IS CASH STILL KING REVIEWING THE RISE OF MOBILE PAYMENTS HEARING BEFORE THE TASK FORCE ON FINANCIAL TECHNOLOGY OF THE COMMITTEE ON FINANCIAL SERVICES U S HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION JANUARY 30 2020 Printed for the use of the Committee on Financial Services Serial No 116–80 U S GOVERNMENT PUBLISHING OFFICE WASHINGTON 42–795 PDF VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 2021 Sfmt 5011 K DOCS HBA030 000 TERRI HOUSE COMMITTEE ON FINANCIAL SERVICES MAXINE WATERS California Chairwoman CAROLYN B MALONEY New York ´ ZQUEZ New York NYDIA M VELA BRAD SHERMAN California GREGORY W MEEKS New York WM LACY CLAY Missouri DAVID SCOTT Georgia AL GREEN Texas EMANUEL CLEAVER Missouri ED PERLMUTTER Colorado JIM A HIMES Connecticut BILL FOSTER Illinois JOYCE BEATTY Ohio DENNY HECK Washington JUAN VARGAS California JOSH GOTTHEIMER New Jersey VICENTE GONZALEZ Texas AL LAWSON Florida MICHAEL SAN NICOLAS Guam RASHIDA TLAIB Michigan KATIE PORTER California CINDY AXNE Iowa SEAN CASTEN Illinois AYANNA PRESSLEY Massachusetts BEN MCADAMS Utah ALEXANDRIA OCASIO-CORTEZ New York JENNIFER WEXTON Virginia STEPHEN F LYNCH Massachusetts TULSI GABBARD Hawaii ALMA ADAMS North Carolina MADELEINE DEAN Pennsylvania ´ S ‘‘CHUY’’ GARCIA Illinois JESU SYLVIA GARCIA Texas DEAN PHILLIPS Minnesota PATRICK MCHENRY North Carolina Ranking Member ANN WAGNER Missouri PETER T KING New York FRANK D LUCAS Oklahoma BILL POSEY Florida BLAINE LUETKEMEYER Missouri BILL HUIZENGA Michigan STEVE STIVERS Ohio ANDY BARR Kentucky SCOTT TIPTON Colorado ROGER WILLIAMS Texas FRENCH HILL Arkansas TOM EMMER Minnesota LEE M ZELDIN New York BARRY LOUDERMILK Georgia ALEXANDER X MOONEY West Virginia WARREN DAVIDSON Ohio TED BUDD North Carolina DAVID KUSTOFF Tennessee TREY HOLLINGSWORTH Indiana ANTHONY GONZALEZ Ohio JOHN ROSE Tennessee BRYAN STEIL Wisconsin LANCE GOODEN Texas DENVER RIGGLEMAN Virginia WILLIAM TIMMONS South Carolina VAN TAYLOR Texas CHARLA OUERTATANI Staff Director II VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K DOCS HBA030 000 TERRI TASK FORCE ON FINANCIAL TECHNOLOGY STEPHEN F LYNCH Massachusetts Chairman DAVID SCOTT Georgia JOSH GOTTHEIMER New Jersey AL LAWSON Florida CINDY AXNE Iowa BEN MCADAMS Utah JENNIFER WEXTON Virginia TOM EMMER Minnesota Ranking Member BLAINE LUETKEMEYER Missouri FRENCH HILL Arkansas WARREN DAVIDSON Ohio BRYAN STEIL Wisconsin III VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K DOCS HBA030 000 TERRI VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K DOCS HBA030 000 TERRI CONTENTS Page Hearing held on January 30 2020 Appendix January 30 2020 1 33 WITNESSES THURSDAY JANUARY 30 2020 Ahmed Usman Head of Global Public Policy PayPal Inc Del Rio Deyanira Co-Director New Economy Project Ford Kim Executive Director U S Faster Payments Council FPC Klein Aaron Fellow Economic Studies and Policy Director Center on Regulation and Markets Brookings Institution Tetreault Christina Senior Policy Counsel Consumer Reports 6 4 11 7 9 APPENDIX Prepared statements Payne Hon Donald M Ahmed Usman Del Rio Deyanira Ford Kim Klein Aaron Tetreault Christina ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Lynch Hon Stephen F Written statement of Americans for Common Cents Written statement of Cardtronics Written statement of Coinstar Written statement of the Electronic Payments Coalition Written statement of the Electronic Transactions Association Written statement of FMI-The Food Industry Association Written statement of the Innovative Payments Association Javelin Advisory Services report entitled ‘‘Growing P2P Adoption’’ Written statement of the Merchant Advisory Group Written statement of the Modern Money Network Written statement of the Money Services Business Association Written statement of Nacha Written statement of the National Association of Convenience Stores Written statement of the National Grocers Association Written statement of the Payment Card Industry Security Standards Council Written statement of The Pew Charitable Trusts RPGC Group Investigative White Paper entitled ‘‘Payment Insecurity— How Visa and Mastercard Use Standard-Setting to Restrict Competition and Thwart Payment Innovation’’ Written statement of the Secure Payments Partnership V VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 34 37 47 55 65 76 K DOCS HBA030 000 TERRI 88 94 102 105 108 111 118 126 146 150 154 158 160 162 164 171 179 247 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K DOCS HBA030 000 TERRI IS CASH STILL KING REVIEWING THE RISE OF MOBILE PAYMENTS Thursday January 30 2020 U S HOUSE OF REPRESENTATIVES TASK FORCE ON FINANCIAL TECHNOLOGY COMMITTEE ON FINANCIAL SERVICES Washington D C The task force met pursuant to notice at 9 34 a m in room 2128 Rayburn House Office Building Hon Stephen F Lynch chairman of the task force presiding Members present Representatives Lynch Scott Gottheimer Axne McAdams Emmer Luetkemeyer Hill Davidson and Steil Ex officio present Representatives Waters and McHenry Also present Representatives Himes Payne Hollingsworth and Gonzalez of Ohio Chairman LYNCH The Task Force on Financial Technology will now come to order Good morning Without objection the Chair is authorized to declare a recess of the task force at any time Also without objection members of the full Financial Services Committee who are not members of this task force are authorized to participate in today’s hearing And without objection Representative Donald Payne of New Jersey may also participate in today’s hearing and be recognized by the Chair to question witnesses under the 5-minute rule so long as all members of the Committee on Financial Services who are present have been recognized for that round of questioning Today’s hearing is entitled ‘‘Is Cash Still King Reviewing the Rise of Mobile Payments ’’ I now recognize myself for 4 minutes to give an opening statement Again welcome everyone Good morning and thank you for attending this hearing of the task force and thank you for joining us today We are here to discuss the future of payments in America Over the past few years we have heard anecdotal but growing evidence that retailers and consumers are moving toward a cashless society a society where consumers don’t carry cash and retailers don’t accept it instead using either plastic or mobile forms of payment A truly cashless future is not imminent but the rise is real and today’s conversation is to help our committee better understand the implications of that rise for financial inclusion consumer privacy and costs to both business and consumers New payment methods the theory goes speed up transactions to give consumers more control over their money and make operating a business cheaper and safer A consumer can swipe a card or tap 1 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 2 their phone instead of making change at the register That transition is then instantaneously documented with her financial institution automatically adding it to her ledger which tracks spending and available balances and the business gets to avoid the time and expense of accounting for safely storing and moving physical currency However the use of physical cash is still a major part of our retail economy Research shows that cash payments make up 42 percent of transactions under $25 and 49 percent of transactions under $10 These transactions disproportionately involve disadvantaged and working-class Americans Cashless payments typically require that consumers have access to a bank account to back their payment method Despite improvements over the past few years the most recent FDIC survey showed that roughly 14 million adults 61⁄2 percent of America’s households lack bank account access If we don’t solve the problem of banking access before transitioning to a cashless society we will be preventing families across the country from accessing many of the basic goods and services they need to survive Further high-profile data breaches have been a regular fixture in the news over the past few years This has left consumers rightly concerned about the security of their financial data Cash transactions involve no consumer data being collected while non-cash payments require at least some data to be exchanged More than a quarter of all malware attacks in 2018 were directed at banks and financial organizations As the amount of personally identifiable information PII stored by financial services firms grows we will continue to see a rise in the attacks on these groups And while our financial institutions continue to combat these attacks some consumers choose to manage their finances in cash A cashless future would not give these Americans that choice We need to continue to promote innovation and payment technology inclusion and security I hope that today’s hearing will focus on the ways we can develop our payment system to reflect these needs The ubiquity of mobile payments is on the rise in Europe and Asia and our competitors there will also continue to develop their own technology We must learn from their experience and focus on meeting the needs of all of