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From the Heart of the EPCOR Membership to Capitol Hill

By Brian Dao posted 20 days ago

  

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Many people experience federal legislation from a distance through headlines, TV sound bites or social media summaries that rarely capture the nuance of policymaking. But each year, Nacha’s Government Relations Advisory Group (GRAG) visit to Capitol Hill offers a very different perspective. Sitting down with Congressional staff and committee members reveals how active, engaged and pragmatic these policymakers are, particularly when it comes to improving the U.S. payments system. Representing the EPCOR membership, I was able to bring real-world insights to the conversation, helping ensure the voices of our members navigating frontline challenges were heard clearly and constructively.

  

Below are some of the trending issues that were discussed, along with what they mean for financial institutions.

1. “Smart Friction” in the Rise of APP Fraud

One of the most pressing topics at Nacha’s Hill Day was the rapid growth of Authorized Push Payment (APP) fraud, a scam in which clients are tricked into sending payments themselves, often through real-time or faster payment rails. Under the Expedited Funds Availability Act (EFAA) and Reg CC, financial institutions are prohibited from placing holds on credits, even when fraud is suspected.

As the U.S. accelerates toward faster payments through the RTP® Network, the FedNow® Service and enhancements to ACH, the industry faces a delicate balancing act: speed vs. security.

While clients and businesses demand instantaneous access to funds, that same immediacy creates fertile ground for fraudsters. Once funds are sent, they are often quickly dispersed, leaving little opportunity for recovery.

This is where the concept of “smart friction” becomes critical. Rather than broadly slowing down payments, smart friction introduces targeted pauses in high-risk scenarios, such as:

  • Unusual transaction patterns,

  • New payee activity and

  • Behavioral red flags.

These pauses give RDFIs the opportunity to flag, review and potentially stop suspicious transactions before funds are distributed further. 
What It Means for Financial Institutions

For banks and credit unions, APP fraud poses both operational risks and reputational challenges. Financial institutions must:

  • Invest in advanced fraud detection tools powered by behavioral analytics and AI,

  • Develop real-time decisioning capabilities,

  • Create client education strategies that reduce susceptibility to scams and

  • Collaborate across the ecosystem to identify emerging threats.

Notably, regulators and lawmakers appear increasingly receptive to policies that allow risk-based payment delays, reinforcing the idea that speed alone cannot be the sole priority. 
2. The Need for Improved Fraud Information Sharing
Another key theme was the inadequacy of current data-sharing frameworks for fraud prevention. Today, financial institutions often operate in silos. Although well-intentioned, this often results from regulations such as the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act and the USA PATRIOT Act not being fully aligned regarding the sharing of information related to fraud.
These frameworks protect client privacy and prevent data misuse, but they can also inadvertently hinder fraud mitigation efforts. In many cases, sending and receiving financial institutions lack the ability to share critical information, such as account behavior patterns or known fraud indicators, that could stop a transaction in progress.
There is also a growing consensus on Capitol Hill that fraud-specific data-sharing exceptions, implemented with proper safeguards, could significantly enhance fraud prevention without compromising client protections. In short, there is value in having additional guidance from FinCEN on Section 314(b) of the USA PATRIOT Act to clarify safe-harbor protections for information sharing among financial institutions when fraud is suspected. 
What It Means for Financial Institutions

For financial institutions, expanded data-sharing could result in:

  • Faster identification of mule accounts and fraud rings,

  • Improved cross-institutional fraud detection and

  • Reduced financial losses and recovery timelines.

However, implementation will require:

  • Clear regulatory guidance to avoid compliance risk,

  • Robust governance frameworks to ensure proper use of shared data and

  • Investment in secure data exchange infrastructure.

Ultimately, financial institutions will need to strike a balance between privacy obligations and fraud prevention capabilities while advocating for regulatory modernization. 
3. The Payments Access and Consumer Efficiency (PACE) Act

Introduced in April 2026, the Payments Access and Consumer Efficiency (PACE) Act represents a significant legislative effort to expand access to U.S. payment rails.  At its core, the PACE Act aims to:

  • Increase competition by allowing more non-bank entities access to payment systems,

  • Reduce costs for clients and businesses and

  • Enhance innovation in payment services.

By broadening access beyond traditional financial institutions, policymakers hope to create a more inclusive and efficient payments ecosystem. However, this shift raises important questions about oversight, risk management and the evolving role of financial institutions. A primary concern expressed by financial institutions centers on maintaining a level playing field. Will all participants be held to comparable compliance, risk management and regulatory standards? While those questions remain, one thing is clear: financial institutions will continue to serve as anchors of trust, stability and expertise within an expanded payments ecosystem. 
What It Means for Financial Institutions

The PACE Act could significantly reshape the competitive landscape with:

  • Increased competition from Fintechs and non-bank providers,

  • Pressure on fee structures and margins and

  • Opportunity for financial institutions to partner with Fintechs rather than compete directly.

Forward-looking financial institutions will view the PACE Act as both a challenge and an opportunity, doubling down on innovation while leveraging their strengths in trust, regulation and client relationships. 
4. Nacha’s Government Relations Advisory Group & Why Representing EPCOR Membership Matters
Participation in Hill Day is more than symbolic; it is essential. Organizations like EPCOR represent a broad cross-section of financial institutions, many of which are navigating these issues in real time. Just as EPCOR advocates for you, our members, through rulemaking and industry engagement, we also work to ensure our members' perspectives are represented in legislative and regulatory discussions that shape the future of payments.

By engaging directly with lawmakers and staff, industry representatives:

  • Provide practical insights that inform policymaking,

  • Help avoid unintended consequences of legislation and

  • Advocate for balanced approaches that support innovation while managing risk.

EPCOR’s presence at these meetings reflects the importance of ensuring that policy decisions are grounded in operational reality, not just theoretical outcomes. 
Final Thoughts
The conversations on Capitol Hill this year reinforced a key truth: the U.S. payments system is evolving rapidly, and policymakers are actively working to keep pace. From tackling APP fraud with smarter safeguards to modernizing data-sharing rules and expanding access through the PACE Act, the path forward will require continued collaboration between regulators, lawmakers and industry participants.
And while most people may only see the final headlines, Hill Day offers a valuable reminder: meaningful progress in payments policy happens through ongoing dialogue, practical industry input and a shared commitment to building a safer, faster and more efficient financial system.

   

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 Go behind the scenes of Nacha Hill Day 2026 as Brian Dao, AAP, Vice President, Growth & Industry Relations, shares firsthand insights from conversations with congressional staff about Authorized Push Payment (APP) fraud, fraud information sharing, the PACE Act and the future of payments policy. Click here to hear why Hill Day matters and what these discussions could mean for financial institutions.

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