Blogs

Special thanks to @Trevor Witchey, AAP, NCP, Senior Director, Payments Education for helping me write this blog!

2024 could bring forth interesting developments that impact financial institutions. The payments sector is constantly evolving with new technologies or changes in rules/regulations.  We’re also seeing the rise of Instant Payment networks along with consumers and businesses wanting an increased level of speed and gratification with their payments. While we do not have a crystal ball or any insider information, we do follow trends and keep a close eye on the industry.

4. Will Same Day ACH have any changes? Since April 2022 when they raised their per-entry limit to $1 million, it’s been quiet on the Same Day ACH front.  Will this product make any alterations to compete with the newly launched FedNow^® or RTP^®?  Nothing has been announced other than the reporting of record volumes for Same Day since the $1 million limit change from March 2022. 

5. What will be the impact of any Nacha rule changes? In May 2023, Nacha presented nine proposed rules in the form of Requests for Comment, along with four other Requests for Information for future consideration.  After receiving many responses from the RFCs and RFIs, Nacha is likely holding internal discussions and, as their website section for proposed ACH Rules now says, “formulating ideas”.  We’ll see what the new year brings!

6. What new products will non-financial institution companies develop?  2023 saw Apple creating a savings account attached to their card product while Venmo began offering accounts to teenagers with their parent’s permission.  Meanwhile, various apps are offering incentives such as cashback rewards when using their Debit Card for any funds kept within the app. We can only assume more innovation is on the horizon.

7. Will any new federal regulations be created for cryptocurrency?  Times were tough for several financial institutions and investors through early 2023 following various cryptocurrency indexes seeing an extended decline through the second half of 2022.  There have been calls for regulations, at a federal level, on cryptocurrencies for years and the closure of several institutions by the FDIC could create change.  

8. Will 2024 be the year of cannabis?  Through late 2023, there was discussion on Capitol Hill about rescheduling marijuana from a Schedule 1 drug to a Schedule 3, which would significantly reform the penalties assessed on possession, distribution and use of cannabis.  Conflicting with federal policy, many states have deregulated marijuana for allowable recreational or medicinal use.  Furthermore, federal financial regulations still make it illegal to conduct business with dispensaries, growers or associated companies involved in the selling of cannabis products.  Reportedly once marijuana is rescheduled as a drug, the next push could be providing legal cover to financial institutions for conducting business with dispensaries or growers. 

9. ISO 20022 for wire transfers – how will the conversion go?  The Clearing House CHIPS wire system will implement ISO 20022 payment message format in April 2024.  With ISO 20022 being more data-rich with more descriptive fields and character space, what could that imply on how wire transfers will be entered?  How could implementing ISO 20022 help in the international wire space?  And how could CHIPS implementing it first create observations for when FedWire implements ISO 20022 in March 2025?

10. Will there ever be any revisions to Regulation E?  Following the case of Wilkins vs. Navy Federal Credit Union, there was chatter in Washington and at the Consumer Financial Protection Bureau (CFPB) about consumers being “induced to authorize”.  Nothing has been presented or pending on Regulation E as of late, but the language of this regulation has mostly been unchanged since payment apps were first introduced on smartphone devices.

11. Will late fee revisions be put in place on credit cards? In April 2023, there was a Request for Comment by the CFPB requesting feedback on capping late fee charges, now allowing higher subsequent fee charges and reducing the liability protection on fees for financial institutions.  RFCs were sent in and we’ve yet to hear from the CFPB on any Regulation Z Rule changes regarding credit card late fees. 

12. Will FinCEN’s Beneficial Ownership Reporting have an impact?  Effective 1/1/24, applicable corporations, LLCs and other entities conducting business in the United States will have to register their beneficial owners who exercise substantial control or own/control at least 25% of the ownership interests of the company directly with the U.S. Treasury’s FinCEN system.  Since the late 2010s, companies were required to register that information with financial institutions, but now they must file that with FinCEN as well. 

13. How high will interest rates go?  Since 2022, the Federal Reserve’s Open Market Committee has increased interest rates to slow down the money supply’s growth to combat excessive price inflation.  Increasing interest rates also carries a risk of causing credit to become too expensive to consumers and businesses.  It’s a delicate balance, but inflation metrics in fall 2023 were ticking up while many other economic numbers appeared stable (such as low unemployment, for example).  If unemployment numbers start to rise but inflation remains high (“stagflation”, like in the 1970s), what would be the next policy move?

14. How will the 2024 election go?  We’re not here to pick any political sides, but an election year of multiple Senators, all House of Representatives and the President up for grabs could implement changes on how things are regulated or deregulated moving forward, along with key appointments to positions affecting the financial sector. 

15. How much will Artificial Intelligence (AI) grow during 2024?  For all you know, AI might be writing this article… kidding! In the last year, AI has taken off online and created unique processing capabilities that were never dreamt of before.  From writing entire documents to creating convincing-sounding voiceovers, AI grew in leaps and bounds during 2023 and could grow further in strength during 2024, good or bad.  It’s a real race on how much more can be innovated or adopted with it as a tool before it becomes regulated (if that’s possible).

So much more could happen during 2024, as you never know what changes or events could present themselves. The best thing your organization can do to prepare for whatever comes your way is to ensure you have proper business continuity plans in place. Having sound plans in place, keeping an eye on industry trends and keeping in-the-know on all things payments will set you up for success! If you would like help with your organization’s business continuity plans, or with anything else you’re working on in 2024, reach out to our team at advisoryservices@epcor.org. Our team would love to assist you with any payments challenge!