our consumers here at home So I look forward to today’s discussion and to hearing from our witnesses With that I now recognize my friend and the new ranking member of the task force Mr Emmer for 5 minutes for an opening statement Mr EMMER Thank you Mr Chairman and thank you for convening this hearing on mobile payments I want to take a moment to acknowledge the concerns that some of our witnesses will offer in their testimony some of which you just shared There are serious public policy challenges to address and I look forward to working through them with you and everybody on this task force However I may differ in tone today because I would like to look at the many positive changes and innovations we have in mobile payments We have tremendous innovation occurring in the mobile payment space The term ‘‘mobile payments ’’ is so broad that it even fails VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 3 to capture all of the improvements in ease and convenience of payment as well as the growing methods of payment We can’t be afraid of innovation and change Ignoring or even suppressing innovation will not make it go away Innovation can actually be a key driver in lowering costs to individuals and creating new ways to enhance consumer protection We have so many ways to pay today using our digital devices This past holiday season Americans spent more than $50 billion just using their phones Apple Pay Venmo Zelle Square Cash and even Bitcoin are now household names Some of the most successful mobile payment applications include Uber and Lyft or I can open my favorite merchant mobile app select items to purchase see what coupons and rewards are available and in one click pay for my items This hearing is titled ‘‘Is Cash Still King ’’ While we have differing opinions among our witnesses and among task force members is this really the right question to ask Regardless of the dominant form of payments shouldn’t be we be asking how can we make access to commerce easier and more fair How do we ensure financial inclusion in an evolving world How can new forms of payment facilitate access to services and uplift struggling Americans Cash is undoubtedly still with us and will remain that way for the foreseeable future but this is the Financial Technology Task Force and I hope we spend some time trying to learn about and better understand the changes taking place in our society And I hope we discuss ways that mobile payments can include everyone and enable access to capital and financial services in ways that were previously impossible I would also like to acknowledge former Ranking Member French Hill for his efforts in this space Representative Hill led a letter to the Federal Reserve supporting further research into the concept of a digital dollar This concept could both speed up transactions and provide convenience for consumers but it could also extend access to those previously excluded and help bring more people into our increasingly digital world In advance I thank the witnesses for their time and insights on these topics I look forward to the discussion today and I yield back Chairman LYNCH The gentleman yields back The Chair now recognizes Mr Scott from Georgia for 1 minute Mr SCOTT Thank you very much Chairman Lynch I look forward to today’s hearing on financial inclusion how we can work on that on how payments innovation can improve access and convenience for underbanked customers Also security in our financial system and how an increase in online transactions impact transparency and fraud And also Mr Chairman our task force has been critically engaged in the ways that cutting-edge technology can benefit consumers and small businesses I look forward to our distinguished panelists And thank you Mr Chairman Chairman LYNCH The gentleman yields back Today we welcome the testimony of a distinguished and accomplished panel of witnesses Ms Deyanira Del Rio the co-executive VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 4 director of the New Economy Project an organization built to support community-controlled development and produce safe and healthy communities Mr Usman Ahmed head of global public policy at PayPal a leading company in digital payments technology and owner of the peer-to-peer payments company Venmo which I use to continually send money to my daughter in college at Elon University in North Carolina—she appreciates your service Mr Aaron Klein a fellow in economic studies and the policy director for the Center on Regulation and Markets at the Brookings Institution Mr Cline has also served as Deputy Assistant Secretary for Economic Policy at the Treasury Department and as the Chief Economist for the Senate Banking Committee Next Ms Christina Tetreault senior policy counsel at Consumer Reports a nonprofit consisting of policy and legal experts who advocate for pro-consumer policies and financial services and Ms Kim Ford executive director of the U S Faster Payments Council an industry trade organization dedicated to modernizing the U S payment system Thank you all for being here and for helping the task force with its work Witnesses are reminded that your oral testimony will be limited to 5 minutes And without objection your written statements will be made a part of the record Ms Del Rio you are now recognized for 5 minutes to give an oral presentation of your testimony STATEMENT OF DEYANIRA DEL RIO CO-DIRECTOR NEW ECONOMY PROJECT Ms DEL RIO Thank you Chairman Lynch Ranking Member Emmer and members of the Task Force on Financial Technology thank you for the invitation to testify at today’s hearing I am here on behalf of the New Economy Project an economic justice center in New York City that for more than 25 years has worked with low-income New Yorkers and community-based organizations to challenge systemic discrimination in our financial system and to advance fair lending financial inclusion and reinvestment as a matter of racial justice and to ensure the tools are available for equitable neighborhood development I am pleased to share our perspectives on some of the issues being discussed at today’s hearing focusing on bank redlining and continued impediments to banking access for too many Americans as well as the growth of cashless businesses and disparities in financial services access as they play out in low-income neighborhoods and communities of color I have attached to my testimony several maps that just paint a bit of the landscape in New York City and show the vast disparities in terms of where bank branches even locate based on the racial composition of neighborhoods And you will see that on the maps they show that there is fewer than one bank branch per 10 000 residents in communities that are predominantly Black or Latino and that compares to 31⁄2 branches in predominantly white neighborhoods It is just one indicator that shows the different kind of financial services landscape that people encounter in their daily lives not only in New York City but throughout the country where those patterns play out consistently VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 5 I want to emphasize a few things in my verbal testimony One is that the issues addressed in today’s hearing we believe are systemic in nature and deeply entrenched They call for bold systemic solutions including strong regulation Too often discussions about financial access disparities including the use of cash versus credit or debit focus on choices or behaviors of individuals or on the need to design so-called alternative products rather than on addressing the continued structural barriers that block millions of people including poor people immigrants low-wage workers and many others from accessing mainstream and strongly-regulated institutions products and systems As this committee knows there are multiple impediments and some of them include the high cost of maintaining bank accounts persistent redlining as I mentioned and prohibitive identification requirements which all create barriers to entry for millions of people Through our legal assistance hotline which assists thousands of people every year we have in fact seen a very clear and growing pattern of mainstream banks actually pushing low-income people out of the banking system and out of regulated services in a myriad of ways One example is the way that banks typically will close people’s accounts if they experience fraud or at the end of the month if they have incurred high and hidden overdraft fees and are unable to pay those overdraft fees back which can easily total in the hundreds of dollars Not only do banks close people’s accounts in those instances but they report those customers’ information to ChexSystems and other consumer reporting databases shared by the bank and it effectively blacklists people from opening accounts elsewhere And so the conversation about access to finance and how that can facilitate mobile payments needs to look at some of the continued predatory practices in our system I want to point out a few things One is that while we believe that eliminating barriers to