8 episodes

The PaymentsJournal Podcast is a weekly podcast that features payment and banking industry professionals throughout the value chain discussing relevant payment and banking topics. If you have a topic you would like us to cover or would like to be on the podcast please reach out to us at info@mercatoradvisorygroup.com

The PaymentsJournal Podcast – PaymentsJourna‪l‬ The PaymentsJournal Podcast – PaymentsJournal

    • Business News
    • 4.8 • 5 Ratings

The PaymentsJournal Podcast is a weekly podcast that features payment and banking industry professionals throughout the value chain discussing relevant payment and banking topics. If you have a topic you would like us to cover or would like to be on the podcast please reach out to us at info@mercatoradvisorygroup.com

    Cryptocurrency Exchange Regulations Pose Challenges for Decision Makers

    Cryptocurrency Exchange Regulations Pose Challenges for Decision Makers

    New and upcoming regulations are going to up-end how cryptocurrency exchanges operate. Listed below are the major regulations that need to be on your radar.







    In recent years, there have been numerous anti-money laundering laws set in place to prevent people from transferring cryptocurrencies illegally. Although this is great news for those who use cryptocurrencies in a legitimate fashion, there are still many challenges that cryptocurrency exchanges face with heightened regulation requirements.







    PaymentsJournal sat down with Neal Reiter, VP of Compliance Products at Acuant and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group to discuss the nuances of crypto exchange regulation and the pros and cons of holding it to the same standards as other currencies





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    New Anti-money laundering regulations







    In the most recent budget bill (US only), there are several hundred new pages of anti-money laundering regulations, which is the first major update of the Bank Secrecy Act in the last 19 years. The new Anti-Money Laundering Act (AMLA) requires that “every [financial institution] (FI), including crypto exchanges, review it, understand it, and integrate what it says into their AML programs,” explained Reiter. Once legislation is passed, the act becomes law and must be followed accordingly, so it is crucial that all FIs review the content and inform themselves of the impact it will have on their day-to-day operations.







    “There [are] some things that are really going to benefit financial institutions,” added Reiter. So what does this mean for cryptocurrency exchanges?







    One big focus of the document is surrounding information sharing. Technically, Financial Institutions can share information via a 314(b), but it’s a very slow and manual process. “And what the government is looking for is for financial institutions to start sharing data more safely, of course, both within their own institution and with the government.” This is set to include everything from Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR), which will be mutually beneficial for all parties involved.







    Next, the AMLA is set to increase potential fines and penalties for those not abiding by the new and existing regulation. Lawmakers have also made it easier and more lucrative for whistleblowing defectors to co...

    • 28 min
    Record ACH Payment Growth in 2020 to 26.8 Billion Payments

    Record ACH Payment Growth in 2020 to 26.8 Billion Payments

    Since the start of the pandemic, the ACH Network has worked diligently to support changing and growing needs of  the payments industry. With an uptick in Direct Deposits and the volume of per day transactions ACH payments thrived in 2020 and show few signs  slowing down.







    To further discuss the “new normal” of ACH payments and what the future of the payments industry will look like for both businesses and consumers, PaymentsJournal sat down with Michael Herd, Nacha SVP,  ACH Network Administration and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.





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    ACH Payments on the rise







    2020 was a record setting year for the ACH Network. For the first time ever, payment volume increased from one year to the next by over 2 billion payments, with a total of nearly 27 billion payments for the 2020 calendar year. To put that figure into perspective, it equates to about 81 payments per each U.S. citizen.







    NACHA ACH Volumes and Values 2020







     “ACH has been in a high growth phase over the past five years or so, even before the events of 2020.” Normally, the impact on the economy directly correlates with the impact on the payments system. For example, if unemployment rates are high, there will be fewer payroll payments and purchases. But this is not what the payments industry saw from 2020.







