Payments Pros – The Payments Law Podcast

In this episode of Payments Pros, Carlin McCrory is joined by Matthew Goldman, founder of Totavi, LLC and publisher of CardsFTW, to discuss operational compliance for card issuers. Their conversation highlights essential practices for maintaining compliance, such as tracking transactions and monitoring systems effectively.Carlin and Matthew examine the complexities of card programs, identifying common pitfalls and exploring strategies to enhance partnerships with banks and customers. They emphasize how compliance can serve as a revenue enabler rather than merely a cost center. Through practical approaches, such as refining marketing collateral approval processes, they discuss ways to streamline operations and support growth effectively.Matthew shares insights from his extensive fintech experience, offering perspectives into industry expectations and the complexities of card products. Carlin and Matthew's discussion underscores the importance of having the right team and partners to navigate compliance challenges successfully.

In this episode of Payments Pros, Carlin McCrory is joined by Pete Jeydel, a partner in the firm's White Collar Litigation + Investigations Practice Group, to discuss the new Department of Justice (DOJ) Data Security Program (DSP), which took effect earlier this year. The DSP, administered by the DOJ's National Security Division, aims to enhance protection for sensitive personal data linked to U.S. persons for activity involving countries of concern like China and Russia. Pete explains that this regulatory framework is distinct from traditional data privacy laws, emphasizing national security over individual consent and contractual protections. The program emerged rapidly following an executive order from President Biden in February 2024, reflecting long-standing concerns about foreign data access.As the episode concludes, Pete emphasizes the critical need for companies to understand the scope and impact of the DOJ's new data security rules. These rules include broad exemptions, including for financial services, but they are complex and require careful interpretation. Noncompliance could result in substantial civil and criminal penalties, making it essential for companies to establish a robust compliance strategy. The DOJ rules necessitate a focus on high-risk areas and a risk-based approach to compliance. Companies are encouraged to proactively assess their data security practices to align with DOJ objectives and effectively mitigate potential risks.

In this special joint episode of The Consumer Finance Podcast and Payments Pros, Chris Willis, co-leader of Troutman Pepper Locke's Consumer Financial Services Regulatory Practice, is joined by Keith Barnett and Jason Cover from the Payments Pros podcast, along with Troutman Pepper Locke Consumer Financial Services Partner Mark Furletti. They discuss the future of earned-wage access (EWA) products following the Consumer Financial Protection Bureau's (CFPB) rescission of previous guidance. The conversation explores the history and evolution of EWA products, initially designed as employer-based solutions to provide employees early access to earned wages without extending credit.The group highlights regulatory challenges, including the CFPB's changing stance and the impact of state laws on EWA offerings. They examine how these products are structured to avoid being classified as credit, focusing on optional fees and the absence of repayment obligations. The discussion also addresses the legal landscape, noting potential state-level regulatory landmines and private litigation. The episode emphasizes the importance for fintechs and payroll processors to navigate these complexities carefully, especially in states with stringent regulations like California and New York. The podcast concludes with insights into the future of EWA, stressing the need for compliance with evolving state and federal laws.

In this special crossover edition of the Payments Pros and Consumer Finance podcasts, Carlin McCrory and Jason Cover are joined by their colleague Caleb Rosenberg to explore the evolving landscape of small business financing. They highlight the significant growth in diverse financing products and providers, which have expanded funding access for small businesses, particularly startups.The discussion outlines the evolution from traditional bank lending to the rise of online and fintech solutions, which have filled gaps left by conventional lenders. The group also examines the complexities of the regulatory environment, focusing on the increased scrutiny from state legislatures and the introduction of consumer-like disclosure requirements for small business lending.Additionally, they consider the impact of recent legislative changes in states like Texas and Louisiana, which could transform financing practices. The conversation includes best practices for structuring and servicing financial products while also speculating on future regulatory trends and the potential influence of federal oversight by the FTC.

In this episode of Payments Pros, Carlin McCrory is joined by Mary Zinsner, a partner in the Consumer Financial Services Practice Group, to explore the increasing litigation trends in the payments industry, with a focus on elder fraud and financial exploitation.Mary provides valuable insights into how these fraud cases frequently involve diverse payment systems, such as wire transfers and electronic fund transfers. The conversation sheds light on the challenges faced by financial institutions, including the delicate balance between compliance and customer satisfaction, as well as navigating claims related to negligence and breach of contract.Additionally, Mary and Carlin discuss the shifting legal landscape, highlighting state legislative efforts aimed at safeguarding the elderly.