access is important at the same time we have to recognize that financial products and technology are not a solution to these deeply systemic problems They aren’t solving poverty or income inequality Too often we hear industry and policymakers tout different products and services as being the solution to deeply entrenched problems that require bolder solutions We also believe that we must challenge the rhetoric and the sort of alleged benefits around financial innovation and fintech which in the experience of low-income people and communities that we work with just simply fail to match reality too often For decades companies have invoked innovation as a smokescreen frankly to evade strong regulation and to peddle inferior high-cost or even outright predatory products from subprime lending to payday loans to fee-riddled prepaid debit cards and payroll cards that are often marketed to low-wage workers or that employers force workers to receive their payments on essentially transferring the cost of managing payroll from the employer to the lowwage worker And I just want to emphasize that the term ‘‘fintech ’’ obviously is very broad and is used in many ways It can refer to a range of companies and technologies We recognize that appropriate and VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 6 safe technology can of course benefit people But too often we see these companies claiming to be eliminating banking deserts and supporting and empowering communities when they are in fact perpetuating segregation in our banking system One example is how fintech companies in New York are routinely seeking to circumvent strong State consumer protection laws including our State usury laws which have effectively kept out payday and other exploitive usurious lending from our State The Administration’s efforts currently to exempt fintech companies from critical consumer protection rules only exacerbates the serious risks Thank you so much for your time and I look forward to addressing the other topics during the Q A The prepared statement of Ms Del Rio can be found on page 47 of the appendix Chairman LYNCH Thank you Ms Del Rio Mr Ahmed you are now recognized for 5 minutes STATEMENT OF USMAN AHMED HEAD OF GLOBAL PUBLIC POLICY PAYPAL INC Mr AHMED Thank you Chairman Lynch Ranking Member Emmer Chairwoman Waters Ranking Member McHenry and members of the task force I would like to thank you all for giving PayPal the opportunity to testify today on the important topic of mobile payments Since 1998 PayPal has been at the forefront of mobile payments PayPal operates an open secure and technology-agnostic digital payments platform that gives our over 300 million active account holders the confidence to connect and transact in new and powerful ways whether they are online in app or in person Through a combination of technological innovation and strategic partnerships PayPal creates better ways to manage and move money We offer people and businesses choice and flexibility when they send and receive payments Whether sending and receiving money with friends and family through apps like PayPal Venmo and Zoom or engaging in e-commerce more and more people are using their smartphones to make purchases receive payments and manage their accounts Our technology is giving more people and businesses access to the global market and the ability to use financial services tailored to their specific needs The mobile phone has transformed nearly every aspect of our lives We use it to communicate with friends and family watch our favorite shows order a cab change the temperature at home and engage in payments The growth of smartphones over the past decade has been incredible In 2011 only 35 percent of Americans had access to a smartphone The percentage grew to 81 percent by 2019 At PayPal we have witnessed how the rise of mobile devices has transformed payments In Q4 of 2019 44 percent of the $199 billion of total payment volume we processed was made on a mobile device The advancement of mobile payments has important implications for unbanked underbanked and financially unhealthy individuals and communities For example giving people access to money instantly via mobile device can help in reducing fees and late pay- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 7 ments Sending remittances using a mobile device is about half the cost of a traditional remittance and can save over an hour of time for both the sender and the receiver Mobile payments can also provide a baseline for credit underwriting which can enable consumer finance during cash-flow challenges Mobile payments can also benefit small businesses due to the lower costs of acceptance as well as payments data being leveraged to help fill the gap in small business working capital in particular for women- and minority-owned businesses Security has been front and center throughout the development of mobile payments leading to the adoption of tokenization technology which reduces the number of entities that have access to sensitive financial data PayPal is a pioneer of tokenization technology Tokenization substitutes sensitive financial information with a series of non-sensitive numbers that confirm to a business that a payment is authentic but minimizes the likelihood of data breaches and reduces fraud Mobile payment information is sensitive and PayPal leverages payment data for fraud reduction and service improvement Cash is an ubiquitous form of payment But while it may appear costless to transfer there are costs associated with cash Cash is deeply implicated in tax evasion which costs the U S Federal Government some $500 billion a year in revenue When Mexican drug lord El Chapo was arrested there was more than $200 million in cash found on the premises and the global drug trade is estimated at $600 billion And finally 20 percent of unbanked consumers report having cash lost or stolen In a study of low-income Los Angeles area households the finding was that the average unbanked consumer lost the equivalent of nearly 2 weeks of household expenses when cash was lost or stolen Mobile payments present a tremendous opportunity to reduce many of these costs associated with cash While we don’t predict the death of cash in the next decade or two and we believe that consumers should have a choice in what payments options they choose at PayPal we are working diligently to make sure that the value proposition of digital payments vastly exceeds the value proposition of cash for every member of society Thank you again for the opportunity to address the task force on this important and timely topic and I look forward to answering any questions The prepared statement of Mr Ahmed can be found on page 34 of the appendix Chairman LYNCH Thank you Mr Ahmed Mr Klein you are now recognized for 5 minutes STATEMENT OF AARON KLEIN FELLOW ECONOMIC STUDIES AND POLICY DIRECTOR CENTER ON REGULATION AND MARKETS BROOKINGS INSTITUTION Mr KLEIN Thank you Chairman Lynch Ranking Member Emmer Chairwoman Waters Ranking Member McHenry and members of the task force for the opportunity to testify on the critically important issue of the future of cash and the rise of digital wallets VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 8 Let me start by answering the question the hearing poses Yes cash is still king In fact cash is used by a diverse set of people who defy traditional political or geographic boundaries False narratives abound that cash is dying or a cashless society is the future or that millennials don’t use cash In fact millennials and their grandparents have cash in common Both generations use it more than those between ages 30 and 60 In a sample of mostly small business transactions Iowa and Wisconsin two of the more cash-intensive States have a lot more in common with the Bronx and Staten Island while Utah and Virginia two of the more card-intensive States are much more similar to Brooklyn and Manhattan Nationally racial minorities and rural Americans both use cash more frequently and it has been stated that cash is the most common way people pay for things under $25 While cash is still king there is no denying that an increasingly large number of goods and services are moving onto digital payment platforms that do not accept cash As the economy digitizes those without access to low-cost reliable digital payments are increasingly unable to participate and share in the benefits Prior concerns about a digital divide were centered around the question of access Smartphones have successfully bridged this divide However online access alone is insufficient Without a means to purchase the goods or services being offered the benefits of the app gig or online economy fail to convey Access to digital payments has become the new digital divide Online and app-based goods and services lower costs for everything from ordering groceries to hailing a cab However the economics of many digital services simply assume users will always have funds to cover recurring or periodic expenses and expect the ability to tap into a consumer’s bank account to get