ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
July 20, 2021
The Gateway For Payroll Data
The American economy is booming, and so is business optimism

Businesses of all sizes are feeling great about the economy

Optimism about the U.S. economy is abundant right now.

Consumers haven't been this confident in their prospects since the pandemic began. And for the country's biggest businesses, of course, it doesn't take a look much beyond the performance of the S&P 500 (^GSPC) and the tightening of credit spreads to see how strong businesses conditions are today. 

And when executives like JPMorgan (JPM) CEO Jamie Dimon are saying the "pump is primed" for consumers to start spending, you know how he's feeling about the state of the economic recovery. 

But recent data also shows there's confidence all across the spectrum, for businesses big and small. 

Paving the Payments Future
Credit Unions Stake Future On Contactless Cards, Digital Wallets

Credit unions (CUs) are known for catering to consumers with a personal touch and for helping small business clients thrive and grow, which has positive ripple effects throughout their communities.

Jeremiah Lotz, managing vice president, digital and data at PSCU, told PYMNTS that, as the pandemic wanes, CUs will have to ramp up their digital strategies to keep the momentum going.

The conversation came against a backdrop of turnover: The June CU Tracker, done in conjunction with PYMNTS and PSCU, found that as many as 36 percent of members are “likely” to leave if their CU’s competitors offer contactless payments.

Child Tax Credit Update Portal: The IRS upgraded the Child Tax Credit Update Portal to enable families to update their bank account information so they can receive their monthly Child Tax Credit payment.

Tax relief for employer leave-based donation programs due to COVID-19 pandemic: The IRS extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

State-by-state data on EIP3: The IRS and the Treasury Department released information detailing how many people in each state received the third round of Economic Impact Payments through early June.

“Dirty Dozen” tax scams for 2021: The IRS has begun its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for nefarious schemes and scams.
In the employer struggle to find workers, there may be a $12 billion fintech opportunity

Younger workers are demanding quicker access to their wages in what could drive the biggest change to the payroll industry in decades

A growing interest among younger workers to access their pay more quickly could create a $12 billion market for payroll providers and earned-wage upstarts that seek to disrupt the traditional idea of pay periods.

Fintech companies see a big opportunity to speed up access to earned wages, especially for hourly employees with tighter cash-flow needs and a greater proclivity to use costly and predatory options like payday loans to make ends meet. The technology, which can allow workers to receive their wages at the end of a shift, may drive the biggest change to the payroll industry in decades following a long stretch of monthly and then biweekly pay cycles.

Companies providing access to on-demand wages say they’re seeing a surge of corporate interest given the current labor market as businesses in sectors like retail and restaurants struggle to recruit workers. One Missouri Arby’s location lists “DAILY PAY” as the first bullet point in its job posting for a team-member position. DailyPay, a startup recently valued at upwards of $1 billion, says it works with some Arby’s franchises to provide this service.

Federal banking oversight agency wants banks to help the un-banked

Reaching and serving people without bank accounts has been a persistent challenge for federal agencies. But on the hunch that banks themselves could help the so called unbanked, the Federal Deposit Insurance Corporation has launched a tech sprint to come up with what it describes as technologies and techniques to do just that. For more, Federal Drive with Tom Temin turned to the FDIC’s Chief Innovation Officer Sultan Meghji.

Tom Temin: Mr. Meghji, good to have you on.

Sultan Meghji: Thanks for having me, Tom. It’s great to be here.

Tom Temin: Tell us about the sprint, you’re looking for ways that banks themselves could help the people without bank accounts – little bit ironic sounding.

3 types of inflation to worry about

The Biden White House thinks inflation is “transitory,” but it sure hasn’t transitioned away yet. Year-over-year inflation hit 5.3% in June, the highest level since 2008. Inflation has exceeded 4% for three months in a row, and economists think the trend will continue at least a little while longer.

Distortions from the coronavirus pandemic have obviously caused some of the wild price swings buffeting the economy. Some price surges will fade as supply and demand rebalances. Other price hikes are more worrisome, including rent, food and energy. If that inflation lasts, it could cause sustained consumer pain and undermine the recovery. It could also jolt financial markets by forcing the Federal Reserve to abandon its stimulative monetary policy sooner than expected.

First, the inflation that’s most likely to fade. A variety of one-time factors have caused shortages of certain goods and anomalous price hikes. Looking at prices on a two-year basis, rather than just one, gives a sense of just how abnormal the supply-demand mismatch is for these products and services:

SAFE Banking secondary to comprehensive pot reform, Senate Democrats say

A new bill, unveiled Wednesday, could become a setback for the future of the SAFE Banking Act, after lawmakers said comprehensive reform would take priority over the more narrow banking bill.

Senate Democrats made good on their promises to introduce a comprehensive cannabis reform bill this week, unveiling draft legislation Wednesday that would remove cannabis from the federal list of controlled substances and expunge federal nonviolent marijuana crimes.

But the draft bill could become a setback for the future of the SAFE Banking Act, legislation that provides protections for banks that service the industry, after lawmakers said their comprehensive reform would take priority over the more narrow banking bill.

Remote work offers test for banks amid 40-fold surge in malicious cyber activity

Financial institutions and financial market infrastructures (FMIs) rapidly adopted work-from-home models in the pandemic. But the move raised the level of cyber risk, as essential employees at banks and other financial centers adopted virtual computing networks and embraced third-party service providers such as cloud banking. It could leave the organizations vulnerable to potential risks due to a single point of failure, according to a report last week by the Financial Stability Board.

The frequency of malicious cyber activity — including phishing, malware and ransomware — exploded over the past year. Incidents jumped from about 5,000 per week in February 2020 to more than 200,000 per week by late April 2021, according to the report, which cited data from the Financial Services Information Sharing and Analysis Center. Threat actors targeted bank employees and customers with malicious activity.

In many cases, banks and FMIs invoked business continuity plans that involved wholesale shifts in network security, including the wide use of virtual private network infrastructure and often unsecured Wi-Fi access points, the report said. Banks also had to shift millions of customers from in-branch banking to mobile app-based transactions or telephone banking.

Rent payments could boost credit scores in a big way

Millions of renters could get a big boost to their credit score if landlords reported their on-time rent payments, according to a new TransUnion analysis, which could help lower their borrowing costs.

The biggest hurdle, though, is getting landlords and lenders on board.

“I always wondered how it is that the single largest payment a person makes out of their bank account every single month doesn't count on their credit score,” Maitri Johnson, vice president of tenant and employment screening at TransUnion, told Yahoo Money.

Renters could raise their credit score nearly 60 points if their rental payment history was factored into their credit report, according to the credit bureau’s findings. In addition, 1 in 11 people went from having no credit score to scoring 631 on their VantageScore 3.0, making them a near prime lending risk and considered a fair score.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
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