    “Unemployment benefit payments, economic assistance payments, and other types of assistance payments to the economy more than made up for the loss of payments due to the impacts on payrolls,” explained Herd. Distributing many of the first-round stimulus payments via checks through U.S. mail proved to be highly problematic, leading to a greater initiative by the government to find new ways to make payments electronically and remotely. This initiative certainly gave the payments industry an additional boost in its already thriving transaction ratio.  







    Are pandemic payments trends here to stay?







    While there are numerous COVID-19 related reasons for the swift changeover of many to electronic payments, experts don’t expect the payments industry to go back to its pre-pandemic methodology once the virus is under control.







    “Part of the challenge over the years is [getting...

    • 24 min
    PSCU Reports Weekly Credit vs Debit Payment Trends Throughout the Pandemic

    PSCU Reports Weekly Credit vs Debit Payment Trends Throughout the Pandemic

    I think I can safely speak for all of us when I say we just want to put 2020 behind us. But there were a lot of lessons learned by credit unions in regards to credit vs debit payment trends during the pandemic, and that data will continue to prove useful throughout the rest of the pandemic and into the new normal.







    To discuss how consumer debit and credit trends in 2020-21 have impacted the payments industry, how debit and credit transactions themselves have been impacted, and what changes should be expected across merchant sectors, PaymentsJournal sat down with Glynn Frechette, SVP, Advisors Plus Consulting at PSCU, Norm Patrick, Vice President, Advisors Plus Consulting at PSCU, and Ted Iacobuzio, VP and Managing Director of Research at Mercator Advisory Group.





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    Consumer debit and credit trends in 2020-21







    Since the beginning of COVID-19, PSCU has been working on a weekly basis to analyze data on year-over-year changes and various payment dynamics. As a result of the pandemic, nobody was immune to the shifts in consumer behavior and payment patterns, which were heavily influenced by the adoption of new technologies. Although the pandemic was a largely negative occurrence, it did help to accelerate the implementation of more digital payment types and methods, which has been invaluable for the growth of the payments industry.







    According to the chart below, there has been a substantial upward shift in contactless and card not present transactions. “The blue line shows our debit growth for Card Not Present transactions,” said Patrick. “And in our most current period, ending in January, we’re looking at about 42% year-over-year growth compared to credit card at 24.5% growth.”







    Shift To Card Not Present and Contactless







    While both numbers are impressive, there is an obvious gap between the debit and credit trends displayed. “I think you can attribute a lot of that to the fact that debit has really been the major growth in terms of payment method over the past year as we’ve gone through the pandemic,” explained Patrick. This could be due, in part,

    • 35 min
    How Community Banks Can Prepare for a Likely Increase in Delinquent Payments

    How Community Banks Can Prepare for a Likely Increase in Delinquent Payments

    Let’s face it: the pandemic has all but crippled the U.S. economy. Millions of citizens have been left jobless in the wake of the devastating COVID-19 virus, so it’s no surprise that delinquent credit has led to an uncharacteristic rise in delinquent payments. 







    Delinquent credit is the falling behind of monthly payments to the lending bank. After two or more payments are missed, the delinquency status is typically reported to the credit bureau, negatively affecting the borrower’s credit score.







    The government has provided citizens with some forbearances, such as deferred student loans, a moratorium on evictions, and an increase in unemployment benefits. But for some American families, a few thousand dollars and a temporary lapse in certain payment responsibilities are still not enough to keep their credit profiles in good standing.







    To discuss how community banks can help combat credit delinquency and help members get ahead, PaymentsJournal sat down with Jim Simon, EVP, Chief Administrative Officer & Chief Credit Officer at TCM Bank, N.A. and Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group.





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    How community banks can keep credit delinquency rates low







    From 2015-2019, the U.S. saw a steady increase in revolving debt caused by delinquent balances. As the chart below shows, however, credit delinquency debt significantly decreased from 2019 to October 2020due to reduced consumer purchases and tightening credit standards.







    2015 -2020 U.S. Revolving Debt





    Most borrowers would like to repay their debt if they are able. “The disruption from unexpected unemployment [numbers in the] double digits, [which] the United States is not used to, really populated that box in the area of ‘want to pay but can’t pay,” said Riley.