paid Given the high cost of overdraft fees growing income volatility and our nation’s anachronistically slow payment system the reality for people living paycheck to paycheck is a far more expensive system than for those on the other side of the divide For consumers to truly benefit from the digital economy cheap and reliable digital payments are necessary Yet our existing system provides them freely to those with money and charges a lot to those without It may require government policy and resources and strong rules to fix this problem A corollary to the policy that businesses continue to accept cash is that consumers have access to digital payments and that needs to be facilitated My written testimony goes into significant detail regarding the high and often hidden costs of existing banking products like overdraft fees that create an effectively different cost structure for people living paycheck to paycheck It highlights multiple policies to solve some of these problems and reduce the demand for expensive ways to access cash like check-cashing The key is to require immediate funds availability for consumers which most of rest of the world developed decades ago through real-time payments Waiting for the Federal Reserve to follow through on its announcement to build a system sometime this decade is not enough Policymakers could solve this problem today if they wanted to by regulation or legislation In fact tomorrow is the 31st A lot of peo- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 9 ple will get paid that day and will struggle to come up with the amount of money available in their bank account to meet their payments on the first of the month the next day I want to conclude by noting that America once led the world in payment technology Fifty years ago America pioneered the new payment technology that would come to dominate the world magnetic stripe plastic cards but technology alone was not enough It required robust consumer protection legislation from Congress such as the Electronic Funds Transfer Act to successfully create an environment where cards flourished Today China has leapfrogged cards China’s new system is built on digital wallets and QR codes and runs through their own big tech firms China’s system largely disintermediates banks and creates an alternative payment ecosystem with different incentives between merchants consumers and payment system providers It challenges the longstanding placement of payments on the side of banking as opposed to commerce China’s system is unlikely to catch on in America precisely because it is more efficient Because it does not take large sums of money from merchants at the register it will not be able to compete with the growing high-end credit cards that come to line America’s wealthy with thousands of tax-free dollars in rewards Ironically the inefficiency in America’s payment system that has turned it into a reverse Robin Hood that contributes income equality will block adoption of alternative technology This committee is wise to consider the rise of mobile wallets and policymakers should devote more time and attention and resources to figure out how to create a more fair efficient and inclusive payment system I thank the chairman and the ranking member and the rest of the task force and I look forward to your questions The prepared statement of Mr Klein can be found on page 65 of the appendix Chairman LYNCH Thank you Mr Klein Ms Tetreault you are now recognized for 5 minutes STATEMENT OF CHRISTINA TETREAULT SENIOR POLICY COUNSEL CONSUMER REPORTS Ms TETREAULT Chairwoman Waters Ranking Member McHenry Chairman Lynch Ranking Member Emmer and members of the Financial Technology Task Force thank you for the opportunity to be here today I am Christina Tetreault senior policy counsel for Consumer Reports CR CR is an expert independent non-profit organization whose mission is to work for a fair safe and just marketplace for all My CR colleague Suzanne Martindale testified before this committee in 2012 regarding the future of money and the rise of mobile payments She noted that consumer privacy concerns inhibited mobile payments adoption and that fragmentation in payments law creates uncertainty for consumers Eight years later I will make these same points today American adoption of mobile payments continues to lag that of other countries Americans still love cash and as compared to mobile they love cards It is important to note that mobile is a plat- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 10 form and not a new payment type Beneath the modern veneer of mobile payments is mostly technology built in the early 1970s New payments rails including faster payments and cryptocurrency are in the case of faster payments or should be in the case of cryptocurrency covered by existing laws Unfortunately payments law is an irrational mess Under current law credit card holders have the strongest protections Debit card bank transfer and prepaid accounts have weaker protections Gift cards and direct to carrier building have almost none Congress can fix the mess in payments law making every way safe to pay They can do this by establishing a strong floor of uniform protections for all non-cash non-check payments Now when it comes to mobile payments unfortunately consumers do not understand their rights and obligations When we asked a focus group of mobile payments users what they thought would happen if something went wrong with the payment they uniformly said that they expected that the company whose name was on the app or wallet would fix the problem and make them whole This is not necessarily the case In some instances users may in fact be obligated to contact their bank or card issuer for help Other problems fall outside the scope of current law For example when a consumer is tricked into sending money to a scammer they will find that these transactions have essentially the same level of protection as cash Now many claims have been made about how mobile will increase financial inclusion The reality is quite different Americans without checking and savings accounts are less likely than bank consumers to use mobile payments and are far more cash-reliant than other Americans Unbanked consumers are more likely to suspend or cancel their cell service because of the cost of maintaining coverage making regular use of mobile financial services nearly impossible No act fixes the structural issues that lock out too many Americans Cryptocurrency has also been proposed as a fix for financial inclusion If the legal mess in traditional payments is bad the legal mess in cryptocurrency is worse The few consumer protections that cryptocurrency payments have are largely found in State money transmitter laws and are seriously lacking Cryptocurrency and for that matter any emerging financial service should not be tested on consumers with the least cushion in their financial lives The best way to ensure consumer access to faster and safer electronic payments is to support the Federal Reserve’s proposal to build the FedNow faster payment system and not by empowering untested unregulated corporate schemes such as Facebook’s Libra There is another shadow over mobile payments The current protections for mobile payments made with stored value for example the money held in Venmo accounts are threatened by the PayPal lawsuit seeking to invalidate the Consumer Financial Protection Bureau’s CFPB’s prepaid rule Before the rule consumers had to rely on the inadequate protections provided by State money transmitter laws Billions of dollars and millions of consumer accounts are at risk if this rule is invalidated VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 11 Privacy concerns exist alongside legal concerns in mobile payments So while mobile payments and even some additional financial services are free to consumers users are not the customers of these services They are in fact the product The potential for users’ information to be weaponized against them is particularly acute when payments are combined with platforms We need strong privacy legislation that creates a Federal floor of protections a law that requires data minimization clear information about provider practices and strong data security standards This law must also have vigorous enforcement tools and tools to ensure accountability I thank you for the opportunity to be here today and I look forward to your questions The prepared statement of Ms Tetreault can be found on page 76 of the appendix Chairman LYNCH Thank you Ms Tetreault And Ms Ford you are now recognized for 5 minutes STATEMENT OF KIM FORD EXECUTIVE DIRECTOR U S FASTER PAYMENTS COUNCIL FPC Ms FORD Good morning Chairman Lynch Ranking Member Emmer and distinguished members of the task force Thank you for the invitation to be here today My name is Kim Ford and I am executive director of the U S Faster Payments Council FPC The FPC is a membership organization that is leading the industry effort to modernize the U S payment system We were formed from the work of the Federal Reserve’s Faster