Payments Access, Choice, and Governance

Position

• ICBA is a strong advocate for secure, financial institution-centric payments systems, and urges policymakers and regulators to maintain their position that direct access to these systems be limited to federally regulated financial institutions.
• ICBA advocates for comprehensive and consolidated supervision of novel firms entering the financial services landscape and encourages cross-agency collaboration to harmonize and provide more clarity to regulatory frameworks that apply to digital assets.
• ICBA strongly urges policymakers to ensure a competitive level playing field for the financial services ecosystem.
• ICBA supports both public and private sector payments settlement networks that facilitate competition and that permit financial institutions to select the provider(s) of their choice.
• ICBA supports the industry rules and the payment market infrastructure (PMI) providers that play a role in developing and maintaining payments systems’ access and functionalities. ICBA urges these organizations to ensure that their governance processes enable and foster community bank participation and support transparent, timely, and inclusive rulemaking.
• ICBA encourages standardization efforts in the industry, for customer-permissioned data sharing, that reflect the broad breadth of capabilities and resources of varying financial institutions.

Background

The Payments industry is constantly changing and presenting new opportunities. ICBA continues to support a payment system that provides consumer access and choice to regulated institutions, thus maintaining the secure independent financial systems which are America’s economic strength.

Access to the payment systems should be limited to regulated institutions. The proliferation of non-bank financial technology (“fintech”) companies that are providing banking services but sit outside the regulatory perimeter has created an unfair advantage for fintechs, while adding risk to the financial system. Fintechs are not subject to the same safety and soundness oversight as banks. No institution should be provided a competitive advantage through policy preferences. All regulated institutions should have a level playing field, and regulations should align with risk.

Community bank payments systems access must not be limited through the imposition of anti-competitive and discriminatory pricing or policies, membership requirements, operating rules, or technological barriers. Competition ensures equitable access, provides options for community banks, and fosters systemic resiliency for the settlement of payments.

Given that industry rules govern the Automated Clearing House, payment card networks, and check clearing houses, it is vital for community banks to participate in the rulemaking, operations, and governance of these organizations. The rulemaking process should be transparent and ensure that community banks have opportunities to review proposed rules and provide comments.

Community banks are highly dependent on their core banking platforms and other solution providers for technology and other digital tools. Standards implementation by different market participants should reflect industry progression and not leave community banks at a disadvantage from any asymmetry of capabilities and resources.