    When asked for his thoughts on how community banks can help to keep credit delinquency rates low, Jim Simon offered one solid piece of advice: listen. “People will be very willing to share, particularly if you adopt a collegial, collaborative, consultative approach to the collection calls,” Simon advised. “Listen, understand what the issues are, listen to the timing of those issues [and] how long you think they’re going...

    • 21 min
    Payments Orchestration Platforms Enhance the Rising Tide of Digital Goods

    Payments Orchestration Platforms Enhance the Rising Tide of Digital Goods

    When was the last time you heard someone say “Honey, we’ve got to pay the Netflix bill this month!” Or perhaps, “Mom, did you renew my Xbox LIVE subscription?” Rarely do today’s consumers think about these things, yet services continue on, day after day, uninterrupted. This is due to something called payments orchestration.







    Payments orchestration is about making all the moving pieces of a financial transaction work together seamlessly, increasing both customer satisfaction and merchant income. To learn more about the nuances of payments orchestration and its role in the digital goods and subscription-based industries, PaymentsJournal sat down with Randy Guard, Chief Marketing Officer at Spreedly and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.





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    Payments orchestration platforms are vital to the subscription economy’s growth







    The subscription economy has been on the rise for years, and the stay-at-home lifestyle of the pandemic has only accelerated its growth further. Recent research from Mercator Advisory Group shows that this growth is only expected to continue.







    Company(Users in Millions)2019 Users2020 Estimated Users2022 Estimated UsersAmazon Prime15180210Apple465600690Disney+1086190Netflix165200220Spotify115150165Walmart+01525Stay-at-home routines drove 2020 subscriber surge, but leading sellers will continue to see future growth. Source: Company Reports, Mercator Advisory Group







    The report splits the subscription economy into two categories: online subscriptions (music and video streaming, software downloads) and box subscriptions (food, beauty products, pet supplies). Combining the profits for both, this was an estimated $28 billion dollar market in 2020, a 66% year over year increase from 2019.







    “To put that into perspective of these online subscription services, that represents about 4% – 5% of e-commerce overall, if we think of e-commerce as about a $700 billion pie,” said Pucci. “So these the online subscriptions, including the box of the month, would be about 4% – 5%.”







    The subscription economy is very closely connected to digital goods,

    • 32 min
    The Best Approach to Risk Management in a Global Economy? A Digital Identity Network.

    The Best Approach to Risk Management in a Global Economy? A Digital Identity Network.

    With regulations becoming increasingly strict, it is more important than ever for companies to deploy a holistic approach to managing risk. More specifically, financial services organizations should be using a digital identity network to decrease fraud and optimize identity verification.







    To learn why a digital identity network is the best approach to digital identity verification, PaymentsJournal sat down with Steve Munford, CEO at Trulioo, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.





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    What is digital identity verification?







    Digital identity verification is a process that identifies a person’s digital identity—the data and personally identifiable information (PII) existing online that can be traced back to a real person, organization, or device. 







    Digital identity networks allow businesses to take a risk-based approach to verifying digital identity. A risk-based approach means that the identity network uses only the PII needed to verify a digital identity. The amount of information needed and verification methods used is dependent on the risk level of the specific digital user being identified.







    For someone in North America, that digital proof of identity might come from a driver’s license and proof of address such as a utility bill. For someone in a developing country, that might be a mobile phone number tied to their name, a selfie (biometric authentication), and digital document verification.







    The identity network’s infrastructure does the hard work of matching the verification methods to the risk level, offering an optimal user experience with the appropriate security measures.







    Why an identity network is the best approach to digital identity services







    Businesses that operate in the digital economy—and in particular regulated entities—must create their own safe and trustworthy online environments. This means satisfying strict security requirements without lengthy identity checks that can alienate customers. This is particularly true during the customer onboarding process,

    • 20 min

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