Payments Task Force which brought the industry together to start to figure out how to make the U S payment system faster more secure and more efficient I am grateful for the opportunity to be with you today as we examine consumers’ payment preferences and look to what the future may hold for the U S payment system as a result As you know the payments landscape is in the midst of unprecedented change When I entered this industry in 2004 the headline at that time was that checks were just starting to lose ground to debit and credit cards and now we are talking about things like mobile payments biometrics machine learning artificial intelligence cryptocurrency and more Clearly we have transitioned in this country from an environment dominated by paper checks and cash to one dominated by electronic payments And we are seeing that cash is being used less and less for some of the major payment categories it once led For example historically cash has been used for low value payments below $25 but we are seeing card use grow in this area as well And as we think about why that is two themes come across most clearly consumers’ desire for convenience and consumers’ desire for security Take electronic payment cards They are accepted at retailers across the globe They enable convenient tracking of transactions provide budgeting options and provide consumers with protections against loss and fraud And while cash may also be convenient easy to carry and widely accepted it can be easily lost or stolen and there are no measures in place for consumers to recoup such funds VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 12 For these reasons among others electronic payments have climbed the ranks to become a preferred payment option for U S consumers Moreover as Americans incorporate their smartphones into so many aspects of their lives they also expect that on-demand functionality to transact with their friends family businesses employers and even the government This has translated to an increase in the use of smartphones for things like internet banking e-commerce transactions and the use of mobile payment apps One study by payment provider TSYS reported that over the last 3 years of their consumer payment research survey respondents consistently rated the most attractive features of mobile payments as one the ability to immediately stop a fraudulent transaction two the ability to instantly view their transactions and three the ability to use their phone to turn their payment card on or off to prevent unauthorized usage These findings underscore so many Americans’ increasing reliance on electronic payments to solve for convenience and added security But of course the popularity of mobile phones and access to the internet are not enough to increase financial inclusion and certainly it is appropriate to ensure that people can actually benefit from digital financial services And this of course requires a welldeveloped payment system reliable and accessible infrastructure and a robust regulatory framework with consumer protection safeguards And while we haven’t completely solved the access issue in the U S financial inclusion is getting better due in part to new types of financial services that are accessed through mobile phones and the internet But challenging our system to be better isn’t limited to plastic cards and mobile phones At the FPC we believe that the next evolution of our payment system is a more real-time safe and efficient system that anyone can access at any time anyhow and anywhere We believe that faster payments have the potential to build on the benefits of current electronic payment mechanisms and further improve money management remove costly paper processes minimize settlement risks and encourage global competitiveness Our members believe it so much that they created an organization to bring all the payment industry stakeholders segments together to identify barriers to faster payments adoption and then work shoulder to shoulder to solve those problems For example we are examining the regulatory landscape for faster payments studying fraud best practices and trends promoting transparency for consumer and business end users assessing directory models and helping our members understand how to develop and implement a faster payment strategy Yes we support electronic payments but we also support an environment in which payment choice is preserved whether that be paying with cash writing a check sending a wire ACH or using a credit debit or prepaid card I am also proud of the fact that we are demonstrating that it is possible to get a widely diverse group of industry stakeholders together representing consumer groups merchants tech providers financial institutions and more to tackle complex problems in a fair inclusive and transparent manner with an end goal on which we all agree which is driving universal VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 13 access to a faster payment system that delivers a high quality and secure user experience for all Thank you for the opportunity to present to you and I look forward to answering your questions The prepared statement of Ms Ford can be found on page 55 of the appendix Chairman LYNCH Thank you Ms Ford I now yield myself 5 minutes for questions Mr Klein you illustrate a good point where if you look at young people and their consumer preferences you know our two girls I don’t think have ever been in a bank except for maybe getting travelers’ checks or something like that Probably less than 5 times in their lifetime compared to how I grew up where on payday you would go down there and stand in line with everybody else So this is a trend that is really overtaking us and it is being driven by consumer preference I don’t think it is necessarily some cabal or diabolical plan I think it is just easier and people want to do it The problem is that not everybody has that opportunity You have an interesting background in terms of looking at international payment systems and things like that Are there models out there that would sort of address what we are trying to get at We know this is much cheaper and in many ways more efficient and safer in some instances Are there systems out there that do a better job than we have right now in terms of the payment systems that are out there Mr KLEIN Yes Chairman Lynch it pains me to say this but China’s system is much more efficient much faster and has reached a level of universal adoption that is somewhat mind boggling You have 2 services that started less than 5 years ago and they each have a billion monthly users Chairman LYNCH Yes Mr KLEIN And they were able to do it in part—one of the fascinating things about the Chinese experience is this is a country that had by some estimates 7 million debit cards but only 20 million to 40 million card readers You could not take a card—go around China and try and do something with your magnetic stripe card and they look at you like you are from a century ago It is all on codes and digital wallets Now the problems with the Chinese system—I am not advocating that we move there particularly because of some of the commercial concerns involved in bringing the banking system—the payment system outside of banking And our legal and regulatory framework completely assumes that payments are part of a banking system As Ms Tetreault’s testimony points out everything is tied to this being in banking When you legally look at the cleft between banking and commerce in the United States there is nothing that ties payments onto the banking side Chairman LYNCH Thank you And Ms Tetreault I want to ask you—we raised the China model So right now if banking goes the way of the internet where they just collect all of our information not what they need to but everything they can get their hands on and then they screen scrape and sell personal data personal financial data—I know that you have written extensively on privacy Do we need a new archi- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 14 tecture with respect to financial data than we—we have given it away in terms of our personal data on the information side on the internet side Do we need a new architecture to be more covetous and protective of our financial data or can we overlay this on the existing system Ms TETREAULT I think there are two solutions to the problem The first is provider practices so enabling tools for consumers to be able to really see what information is being collected and then make choices and there are efforts out there I know that the Financial Data Exchange was here before the committee previously and they are creating those tools and those tools are very helpful and more supportive of that effort The other aspect though is strong a Federal privacy floor that actually includes curbs on data collection and sharing The GrammLeach-Bliley Act GLBA is often touted as a privacy law but it is not in fact privacy protected in those ways so it is time for a new approach Chairman LYNCH Right Thank you Mr Ahmed speaking for Venmo and for the industry in terms