The faster payments space is expanding with Facebook announcing plans for Calibra, a new subsidiary and digital wallet that will provide financial services and a new digital currency, Libra, powered by blockchain technology. Facebook expects to launch its new endeavor in 2020. The Clearing House (TCH) RTP® network is also broadening its reach with FirstBank, one of the nation’s largest privately held banks, announcing that it is joining the network. Also of interest this month, the Faster Payments Council continues its growth with the addition of Kimberly Ford as its first executive director.
Read on for more about these and other developments in the world of faster payments
On June 18, 2019, Facebook announced its plans for a new subsidiary, Calibra, whose goal is to provide financial services that will let people access and participate in the Libra network. Calibra will serve as a digital wallet for Libra, "a new global currency powered by blockchain technology.” The wallet will be available in Messenger, WhatsApp, and as a standalone app. The projected launch date in 2020.
In response to this news, the Fed announced its intends to hold the new cryptocurrency to high standards, giving particular attention to consumer protection and regulatory compliance. But the Fed isn't the only regulator taking a closer look at Libra.
A June 26 PYMNTS.com article reported:
"The U.S. House Committee on Financial Services has scheduled a hearing to examine Facebook's proposed cryptocurrency, and its impact on consumers, investors, and the U.S. financial system. The Senate Banking Committee will hold a hearing on the social media giant's digital currency the day before. Also, Committee Chairwoman Maxine Waters (D-CA) has already called for a moratorium on the crypto until lawmakers can investigate it further."
Other organizations speaking out on the need for regulation include the international Financial Stability Board (FSB) and the U.K.’s Financial Conduct Authority (FCA), joining the Bank of England (BoE) and the G7.
Check NEACH’s Pacing Payments website for updates on this story as it unfolds.
The Clearing House
Also of note, The Clearing House (TCH) announced that FirstBank, one of the nation’s largest privately held banks, is joining the Real Time Payments network developed by The Clearing House (TCH). FirstBank began providing banking services in Colorado in 1963. Today, the bank maintains more than $19 billion in assets and operates more than 115 branch locations across Colorado, Arizona, and California.
This comes on the heels of a June 12, 2019, TCH announcement, which emphasized the organization’s commitment to ensure fair and easy access to the RTP network by depository institutions of all sizes. RTP was initially viewed as having more appeal to larger financial institutions. However, TCH communications released in recent months have made the point that “TCH remains committed to connecting financial institutions of all sizes to the RTP network with flat pricing and no volume discounts or monthly minimums.”
Faster Payments Council
Payments industry expert Kimberly Ford is joining the Faster Payments Council as its first executive director. Most recently, with First Data Corporation, Ford brings extensive industry knowledge to this position. Her first day will be Monday, June 24.
The Council’s June 20, 2019, news release states:
"Ford has a clear vision for the FPC and its role in facilitating faster payments by fostering industry dialogue and collaboration. In terms of strategic areas of focus, Ford plans to first target organizational needs by ensuring consistency during the transition and establishing a longer-term plan to involve the right parties in the right positions—both staff and volunteer. From there, Ford plans to turn focus to more external efforts, including increasing industry education opportunities, expanding membership across all segments, supporting effective and engaged work groups, and identifying opportunities for the FPC to offer industry guidance and best practices."
The FPC launched in November 2018 as a volunteer-driven organization with support from broad industry constituents. The council says Ford's hire formalizes staffing, and additional organizational developments will evolve over the coming months.
On June 6, 2019, Nacha hosted its annual Capitol Hill Day in Washington, D.C., facilitating a series of meetings with members of Nacha’s Government Relations Advisory Group (GRAG), elected officials, and congressional staff members from the Senate Banking Committee and the House Financial Services Committee.
According to the Nacha website:
"Nacha Members continued their outreach and education efforts regarding the ACH Network with particular emphasis on the value of private sector rulemaking, ACH Network consumer protections and Nacha's role in governing the network. Other discussion topics included an update on Same Day ACH, industry efforts to move payments faster and make them more accessible for end users, cannabis banking and RegTech."
The Federal Reserve
As reported by The New York Times, the U.S. Federal Reserve is looking carefully at Facebook’s planned cryptocurrency Libra and will hold it to high standards from a regulatory and consumer protection standpoint. Facebook announced its plans to develop a cryptocurrency on June 18, 2019, and said it expects to launch it sometime in 2020.
The Times quoted Powell as saying:
"Libra’s a new thing; we are looking at it very carefully," Powell said in response to an audience question after a talk at the Council on Foreign Relations in New York. "Given the possible scale of it, I think that our expectations -- from a consumer protection standpoint, from a regulatory standpoint -- are going to be very, very high."
Also, as a reminder, the Board of Governors of the Federal Reserve System’s request for comments on potential modifications to the Federal Reserve Banks' (Reserve Banks) payment services to facilitate the adoption of a later same-day automated clearinghouse (ACH) processing and settlement window closes on July 15, 2019.
According to the Federal Register:
"The Reserve Banks would extend the daily operating hours of the National Settlement Service (NSS) to allow the private-sector ACH operator to settle its in-network transactions resulting from the later same-day ACH window. To support these new NSS operating hours, the Reserve Banks would extend the daily operating hours of the Fedwire® Funds Service, creating implications for extension policies for contingencies that might result in more frequent delays to the reopening of the Fedwire® Funds Service. Finally, the board is requesting comment on corresponding changes to the Federal Reserve Policy on Payment System Risk related to a new posting time and an increase to the daylight overdraft fee rate."
Also, the industry is still awaiting news on the Fed’s next steps regarding developing and operating its own real-time payments system with the Fed indicating it would make a decision by year-end at the latest.
NEACH is closely following this story and will release updates as soon as they become available.
Registration is now open for NEACH’s Innovating Payments conference, which is being held October 9-10, 2019, at the Hilton Boston Logan airport. Innovating Payments 2019 will bring together financial services leaders and payments innovators to provide a platform to explore existing solutions, emerging Fintech solutions, and trends in the industry. The conference has the unique focus of keeping community banks and credit unions relevant and competitive.
This conference will have a multi-tiered focus that will include sessions on:
- Faster Payments
- FinTech Solutions and Providers
- Payments Innovation
- Regtech, Proptech, Insurtech
- Strategic Innovation Examples
- And more
On a related note, NEACH is currently seeking outstanding expert speakers for its Innovating Payments 2019 Conference. The submission deadline date for the 2019 Innovating Paymentsconference is July 15, 2019. To submit a session for consideration, click here.
In conjunction with the conference, NEACH invites your nominations for the 2019 NEACH Innovation & Excellence Award. Nominate an outstanding individual or organization for this recognition by September 17, 2019. Categories open for nomination include faster payments, advancement, leadership, efficiency, innovation, and security.
To register or to submit a conference session or nominee for the 2019 NEACH Innovation & Excellence Award, visit the conference website.
For more on these and other faster payments stories, visit NEACH’s Pacing Payments website.