ICBA Policy Resolution: Innovation

Position

  • ICBA supports the development and evolution of innovative payment systems that are bank-centric, ubiquitous, faster, risk adverse, competitive, more secure, and efficient to help community banks meet the global payment needs of their customers.
  • ICBA supports and encourages community banks as they develop strategic approaches to offering payments products and services to their customers.
  • ICBA strongly supports subjecting non-bank payments providers to the same privacy, security, consumer protection, and other legal and regulatory requirements as banks.
  • ICBA encourages a federal and state regulatory framework for emerging payments such as virtual currencies, virtual wallets, exchange services, and merchant enablers that support these services.
  • ICBA supports changes to Regulation E requirements covering remittance transfers to improve product availability and reduce unnecessary burden for customers and community banks. These changes include: 1) increasing the safe harbor exemption from 100 to 1,200 transfers made in the previous year; 2) making permanent the temporary provisions permitting estimation of certain pricing when disclosing remittance fees to customers; 3) eliminating the “availability date” to remove the burden of predicting funds availability for foreign locations; and 4) eliminating the 30-minute cancellation requirement.

Background

Non-Bank Payment Providers

 The emergence of non-bank payments providers adds risk and threatens the integrity of the payments system as these providers are not subject to the same safety and soundness and oversight and examination requirements as banks. This lack of oversight places consumers and small businesses using these services at greater risk. Additionally, these non-bank providers should not disrupt or disintermediate the bank-centric payments system. Technologies should be safe and secure, adhere to the same regulations and consumer protections as banks, and enable banks, regardless of size, charter-type or location, to play an active role in the customer relationship.

Virtual Currencies

Virtual currencies offer consumers a new choice of payment method and have the potential to create further new options for consumers, international commerce, and investors in the future. However, many of these options come with great risk for customers and the banks that serve them, as virtual currencies are often used for illicit purposes. Current, limited regulation and oversight applied to the virtual currency marketplace and transactions mean that consumers and investors that use or hold virtual currency are exposed to significant risks. ICBA continues to advocate on behalf of community banks to educate policymakers regarding the risks related to virtual currencies.

Digital and Mobile Wallets

ApplePay, MasterPass, and Samsung Pay – all digital and mobile wallet applications – offer consumers a means of consolidating their payment card and account information. It is imperative that these wallets evolve in a manner that ensures that customer data is protected, login credentials are never shared, non-banks (software companies, retailers, and phone manufacturers) do not have access to customer account information, and bank-centric payments are accommodated. Digital and mobile wallets should be ubiquitous – connecting all consumers to all businesses – through all financial institutions. They should allow for an open competitive environment and not add unrecoverable costs.

Remittance Transfers 

The CFPB’s 2013 remittance transfer rule, designed to protect consumers who send money electronically to foreign countries, exempts community banks and others sending fewer than 100 transfers per year. This threshold, which is unreasonably low and forces community banks to manage volume to stay below it, results in fewer consumer options. Additionally, this rule contains other onerous compliance requirements that discourage community banks from offering the product.

Staff Contacts: Cary Whaley and Rhonda Thomas-Whitley

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