of what you have come up with are there mechanisms or models that you identify that might address the concerns that we have raised here Mr AHMED Certainly I want to acknowledge something Mr Klein raised about merchant acceptance In China a lot of the reason why there has been success there in moving to mobile payments was getting all of the businesses to accept these small QR codes And I agree with Mr Klein that maybe it is that model or maybe it is something else But I just want to stress that when we are talking about consumer adoption low- and moderate-income consumers rural consumers if the places where they go don’t accept mobile payments then they won’t switch It is a chicken-andegg problem and we also have to include a focus on the merchant side of the equation Chairman LYNCH That is great Thank you very much My time has expired I now recognize the gentleman from Minnesota our ranking member Mr Emmer for 5 minutes Mr EMMER Thank you Mr Chairman and thank you to the witnesses for your testimony and for being here today It is interesting More than one of you this morning was critical in different respects to the promise that the innovation that new technologies provide In fact I think one of you even referred to the rhetoric that gets used about how this is going to benefit consumers in society I could focus on several but in my short time Ms Tetreault I was particularly concerned by some provisions in your written testimony that you have submitted that criticize cryptocurrency although you only mention Libra which is not in itself a cryptocurrency I would hope that you more fully explored these innovations or if you haven’t that you will be in the opportunities that they provide to both build a financial future for individuals but also to empower individuals to control the value of their own assets separate from government control Have you done any of that VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 15 Ms TETREAULT We have looked at cryptocurrency and I made remarks almost what 6 or 7 years ago that the original promise of cryptocurrency was returning power to consumers And what in fact has happened in the intervening years is that—what we have seen is an infrastructure that is built up that is largely acting as an intermediary that consumers are not truly empowered to ‘‘be their own bank ’’ And that these intermediaries are often underregulated and undersupervised that there aren’t clear rules of the road and so the promise of cryptocurrency in many ways has been lost There are any number of needs not the least of which is to fold them into payments law in a more rational way and to rationalize payments law overall Mr EMMER Right As defined by you or someone else what is rational Seriously It is your definition of what is rational because there is a whole environment out there brilliant genius young people who are coming up with new ways to transfer value every single day and I worry that we are going to crush that entrepreneurial spirit and that advancement Obviously you and I we have heard of Bitcoin We have heard of Ethereum Are you familiar with XRP and the efforts of Ripple Ms TETREAULT With the distributed ledger technology for their payments Mr EMMER Yes And you are familiar with Eos Ms TETREAULT No Mr EMMER What about privacy coins like Monero or Zcash Ms TETREAULT I had a footnote If I understood the aim of this hearing it was that I was not going to approach the privacy concerns There are any number of different privacy technologies around cryptocurrencies Some are concerning some are very promising and it really is very item-specific So I don’t have a lot to say on that only that you are right I agree with you that there are definitely some interesting things going on there Mr EMMER How about Zero Pay and Algorand What about Stellar which is facilitating cross-border transfers Are you familiar with that one Ms TETREAULT No Mr EMMER I could keep going through these but it is amazing the things that are happening out there and it concerns me when we are talking about mobile payment systems and we draw in any one of you cryptocurrency or these new innovations and suggest that it is a negative Because by the way major companies like IBM are doing work on this too The Plastic Bank is a pilot program that has proven to be successful in Haiti where a digital asset is provided in return for cleaning up plastic waste amazing things Are you familiar with M-Pesa Ms TETREAULT Yes Mr EMMER We should talk because somebody used the term ‘‘rhetoric ’’ ‘‘M’’ stands for mobile ‘‘Pesa’’ is Swahili for money This is a mobile phone-based money transfer financing and microfinancing service launched in 2007 by Vodaphone the largest mobile network operator in Kenya and Tanzania By 2012 it had 17 million accounts This service has been credited with giving mil- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 16 lions of people access to the formal financial system and for reducing crime in the otherwise largely cash-based society Again I think we have to take a deeper look at this and learn more about these innovations It is not black and white And the really interesting developments come when you start to get into the details and differences in the technology So I would appreciate it as we talk about mobile payments and move forward if we could be more inclusive about the technologies instead of fearing something that we don’t know enough about Thank you Chairman LYNCH The gentleman yields back The Chair now recognizes the gentleman from Georgia Mr Scott for 5 minutes Mr SCOTT Thank you very much Mr Chairman Ladies and gentlemen first let me say that each of your testimonies were very very informative and opened our eyes I am sure to much of what we were only dimly aware of However this whole issue is sort of bringing us into the new frontier for our entire financial services industry It is very important I have been spending quite a bit of my time dealing with an issue that I want to present to this committee which is are we doing enough to make sure we address this fundamental problem According to the most recent statistics there are 58 million unbanked and underbanked folks out there What is most startling is that most of these are unbanked meaning they don’t have a savings account not mama not daddy sister brother Nobody in the household has a savings account or a checking account Mr Ahmed let me start with you How do we address this to make sure that we are providing the transparency the affordability the convenience for these consumers but access to electronic payment systems have traditionally required a savings account or a checking account which presents challenges here How are you all at PayPal which has certainly been a forerunner in all of this addressing this issue to make sure we bring everybody along with us as we make this technology jump Mr AHMED Thank you for the question Mr Scott I think it has to be done in partnership PayPal is a technology company but there are all sorts of entities that are on the ground in the communities in the places where you are talking about I think of retailers 7-Eleven Walmart I think of a remittance provider like ARIAS where we can partner with those entities enable cash to be offered up at the point of sale and then digitize it on the back end So I think it is really in getting on the ground in the communities and the places where these people are and providing them a service as I mentioned in my testimony that is actually more valuable than just a cash-based service Because until and unless we create a value proposition that really can respond to the challenges and the issues that they are facing then there won’t be a reason to move into this ecosystem Mr SCOTT Are you confident that we will not leave these unbanked and underbanked folks behind Mr AHMED I would say at PayPal we are making very very strong efforts to do that and I think it is going to be about everyone in this room working together a public-private partnership VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 17 and intentionality behind the efforts in order to prevent that from happening Mr SCOTT Do you think there are costs associated with accepting cash for small businesses Mr SMITH Certainly I think a typical small business when they are accepting cash they assume that it is a costless transaction But actually when it comes to simple things like accounting for that cash doing payouts to employees doing payouts to vendors providing security for the cash there are actually a number of costs associated with that My mom was a small business owner and I remember the challenges of trying to account for everything And so digital kinds of transactions can really help to simplify a lot of those processes and reduce some of those transaction costs Mr SCOTT Ms Ford you have been working very much in this area throughout your career What are your thoughts on this Ms FORD I think that we have to recognize that obviously there are limitations that financial institutions have because there is a regulatory framework