Welcome to the June 2024 Innovating Payments Executive Summary. In this issue, the 2024 Jack Henry Benchmark Strategy Study results are now available, offering financial institutions a wealth of actionable insights. On June 5, the CFPB finalized a rule outlining the qualifications to become a recognized industry standard-setting body, which can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule. The CFPB also issued the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders final rule on June 3, 2024, requiring certain nonbank entities to register their company information and certain orders and submit copies to the CFPB.
In other news, the Atlanta Federal Reserve released the summary results of its 2023 Survey and Diary of Consumer Payment Choice. According to the survey, mobile won over three-quarters of Americans. Nacha announced the launch of its new Risk Management Resource Center, and JPMorgan Chase's global head of payments, Takis Georgakopoulos, is stepping down, according to an internal memo seen by Reuters on Monday.
Read on for more on these and other stories.
Top Story
New Study Highlights Tech Trends and Top Priorities for Banks in 2024 and 2025
The 2024 Jack HenryTM Benchmark Strategy Study results are now available, offering financial institutions a wealth of insights. These insights highlight tech trends and the industry's top priorities in 2024 and 2025. By providing actionable insights, the study empowers financial institutions to capitalize on market shifts and new opportunities, ensuring they are well-prepared for the future.
Highlights from this year’s study follow:
- 96% of financial institutions plan to add payment services within the next two years, with FedNow® Service being the top priority for both banks and credit unions.
- 80% of all financial institutions plan to increase technology spending over the next two years.
- Fraud detection and mitigation, digital banking, and data analytics are the top three technology investments planned over the next two years.
- Financial institutions entered 2024 with a heightened sense of urgency around improving operational efficiency. This focus on efficiency underscores the industry's commitment to streamlining processes and enhancing productivity.
Download the study here to learn more.
Consumer Financial Protection Bureau (CFPB)
CFPB Launches Process to Recognize Open Banking Standards
On June 5, the CFPB finalized a rule outlining the qualifications to become a recognized industry standard-setting body, which can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule, according to a company news release. The rule identifies the attributes that standard-setting bodies must demonstrate to be recognized by the CFPB. The rule also includes a step-by-step guide for how standard setters can apply for recognition and how the CFPB will evaluate applications.
“Industry standards can be weaponized by dominant firms in order to maintain their market position, undermining competition for all,” said CFPB Director Rohit Chopra in the release. “Today’s rule will prevent these firms from rigging standards in their favor by identifying attributes the CFPB will use to recognize standard setters.”
As part of the upcoming Personal Financial Data Rights rule, the CFPB expects to allow companies to use technical standards developed by standard-setting organizations recognized by the CFPB. Today’s rule kicks off the process for standard-setting organizations to seek formal recognition.
Click here to learn more about this rule and the attributes standard setters must display.
CFPB: Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders
The Consumer Financial Protection Bureau (CFPB) also issued the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders final rule on June 3, 2024, according to the CFPB’s executive summary of the rule. This rule requires certain nonbank entities to register their company information and certain orders and submit copies to the CFPB. The rule applies to orders that enforce certain laws and are issued or obtained by government agencies, such as enforcement orders. The final rule takes effect on September 16, 2024, and sets specific timeframes for covered nonbank entities to comply, including submitting their registrations. Registrations for covered nonbanks will begin as early as October 16, 2024.
Click here to read the final rule in its entirety.
CFPB Takes Action to Ensure Consumers Can Dispute Charges and Obtain Refunds on Buy Now, Pay Later Loans
“The Consumer Financial Protection Bureau (CFPB) today issued an interpretive rule that confirms that Buy Now, Pay Later lenders are credit card providers,” stated a CFPB news release. “Accordingly, Buy Now, Pay Later lenders must provide consumers with some key legal protections and rights that apply to conventional credit cards. These include a right to dispute charges and demand a refund from the lender after returning a product purchased with a Buy Now, Pay Later loan.” The CFPB inquiry launched more than two years ago and continues receiving consumer complaints about refunds and disputed transactions.
“When consumers check out and choose Buy Now, Pay Later, they don’t know if they will get a refund if they return their product or whether the lender will help them if they didn’t get what was promised,” said CFPB Director Rohit Chopra in the release. “Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books.”
The new rule will help bring consistency to this market.
The Federal Reserve
The Atlanta Federal Reserve released the summary results of its 2023 Survey and Diary of Consumer Payment Choice. Excerpts from the summary are below:
- American consumers made more payments in 2023 than in 2022.
- Compared to October 2022, there were statistically significant increases in the number of all payments (to 45.6 on average per month), in the number of all types of card payments (29.5), and payments via mobile app (13).
- The share of purchases made remotely increased to 22 percent, up four percentage points from 2022 and more than double the share of remote purchases before the COVID-19 pandemic.
- Mobile has won over three-quarters of US consumers.
- 72 percent of consumers adopted online or mobile payment accounts like PayPal, Zelle, Venmo, and Cash App in 2023, a statistically significant increase from 2022.
- 70 percent of consumers made a mobile phone or tablet payment at least once in the 12 months ending in October 2023 (also a statistically significant increase).
- 73 percent of consumers used mobile banking (another statistically significant increase).
Click here to review the survey data in its entirety.
Nacha
On May 7, Nacha announced the launch of its new Risk Management Resource Center, where visitors can access a wide range of risk management resources—from Nacha’s Risk Management Framework for the Era of Credit-Push Fraud to materials created by Nacha’s Risk Management Advisory Group (RMAG), Phixius, and everything in between.
You can click here to learn more.
Zelle®
“The scale of fraud on the Zelle platform is unacceptably high,” stated National Consumers League Vice President John Breyault while testifying before a May 21 Senate subcommittee hearing, “Fraud Alert! Shedding Light on Zelle” according to Payments Dive. He said, “It is estimated that total fraud rates on Zelle will likely exceed one billion dollars annually by next year.”
The subcommittee has been investigating how Zelle and the financial institutions that use it handle reports of fraud and scams for nearly one year, according to opening remarks by Senator Ron Johnson (R-WI).
“More may need to be done to assist individuals who have fallen victim to a scam that tricks them into sending money to another user,” Johnson said, according to the publication. “The banks need more incentives to invest in more secure systems for peer-to-peer payments.”
Click here to read the complete article.
Miscellaneous
According to U.S. News, “JPMorgan Chase's global head of payments, Takis Georgakopoulos, is leaving to pursue other opportunities, prompting the bank to install new leaders atop one of its fastest-growing divisions, according to an internal memo seen by Reuters on Monday.”
According to the news outlet, “Georgakopoulos, who sat on the firm's operating committee of top leaders, had been with the bank for 17 years and is credited with expanding its payments business, which processes $10 trillion a day.”
Click here to learn more.
NEACH
Did you know the NEACH U School of General Payments is an exclusive benefit for NEACH members, granting access to comprehensive content and materials as part of their membership? For those new to payments or seeking a comprehensive refresher, this program serves as an ideal entry point, empowering students to progress within the payments ecosystem. Concepts covered include ACH, Wires, Checks, Cards, Instant Payments, and more.
Visit the NEACH U website to learn more.
 |
... |
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.
|