Last fall, Nacha finalized its Meaningful Modernization rule which provides for significant changes to the Nacha Operating Rules. According to Nacha, the amendments are intended to facilitate adoption of new ACH payments technologies, increase consistency for authorizations, reduce administrative burdens related to authorizations and provide additional flexibility for ACH Originators. The amendments become effective on September 17, 2021.… Continue Reading

On February 2, 2021, the Federal Reserve (“Fed”) announced that the launch date for its instant payments platform—FedNow—would be sooner than originally expected.  The announcement narrows the delivery timeframe by a full year.

FedNow provides interbank clearing and settlement, which enables funds to be transferred between banks and credited to accounts in near real-time. … Continue Reading

After discussing what real-time payments are and how they differ from fast payments, we look at the benefits of RTPs and potential for fraud, issues arising from the Fed’s plans to launch a RTP service, the laws and rules applicable to RTPs and how they bear on loss allocation, the pandemic’s effect on RTPs, and our expectations for the use of RTPs and the impact on fast payments generally.… Continue Reading

Among the unfortunate consequences of the pandemic has been COVID-19-related scams targeting businesses and consumers.  As real-time payments (RTP) become more popular in the U.S., fraudsters can be expected to increasingly engage in fraudulent RTP transactions.

A new article titled “The Effect of COVID-19 on Real-Time Payments” written by Ballard Spahr Of Counsel Judy Mok and Amy Schwartz and published in the Banking & Financial Services Policy Report discusses the new RTP system, the benefits of RTP, the potential for fraud in connection with RTP, and the laws that may bear on loss allocation.… Continue Reading

The Conference of State Bank Supervisors (CSBS) recently announced plans to establish a program under which money transmitters licensed in multiple states will undergo a single comprehensive exam that seeks to satisfy all state examination requirements, beginning in 2021. Money transmitters, payments firms and cryptocurrency companies licensed in 40 or more states would be covered by the program, to be known as “MSB Networked Supervision”.… Continue Reading

The Federal Reserve Board recently issued a Service Announcement setting forth the details of its FedNow Service, a new 24x7x365 interbank settlement service with clearing functionality to support instant payments in the United States.

The Fed announced its decision to develop the FedNow Service in a notice and request for comment issued in August 2019. … Continue Reading

Acting Comptroller Brooks recently revealed the OCC’s plans to create a national payments charter for payment processing companies.  After discussing the new charter’s intended purpose and benefits, we look at the OCC’s planned two-phase roll-out, how a payments charter would differ from the OCC’s fintech charter, other charter options for non-bank payment processors, and possible legal challenges.… Continue Reading

As we reported, Acting Comptroller of the Currency Brian Brooks has previewed the OCC’s plans to introduce another special purpose national bank charter that would give payment companies a nationwide servicing platform and federal preemption of state laws regarding licensing and regulation of money transmitters and payment services providers.  Acting Comptroller Brooks’ statements drew swift reaction in the form of a July 29, 2020 letter from seven leading banking trade associations.… Continue Reading

In recent interviews including a podcast with the ABA Banking Journal reported by Forbes, Acting Comptroller of the Currency Brian Brooks previewed the OCC’s plans to introduce another special purpose national bank charter that would give payment companies a nationwide servicing platform and federal preemption of state laws regarding licensing and regulation of money transmitters and payment services providers.… Continue Reading

The Senate Banking Committee will hold a hearing tomorrow, June 30, titled, “The Digitization of Money and Payments.”

The witnesses will include Charles Cascarilla, Chief Executive Officer and Co-Founder, Paxos, and Professor Nakita Q. Cuttino, Visiting Assistant Professor of Law, Duke University School of Law.

 … Continue Reading