Welcome to Innovating Payments Top 3 News Headlines for the week of Dec. 16. In this issue, the Consumer Financial Protection Bureau (CFPB) took action to close an outdated overdraft loophole that exempted overdraft loans from lending laws. Meanwhile, PYMNTS states over 75% of banks are not ready for ISO 20022 mandates. The question is: Why? Finally, In the world of finance, 2025 is shaping up to be a year of monumental change, says CU Insight.
Read on to learn more.
1. CFPB Closes Overdraft Loophole to Save Americans Billions in Fees (CFPB)
Today, the Consumer Financial Protection Bureau (CFPB) took action to close an outdated overdraft loophole that exempted overdraft loans from lending laws. The agency's final rule on overdraft fees applies to the banks and credit unions with more than $10 billion in assets that dominate the U.S. market. The reforms will allow large banks several options to manage their overdraft lending program: they can choose to charge $5; to offer overdraft as a courtesy by charging a fee that covers no more than costs or losses; or continue to extend profit-generating overdraft loans if they comply with longstanding lending laws, including disclosing any applicable interest rate. (Read more.)
2. More Than 75% of Banks Not Ready for ISO 20022 Mandates. The Question Is: Why? (PYMNTS)
The benefits of standardized data formats and exchanges in financial services are myriad. Banks are moving toward the ISO 20022 financial messaging standard, tied to Swift, which noted that the open standard can be used for all types of financial transactions, including cross-border fund flows. The messaging formats support the inexorable global movement toward real-time payment, with 68% of businesses telling PYMNTS that they plan to adopt instant payments in the next two years via the RTP® Network or FedNow® Service. Certain verticals are outpacing that overall percentage in terms of intent: 81% of companies in consumer and retails plan to harness instant payments, followed by 75% in hospitality and leisure, and 70% in healthcare. (Read more.)
3. The Theme Song for 2025: Payments (CU Insight)
In the world of finance, 2025 is shaping up to be a year of monumental change. Traditional payment rails-the backbone of how money moves through economies-are poised for a significant shake-up as new technologies, regulations, and consumer preferences converge to rewrite the rules of payments. For credit unions, staying ahead of these changes is critical to remaining relevant and competitive. Traditional payment rails, such as ACH, SWIFT, and card networks, have long facilitated the secure and reliable movement of funds. Yet, these systems come with inherent limitations: high transaction costs, settlement delays, and a lack of transparency. (Read more.)
What are your thoughts on the CFPB's actions to close the "overdraft loophole?" What steps is your financial institution taking to ensure it is ISO20022 ready? What shifts is your financial institution anticipating in 2025?
Check back soon for our next issue, highlighting the industry's most pressing and important developments. Until then, visit us online at Innovating Payments.
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AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.
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