in which they have to operate But I think when we look at the experience in the U S as well as globally I think that is one reason we have seen the rise of non-bank fintechs who are saying okay we have this great technology out there We want to try to be some sort of a link to consumers So if we can be that intermediary and try to get somebody who is unbanked to be more comfortable maybe it starts with a gift card or some sort of prepaid card they can load with cash Then that gets them slowly into the financial services system and they can become banked That is obviously where we want to move things So I think that we are making progress but I agree with you that the unbanked issue is very real It is one reason that at the FPC we have a whole consumer segment who are constantly asking how are we going to make this as inclusive as possible But I do think we have to acknowledge that financial institutions are constrained by certain regulations as well Mr SCOTT Thank you very much Thank you Mr Chairman Chairman LYNCH The gentleman yields back The Chair now recognizes the gentleman from Missouri Mr Luetkemeyer for 5 minutes Mr LUETKEMEYER Thank you Mr Chairman Mr Klein you made my day today when you said a while ago that the seniors and the millennials have something in common with regard to cash Seniors don’t have anything in common with millennials so thank you Mr KLEIN You are welcome Mr LUETKEMEYER Also one of the attributes and one of the benefits I guess of being a little older and having been through the mill a little bit here is the fact I remember when credit cards came out Yes I am that old Moses and I we came down the mountain together And I remember everybody said well that is the end of the checks No more checks Credit cards are going to take over Checks are gone But as of today the latest Federal Reserve report from the Federal Reserve Bank of St Louis said we actually have twice as much cash in the system now as we did 10 years ago We still have as VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 18 many checks issued today as we did 40 years ago or whenever credit cards—50 years ago when credit cards came out and now we have all different sorts of payment systems out there If I was forming a new business today I would have all of these kinds of payments because it enhances the ability for me to be a new business to transact business to attract everybody in and enable them to make the transaction So when people get exercised here about this is going to happen that is going to happen everybody should take a deep breath and step back This is just an alternative another way of doing this I come from the point of view of okay how can we do this in a safe fashion I think Ms Ford made some really good closing comments in her testimony a minute ago I think Ms Tetreault made some comments with regards to Libra and cryptocurrencies and that quite frankly is now the preferred way of money laundering with cryptocurrencies for all of our nefarious folks out there I look at the security of the data how you can improve the convenience for people and how you can minimize the use of enabling people to do fraud and launder money So to me this is where we need to be focusing to enhance the ability of the mobile phones and the different types of payment transactions Ms Ford I would like for you to elaborate just a little bit on your final comments about how we can make a faster system and a safer system and be more inclusive Ms FORD Absolutely Again one of the elements that is driving this whole conversation around faster payments besides the fact that a lot of other countries have implemented faster payment systems is that we have better technology out there And I think as we look to for instance the experience in the card space as it relates to security we have seen some great innovations around encryption and tokenization where the idea is that—I think the mindset used to be how do we protect our sensitive information from being subject to unauthorized usage Now I think we know how sophisticated the criminals are so the conversation has shifted to how do we devalue the data because it is likely that there is going to be some sort of a breach somewhere So I think those are the kinds of things that we are looking at in the context of faster payments as well which is how can we continue to leverage these types of innovations For instance if you look at fraud prevention practices historically in payments a lot of that was very manual processes individuals actually sitting in front of a monitor trying to look at these transactions Now we can think about okay how can we leverage artificial intelligence for instance or machine learning Obviously there can be biases in those as well but I think there are some opportunities to be able to leverage this technology to add security components Mr LUETKEMEYER Thank you for that Ms Del Rio you talked a little bit about some of the concerns with folks who can’t work with a bank because of the costs that are involved there and they have to go to a strictly cash way of living Have you found that because the banks charge for cashing checks or for having an account or for a minimum amount that you have VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 19 to have in there before you get free checking is that the kind of problems that you see Ms DEL RIO Yes Those are some examples And just to clarify not only are people being pushed out of the banking system and being forced to rely on cash but then in the vacuum that banks leave in these neighborhoods is where you see the pawn shops rent-to-own stores and so on Mr LUETKEMEYER Why do you think that the banks are having to charge those fees Ms DEL RIO I think that the banks have made pretty clear— well first of all there has been a wave of deregulation of the banks and there is a weakening of the Consumer Financial Protection Bureau and other rules that govern banks We think the banks have made pretty clear they are not very interested in serving low-income people We see that in a myriad of ways And yes the minimum balances that banks require to avoid fees is one impediment Identification requirements that actually go far beyond what regulations require are another impediment for millions of Americans Mr LUETKEMEYER Have you talked to any banks and asked them what it costs to maintain an account Ms DEL RIO Absolutely I am actually the board chair of a community-based credit union and so we are very aware of the cost of implementing— Mr LUETKEMEYER It is difficult to give a service for free unless you can find another way to subsidize that within your institution right Ms DEL RIO I think one of the problems is that in terms of checking accounts it is low-income people through overdraft fees who are subsidizing the free checking of more affluent people And so yes we believe there are costs and there are ways to manage the costs but right now the costs are not being borne fairly among banks’ customers You can look at who pays overdraft fees It is a very small percentage of people and it is the lower-income segment Mr LUETKEMEYER Those are loans by the way Thank you very much Chairman LYNCH The gentleman yields back The Chair now recognizes the gentlewoman from Iowa Mrs Axne for 5 minutes Mrs AXNE Thank you Mr Chairman And thank you to the witnesses for being here today I really appreciate it Obviously we are hearing a lot of discussion about the benefits that mobile payments can provide As the co-owner with my husband of a digital design firm who uses PayPal literally every day nationally and internationally for payments I am certainly familiar with the benefits And I think there is absolutely so much opportunity to help people with better services and hopefully we will see more of that down the road However I am concerned that we are leaving some people behind We have been talking about it today with smartphone and internet access People can’t use these wonderful services as we well know and the FCC estimates that approximately 20 million VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 20 Americans lack broadband service and I certainly know that in the State of Iowa Also due to the issues with mapping we know that that number is probably far greater than just 20 million In fact Microsoft estimated that 150 million Americans aren’t actually using the internet at broadband speeds which they would need to be able to perform these functions and a lot of these people are unfortunately in my district That kind of difficulty is why Iowa is one of the top five States as Mr Klein pointed out in terms of use of cash So Mr Klein I am worried that moving too quickly to mobile payments will risk exacerbating what we are already seeing with rural communities absolutely being left behind I am trying to fight to keep them getting the opportunities that we need Are you seeing that moving to mobile too quickly and risking the opportunities for rural communities is something that your research shows to be a problem Mr KLEIN Yes Congresswoman It is very important to