Welcome To
The Bottom Line

Sens. Dick Durbin (D-Ill.)t, Peter Welch (D-Vt.), Roger Marshall (R-Kan.), and J.D. Vance (R-Ohio) have re-introduced the bipartisan Credit Card Competition Act of 2023 (CCCA). Companion legislation was introduced in the House by Reps. by Lance Gooden (R-Texas) and Zoe Lofgren (D-Calif.).

This year’s edition of Money20/20 was back in full force. It was a well-attended event by all players in the ecosystem, a definitive difference from last year when lingering COVID-19 travel restrictions kept many would-be attendees on the sideline.

The conversation among the 13,000 registered attendees in Las Vegas, and countless others working the periphery, expanded beyond last year’s darling – cryptocurrency – to encompass other issues financial institutions will face as they head into a potentially turbulent 2023. This year’s top themes included safety and security, innovation, and evolving regulation.

Here are a few recurring observations from our time there...

Financial institutions of all sizes are under pressure to find new revenue sources and solidify their status as customers' trusted financial advisors. One would think FIs would race to participate in a lending category projected to grow significantly in coming years – and one where 70% of consumers indicated in a recent survey that they'd prefer access through their bank.

That isn’t necessarily the case. Surprisingly, a study by IntraFi Network found that 80% of community banks and credit unions have no plans to introduce Buy Now, Pay Later (BNPL) services. A new SRM report details why FIs should closely examine this opportunity – not only as a revenue generator but also to defend current and future business.

Several high-profile banks, including Capital One, Citigroup, Wells Fargo, and Bank of America, have announced plans to either eliminate or dramatically reduce overdraft (OD) and nonsufficient funds (NSF) fees. It could be argued that these banks made this leap before regulators, including the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), required them to do so.

Buy Now Pay Later (BNPL) has emerged as one of the most discussed and fastest-growing areas in consumer lending. What has been surprising is the unwillingness of many financial institutions to add it to their product offerings, according to a recent survey by IntraFi Network. Though BNPL upstarts like Klarna and Affirm continue to claim new territory, the survey indicates that 80% of community banks have no plans to add these services.

This year’s Money 20/20 conference marked a notable return to large-scale in-person industry events, as thousands of professionals gathered in Las Vegas to discuss all things fintech. It’s unsurprising yet ironic that this group, finally able to meet face-to-face, focused on digital solutions enabling remote commerce.

Here’s an overview of key takeaways from four days of in-depth discussions with clients and other experts in this dynamic sector.

The global supply chain has drawn more mainstream attention over the past year than in generations – or perhaps ever. Supply chain issues have affected everything from shipping container shortages to automobile production to gaming consoles to, believe it or not, credit and debit cards.

A critical factor in most of the items previously mentioned is an ongoing shortage of silicon chips. Such chips are a building block for virtually all electronic products enjoyed by consumers worldwide.

We believe this supply risk should be on the radar of every financial institution, given the importance of keeping customers equipped with active payment cards. With effective planning, issuers can minimize the potential impact on their organizations.

As discussed in a previous blog, the Federal Reserve began seeking comments on proposed changes to Reg II of the Durbin Amendment in May. At that time, the Fed said that it felt the changes would be non-substantial and would not include more compliance obligations. Currently, the Fed bars issuers from restricting the number of unaffiliated networks for debit card transactions to fewer than two, including one signature network and one PIN network. The new proposal would make issuers responsible for ensuring that all transactions with US merchants can be routed across two unaffiliated networks.

While the Fed characterized this change as a simple clarification, it is anything but, as evidenced by the over 2,600 comments received. It is clear this issue is complex, substantial, and would increase compliance obligations.

We have sorted through the comments posted on the Fed's website and various government sites to summarize the key points for both sides of this argument.