In this episode of Payments Pros, Carlin McCrory welcomes Melissa Sneed from the Georgia Department of Banking and Finance and James Stevens, co-leader of Troutman Pepper Locke's Financial Services Industry Group, to explore Merchant Acquirer Limited Purpose Bank (MALPB) charters.Melissa, the deputy commissioner for supervision, outlines the application process for obtaining a MALPB charter, emphasizing the importance of a comprehensive review of financials, management, IT systems, and compliance. She explains the timeline for the process, noting a six-month review period followed by a 90-day decision window after accepting the application, with conditional approvals extending through a three-year de novo period. James also provides insights from the applicant's perspective, stressing the need for thorough preparation and collaboration with legal and consulting experts before engaging with the Department of Banking and Finance.The episode also covers ongoing examination and oversight, highlighting the role of card networks and the unique regulatory requirements involved. The group's discussion emphasizes the collaborative effort required among applicants, card networks, and regulatory bodies to ensure successful charter implementation.

In this episode of Payments Pros, Carlin McCrory introduces Jason Cover as a new co-host. Jason, a partner in Troutman Pepper Locke's Consumer Financial Services practice, brings extensive knowledge in consumer lending and payments laws. He advises clients on electronic payments, online small business lending, electronic consents, contracts, disclosures, and recurring payment methods. As a fintech consumer credit attorney, Jason focuses on regulatory compliance and product design, covering both federal and state laws. His insights into payment authorizations, Regulation E, and Nacha rules are invaluable.

In this episode of Payments Pros, host Carlin McCrory welcomes Jason Mikula, a seasoned fintech and banking advisor, to explore various topics within the payments industry. They begin by examining the implications of U.S. sanctions on global payment systems and the potential shift away from U.S.-controlled payment rails. The discussion then moves to the viability of pay-by-bank systems in the U.S., focusing on the challenges posed by entrenched card payment behaviors.Carlin and Jason further discuss the sustainability of nonbank fintech businesses that rely solely on interchange fees, highlighting the necessity for diversified revenue streams. The episode also covers the adoption of real-time payments like FedNow, noting the limited consumer use cases compared to commercial applications. Additionally, they explore the innovation of network flexible payment credentials and the complexities surrounding consumer understanding of new payments products. The conversation concludes with insights into new types of financial charters and the potential role of stablecoins in international payments.

In this special crossover edition of the Payments Pros and Crypto Exchange podcast, Carlin McCrory is joined by colleagues Alex Barrage and Ethan Ostroff to discuss recent legislative updates surrounding payment stablecoins. The group begins by exploring the advantages of payment stablecoins, such as their 24/7 availability and programmability, and the merits of having robust competition for stablecoin issuance and use cases.They also highlight the introduction of the Anti-CBDC Surveillance State Act and the potential for states like Wyoming to issue their own stablecoins. The discussion covers the Securities and Exchange Commission's recent statement on USD-backed stablecoins, clarifying that they do not require Securities Act registration under certain conditions. The group emphasizes the importance of a robust legislative framework to ensure stablecoin proliferation and trust, considering factors like Know Your Customer, Anti-Money Laundering, and global regulatory alignment. The episode concludes with a discussion on the future of stablecoins and the possibility of them being widely used for retail payments, contingent on effective regulation and industry trust.

In this episode of Payments Pros, host Carlin McCrory discusses a recent consent order between Patriot Bank and the Office of the Comptroller of the Currency (OCC) following a $27 million loss. The order addresses unsafe practices and legal violations, focusing on prepaid card program oversight. Key areas of concern include the need for a strategic plan, evaluation of internal operations, and staffing requirements. The bank must also enhance its Customer Identification Program (CIP) and ensure adequate monitoring of third-party program managers.Carlin discusses key takeaways from the OCC's consent order with Patriot Bank, emphasizing that other banks should maintain high compliance standards, particularly in BSA/AML programs, and tailor policies and procedures to specific business lines. She underscores the importance of thorough monitoring of fintech partners. Additionally, banks should implement robust suspicious activity reporting, conduct detailed BSA/AML risk assessments, and ensure effective internal audit coverage.