: they care about what they want to buy and sell, he noted. Solutions need to be easy for merchants and wildly simple for consumers, he added.
Financial inclusion, driven by fintechs and balanced by sound regulatory frameworks, was a popular topic. It was introduced early in a panel discussion and revisited throughout the day by regulators, financial institutions, fintechs and legal analysts, each bringing a unique perspective to multithreaded discussions.
Ed Marshall, partner at Arnall Golden Gregory LLP, moderated a discussion with Sara Reid, public policy liaison, financial inclusion, FIS; Mary Donohue, Mary Donohue, head of SMB public affairs, Enova/OnDeck; Brett Pharr, CEO, Pathward; Darlene Goins, , executive vice president, head of banking inclusion initiative at Wells Fargo; and Victoria Edison, chief compliance officer, Chime.
Goins, commenting on 7 million unbanked U.S. households, said it's important for payments industry stakeholders to focus on what their needs are instead of "what we think their needs are."
Donohue agreed, stating that service providers "need to let consumers build their own path to success."
Rohit Chopra, director at the Consumer Financial Protection Bureau, underscored the CFPB's focus on balancing innovation with consumer protection as well as open banking with privacy. "Banks have been protective of customer data, and I personally worry about harvesting data when it rides on banking rails," he said, reaffirming that the success of these initiatives will involve all stakeholders, including large and small financial institutions.
Chopra discussed the CFPB's recently published study on buy now, pay later schemes, describing BNPL as a close substitute for a credit card that could potentially use data to induce more purchasing behavior. What is also interesting, and not in the report, he added, is the potential for payment systems to one day require merchants to offer BNPL products.
Ellen Berge, partner at Venable, moderated a BNPL panel with Nick Simpson, head of North American Policy and Public Affairs, Klarna, and Victor Baten, head of public policy at Afterpay. The discussion highlighted BNPL provider efforts to provide transparent disclosures and protect consumers from becoming financially overextended. The conversation also brought to light that merchants pay 90 percent of BNPL revenues.
Scott Talbott, senior vice president, government relations at the ETA, led discussions with card brand experts on technology initiatives designed to make payments faster and more secure. Angela Webb, senior vice president, cyber & intelligence solutions, global product management, Mastercard, and Jennifer Schroeder, executive vice president, product management, Pulse, a Discover company, joined Talbott on stage. Nikhil Gupta, vice president, point-of-sale fraud, risk & information management, American Express and Simon Hurry, vice president, North America products, Visa, joined virtually on the big screen.
Devina Khanna, economic policy advisor at the U.S. House of Representatives, led a discussion about Earned Wage Access with Amena Ross, head of policy at Block, and Molly Jones, vice president of government affairs at Payactiv. Panelists emphasized EWA is not a predatory product but a way to get people paid early, using funds they have already earned.
"View from the Regulators," a panel moderated by Jonah Crane, partner at Klaros Group, explored ways to align regulations with modern fintech technologies. Panelists included Beth Knickerbocker, chief innovation officer, Office of the Comptroller of the Currency; Jeff Ernst, manager, innovation policy, division of supervision & regulation, Federal Reserve Board; and Amy Zirkle, senior program manager, payments and deposits, office of consumer credit, payments and deposits markets, CFPB.
In "A View from the States," Tara Rider, assistant vice president, government affairs at Cross River, engaged Assemblyman Clyde Vanel, D-N.Y.-33, chair, subcommittee on internet and new technology, and Suzanne Martindale, Esq., senior deputy commissioner, California Department of Financial Protection, who attended virtually, in a discussion on state-level efforts to protect consumers and enforce best practices during all phases of new product roll outs.
"Capitol Hill's Thoughts on Fintech," featured a fireside chat with ETA CEO Kelley and Rep. Warren Davidson, R-Ohio, ranking member of the Task Force on Financial Technology, in which Davidson called the future of money an important topic. Cash is the only permissionless system currently in place, he noted, while the blockchain's promise of true permissionless peer-to-peer payments remains a matter of open debate and endless discovery.
Additional approaches to cryptocurrency and digital assets were explored in "Crypto," a panel moderated by J.C. Boggs, partner at King & Spalding, with panelists Jesse McWaters, Mastercard; John Avery, product head, capital markets, crypto & digital assets, FIS; and Andy Kim, policy lead CBDC, PayPal.
Commenting on the ever-changing threatscape, Chopra stated that criminals perpetuate fraud in multiple ways, and the industry needs to figure out its role in deciding which service providers get kicked off, which get approved, and when "speed bumps" need to be put in place to validate transactions and protect them from bad actors.
"Digital ID and Fighting Fraud" explored approaches to validating and protecting consumer identities with Kay Turner, chief digital identity advisor, Financial Crimes Enforcement Network, U.S. Department of the Treasury, and Jason Kratovil, head of public policy and external affairs, Sentilink.
Turner noted how much the world has changed since FinCEN was created in the 1990s. "Analog static credentials challenge digitally native financial services," she said. "Identity is a network business and we're only as strong as our weakest link."
Daniel Kornitzer, head of business development at Paysafe and Roshni Joshi, head of banking and expansion, North America for Wise, discussed how different countries regulate fintech and the United Kingdom's open banking leadership. Joshi said there hasn't been much innovation in cross-border and expressed hope that FedNow will help make systems more modern and transparent. Kornitzer noted open banking and real-time payments are the norm in 68 countries, and the new value chain favors platforms like Uber with embedded finance capabilities.
"Open Banking," moderated by Eric Foust, vice president of banking partnerships for Trustly, with panelists Leigh Lytle, policy, Plaid; Adam Maarec, senior director, associate general counsel, enterprise innovation, Capital One; and Dion Spencer, director, corporate affairs and government relations, Intuit, explored open banking's implications on everyday transactions.
Eric Grover, principal at Intrepid Ventures, said the ETA's Fintech Policy Forum captured the industry's dynamism, growth and innovation prospects, and regulatory risks. "ETA Board President Philip McHugh reasonably enthused there will be more choice and form factors," he said, adding that ETA CEO Jodie Kelley drew out CFPB Director Rohit Chopra, who was open and thoughtful, and Congressman Warren Davidson, who was cautiously optimistic on the near-term potential for legal and regulatory clarity on stablecoins.
In closing, Kelley again thanked sponsors and participants, inviting everyone to a rooftop networking reception. "I am delighted that we ordered up a beautiful day to close it out," she said with a smile. "I look forward to seeing you there."
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
