Electronic Transactions Association calls for regulatory collaboration


The Electronic Transactions Association worries that too much regulation will stifle innovation and hurt underserved consumers, the industry group said in a document outlining its policy perspectives.

The Electronic Transactions Association (ETA), a payments trade association whose members include big tech companies and other payments providers, urged regulators to work “collaboratively and with careful consideration” today in an annual document outlining its policy perspectives.

According to a 33-page document released Monday by the ETA, regulators must avoid a one-size-fits-all approach to setting rules for financial products. Otherwise, the public will lose out on products and services that could prove to be beneficial to them, the ETA said.

“Such an unintended consequence could reduce benefits and options to consumers at a time when new technologies are providing the underserved with unprecedented access to financial products and services,” the ETA’s white paper said.

ETA’s policy perspective document arrives this year as the Consumer Financial Protection Bureau is taking a hard look at some of the industry’s practices. Last October, the agency ordered an inquiry into the products, services, and business practices of some ETA member companies, including big tech companies such as Google, Apple, and PayPal. The agency is seeking information on how the companies provide the services to customers, what risks there might be for consumers and what the companies’ financial interests are, according to the CFPB document demanding the information.

Separately, the agency also began an inquiry last year into the products and practices of buy now-pay later companies, including Affirm, Afterpay, Klarna, and Zip. In addition, the CFPB is reviewing its policies related to companies’ earned wage access services, and increased financial institution data sharing.

The inquiries are being driven by the CFPB’s new director, Rohit Chopra, who was appointed to lead the agency by Pres. Biden last year. The ETA has said it will cooperate with the bureau’s investigations.

ETA spokesman Scott Talbott said that the association’s message in the document released today was meant to apply to all regulators and wasn’t targeting Chopra in particular. The association, though, has raised questions about the scope of the investigations ordered by Chopra.

“ETA members are constantly developing and deploying new products and services, bringing together traditional players and new participants,” the paper says.”The innovation in this space delivers new products and services quickly and cost-effectively while supporting an inclusive financial system.”

The ETA contends that among the beneficiaries of the boom in new payments products and services are people worldwide who are unbanked or underserved by existing financial institutions. A 2019 Federal Deposit Insurance Corp. survey showed that 5.4 percent of U.S. households are unbanked.

“Billions of people around the globe face inconvenient, time-consuming, and prohibitively expensive systems for completing simple transactions like cashing a paycheck or sending money to a loved one,” the ETA’s paper said. “In this era of mobile technology and advanced software platforms, the fintech sector supports this underserved group by helping people around the world manage, move, and spend their money by providing more consumer choice.”


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