Outlook for Fintech Regulation and Innovation in 2018


The payments industry is hoping 2018 will bring new policymaking innovations for the fintech sector. 

The Electronic Transactions Association is looking for Congress to move several pieces of legislation next year that could have a major impact on its members and the regulators that oversee them.

That includes bills governing data breach notification laws and encouraging regulatory “sandboxes” that allow companies to test new products and services without the fear of enforcement actions. Another bill would encourage a host of federal agencies that oversee financial services to set up “innovation offices” to collaboratively explore new technologies and regulations to promote them.

That approach would help keep pace with the technological evolutions and partnerships occurring in the market, said ETA’s CEO Jason Oxman.

“What we’re really seeing is financial services companies, in some cases large banks that have been around for 200 years, working with these great new technology companies ranging from small startups to large technology giants to bring fintech services and products to markets,” Oxman said.

ETA represents more than 500 financial services and technology, including tech giants Amazon.com Inc., Apple Inc., Facebook, Inc. and Alphabet, Inc.’s Google, global banks like Chase and Goldman Sachs & Co., financial service providers Mastercard, Inc. and Visa, Inc., and fintech companies like Kabbage, Inc., OnDeck Capital, Inc. and PayPal, Inc.

“With the advent and deployment of new fintech products and services, I think it’s safe to say that regulators are looking anew” at existing regulations, Oxman said. One of those efforts include a proposal by the Office of the Comptroller of the Currency to offer fintech companies a special banking charter. A decision on whether that proposal, which could allow some fintech companies to compete more directly with banks, moves forward or changes may come in 2018.

ETA is also hoping Congress will overhaul a patchwork of more than 40 data breach notification laws at the federal and state level coming in the wake of high-profile hacks and data breaches at Equifax and major retailers.

“We’d like to see a uniform national standard” that makes it easier for companies to be in compliance, Oxman said. “And we’d also like to see legislation that would continue to encourage regulatory agencies to continue to stay on top of regulatory developments in the industry,” he added.