Washington Update with Guest William Sullivan
Wrestling Payments Podcast: Season 4 - Episode 02
Episode Summary
In this episode of Wrestling Payments, host Joe Casali sits down with William Sullivan, Associate Managing Director of Government and Industry Relations at Nacha. They explore the shifting landscape of payment regulations, focusing on how recent developments in open banking and data access rules could reshape the industry. William describes the latest twists in rulemaking, including rumors about the Consumer Financial Protection Bureau (CFPB) and ongoing challenges around access to customer data and security.
William breaks down the politics and progress behind the Clarity Act and stablecoin legislation, showing how banking and crypto interests clash as Congress wrestles with next steps. He offers a candid look at why efforts to reduce checks and address cannabis banking remain complex, with regulatory changes often slowed by competing priorities and election-year pressures.
Throughout the conversation, William emphasizes the importance of advocacy, collaboration, and staying alert to new regulatory actions. The episode gives payment professionals a clear view of the policies, risks, and practical realities shaping the future of ACH and payment operations.
Guest-at-a-glance
💡 Name: William Sullivan
💡 What they do: Associate Managing Director, Government & Industry Relations
💡 Company: Nacha
💡 Noteworthy: William leads Nacha’s advocacy and industry relations, sharing actionable insights on ACH network policy, payment regulation, and legislative developments that affect financial institutions.
💡 Guest Company Website: www.nacha.org
Key Insights
Open Banking Rules Face New Uncertainty
The landscape for open banking in the U.S. is shifting yet again. Recent developments suggest that regulators may no longer allow financial institutions to charge fees for providing data to third parties. This change, if confirmed, would mark a major about-face from previous expectations and could reshape how banks approach data sharing and security. Financial institutions have long advocated for the right to negotiate compensation for the effort and risk involved in transferring customer data. Removing fees could create new operational and compliance challenges, especially as data security responsibilities transfer with the data. Payment professionals should monitor proposed rules closely and prepare for scenarios where fee collection is no longer an option. Staying informed and ready to adapt procedures will be key as open banking rules evolve from both regulatory and political pressure.
Stablecoin Legislation Highlights Industry Divides
Stablecoin and crypto regulation remains gridlocked as lawmakers struggle to balance innovation and risk. Congressional efforts to clarify rules for stablecoins have hit repeated roadblocks, with debates centering on whether these digital assets should allow interest and rewards—something the banking sector strongly resists. The political calendar complicates matters, as election-year priorities and party dynamics slow progress. With both banking and crypto advocates lobbying hard, progress often stalls when even small factions within parties disagree. For payment leaders, this means continued uncertainty about the regulatory environment for digital assets. The path to clear, workable rules will likely take more time, and success may depend on compromise and a willingness to address both industry and consumer concerns. Monitoring these developments will help organizations plan for the future and adjust strategies as the legislative picture changes.
The Slow Decline of Checks—and Why It Matters
Checks continue to shrink as a payment method, but their end will be gradual, not sudden. While some government agencies push harder for electronic payments—using tactics like holding paper refunds for weeks to encourage direct deposit—many consumers and businesses still rely on checks. The costs of processing checks are rising, and there is growing discussion about pricing them to reflect true operational and fraud-prevention expenses. However, a full mandate to eliminate checks remains unlikely in the U.S., where market-based approaches are favored over regulatory mandates. For payment operations leaders, this means balancing the ongoing support for check processing with investments in digital alternatives. By tracking regulatory signals and customer behavior, organizations can plan for a future where checks fade away at a natural pace, while staying ready to serve those who still need them.
Episode Highlights
The Risks of Disrupted Direct Deposit for Banks
00:00:00
A sudden disruption in direct deposit payments can threaten a financial institution’s stability. In this episode’s opening, the conversation centers on what would happen if every customer tried to move their funds at once due to a failed payroll. This scenario highlights how quickly a bank could face a crisis if core payment operations break down. The discussion sets the stage for why resilient payment infrastructure and careful risk planning are essential in today’s banking environment. Even a short outage can trigger mass customer action, underscoring the importance of reliable ACH processes and proactive risk management for all institutions.
“What if everybody can’t get paid via direct deposit and all the customers leave in a 24-hour period? What are we going to do then? We’re looking at a bank collapsing, and they’ve pretty much got it.”
How Congressional Politics Stall Stablecoin Rules
00:12:04
Stablecoin regulation remains gridlocked as political divides, industry lobbying, and election-year priorities stall progress. The episode details how attempts to pass the Clarity Act and related rules have failed, with Democrats and Republicans unable to agree on key points such as interest and rewards on stablecoins. Banking and crypto advocates have both pulled support at critical moments, while lawmakers worry about handing the other party a political win. This deadlock keeps the industry in a holding pattern, making it hard for payment professionals to plan around digital asset adoption and compliance.
“The big sticking point right now is that the crypto world supporting Clarity wants to be able to have interest and rewards attached to those stablecoin accounts and payments, and the banking world absolutely opposes it. Even on the Republican side, there’s a little bit of disagreement about which direction they should go.”
De-banking: Politics, Policy, and the ACH Network
00:26:20
De-banking—when financial institutions close accounts for political or risk reasons—remains a contentious issue. The episode explores how proposed de-banking legislation fizzled after lawmakers realized the practical and legal limits of forcing banks to serve everyone. The conversation covers why recent bills failed, the complexity of denying Federal Reserve services as a penalty, and why the ACH network likely won’t be affected by future de-banking proposals. For payment leaders, the lesson is clear: regulatory threats can surface quickly, but most don’t become law, especially when they challenge core banking operations or network access.
“There was a 2019 bill that got dusted off and introduced in the House and Senate on de-banking. The bill never, ever saw the light of day. It was poorly written, and it actually had a clause in there that if you were found to illegally de-bank somebody, your institution could be denied Federal Reserve services to the ACH network. So we found out about that, and needless to say, there was a lot of running around in the office and a lot of scurrying, because the bill never went anywhere.”
Government Pushes to Phase Out Checks
00:47:59
The U.S. government continues to push for electronic payments, making it harder for consumers and businesses to rely on checks. Agencies now use tactics like delaying paper refund checks for weeks to encourage direct deposit adoption. Despite these efforts, some groups—including those without digital access—still depend on checks. The discussion also compares the U.S. approach to Europe’s mandate-driven model, noting that American agencies prefer to nudge the market rather than impose outright bans. For payment professionals, this means supporting a shrinking check infrastructure while planning for a digital future.
“They are going to a lot of effort to do what they can. Just the other day, the IRS put out guidelines for this tax season. They talked about really pushing direct deposit, direct payment if people get paid. If they do not get that, they are holding the check for up to six weeks before mailing it. They’re trying to disincentivize people—if you filed on February 1st, you might not get paid until St. Patrick’s Day or something.”