appreciate that as the economy digitizes there are huge benefits and those benefits then are not accessible to people without the ability to transact in that I think a lot of the conversation about preference for cash that we have seen if you dig into the data what you really see is a rise in online purchases particularly for that age category between 30 and 60 Now whether that is consumer preference or choice or whether that is just the changing nature of our economy because you can get these goods better cheaper faster can be debated But what does that mean for people who don’t have the ability either to access that material online and to have the ability to make payment online in a convenient and low-cost fashion If you risk an overdraft to buy something that is $5 cheaper online it may end up costing you $30 more and part of the problem why there are so many overdrafts is ‘‘I don’t know when my paycheck has cleared ’’ If I get paid tomorrow on the 31st of the month—10 percent of Americans get paid monthly 38 percent get paid biweekly A lot of people get paid tomorrow Do not mistake direct deposit for immediate deposit You are not certain if your payment is going to be available for your funds the very next day and this makes life incredibly challenging for people in rural America and for people who are living paycheck to paycheck The sad reality is we had the tools to fix that 10 15 20 years ago The United Kingdom went to real-time payments in 2008 and Mexico in 2004 And so I think for your constituents in rural America you are facing a double whammy You have this access problem and you have a means-of-payment problem and particularly for those living paycheck to paycheck—and older people for example who may be relying on Social Security—it becomes incredibly challenging for consumers to be empowered enough to be able to solve these problems and access all of these online benefits Mrs AXNE Thank you for that I appreciate that And as the State who has the fourth-oldest population in the country I appre- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 21 ciate your concern for them being able to get their Social Security that they need Moving on Mr Ahmed you mentioned in your opening statement that PayPal is committed to serving every American or something to that effect Bringing broadband access to all Iowans is a major priority for me As a matter of fact I’m on the Whip’s Rural Broadband Task Force We want to make this happen And I think it needs to be really a priority for all of the American economy or we will leave parts of this country behind So I want to ask you specifically since you work for PayPal and I’m really asking all of the mobile payment community to get behind this priority so that everyone can actually benefit from what you have to offer As a recipient of your product that I know works well we need everybody to have access to this My small business owners in Iowa need to be able to utilize services like yours Are there steps you are able to take to help us spread the access more quickly than we are doing right now Mr AHMED I think we can be supportive of course of your efforts and I think we can also add in kind of our perspective on the benefits that access provides in terms of increased growth and increased payments and I would also point out that you highlight access as such a key issue but it is also cost and kind of driving down the cost for individuals in particular in rural areas and making sure that the data is not so expensive that yes you have access but you can’t actually use it And so I think we can be supportive of your efforts and I would love to kind of partner with you on that and figure out how we can be helpful Mrs AXNE We will be in contact because we need your help I yield back Thank you Chairman LYNCH The gentlelady yields back The Chair now recognizes the gentleman from Arkansas Mr Hill for 5 minutes Mr HILL Thank you Chairman Lynch It’s great to be here with you and it’s great to have a broad payments hearing today Thank you for making those arrangements We are having a great discussion I have enjoyed hearing everybody’s presentation Mr Ahmed I was interested in your testimony that 40 million users and 28 percent of PayPal’s total volume is Venmo I take it from looking at your—and I too like my friend from Massachusetts have a regular Venmo user in my family My question for you is of those 40 million people how many of those users have an account balance with Venmo or PayPal meaning there is cash left in their name out on the system would you guess Mr AHMED I don’t have the exact number but I would be happy to follow up in writing and— Mr HILL I would be interested in that exact number and what the average balance is because of course everybody knows those are not FDIC-insured deposits and it reminds me of the old American Express traveler’s checks from the 1960s where you have this money that PayPal gets to use but people may or may know they have it So if you would follow up with me on that I would appreciate it VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 22 Mr AHMED Okay Mr HILL Also I was pleased to read about your being involved in the Faster ID Alliance and I assume Ms Ford you are also involved in the Faster ID Alliance Ms FORD I am not personally Some of our members are yes Mr HILL Yes I think that’s important because in this Fintech Task Force we have talked about these foundational building blocks of a digital future Authentication is fundamental to get away from name and password and so if you could send me some follow-up information on that who the members are and what is being done there that would be of interest I want to turn to tokenization and you referenced that and also ask Ms Ford first on that this idea that banks and nonbanks have a payment rail out there in the payment system—we have wire transfers we have ACH we have SWIFT we have cash obviously we have MasterCard Direct We have all of these different methodologies and my question is can we have an approved regulatory payment rail that is blockchain-based that is available to banks and nonbanks equally where someone could propose a blockchain effort and what does that look like from a regulatory point of view that rail So it is not a debit rail It is not a credit rail It is a blockchainavailable digital rail whether there is a cryptocurrency involved or not Be neutral on that What are your thoughts Ms Ford on that Ms FORD I am not sure how authorized I am to speak on that issue I am not an expert on that type of technology but I would say that I don’t think it would be a limitation of technology being able to support that rail I think it would actually come down to whatever policy implications there are and I think Christina has alluded to some of this as well that I think there is an inconsistency in the way that blockchain or distributed ledger is regulated today It seems to be happening mainly at the State level and so that kind of inconsistency with the regulatory environment might be one of the limitations that could exist Mr HILL Right Mr Ahmed do you want to comment on that Mr AHMED I would just note that for the kind of core banking architecture I think there would probably be some changes needed in terms of the Federal Reserve System but for smaller-valuation or smaller-amount payments I think you already are seeing some blockchain-based systems being created that enable the movement of money and so I think there are examples out there—we talked about XRP or others—that kind of offer this Mr HILL Mr Klein for 40 years I have been in and out of the banking business small banks and larger ones and I couldn’t agree more with your testimony about access to available funds and the timeliness of that We thought we were going to get there in 2004 obviously and this is a huge frustration to people and it leads to higher overdraft usage because of that 2- or 3-day gap I think we do have a financial literacy issue there too and Dr Foster and I have worked a lot on that I think people don’t know they can schedule their payments around their payday by just simply calling the 1–800 number and doing it and so they are juggling VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 23 when they could move everything given that but what should the Fed do about making—you suggested up to $5 000 be available if it is—I get complaints about this from my constituents Mr KLEIN Under the Expedited Funds Availability Act that’s where it requires the first $100 as you well know to be made available immediately and the Federal Reserve has all the legal authority— Mr HILL To change that number Mr KLEIN —to change that number and to change the amount of time up to $5 000 for customers of more than 6 months Mr HILL Yes Thank you for that We will talk more about that I yield back Mr Chairman Chairman LYNCH The gentleman yields back The Chair now recognizes the gentleman from Ohio Mr Davidson for 5 minutes Mr DAVIDSON I thank the chairman and I thank our guests Thanks for your expertise in this field It’s safe to say we don’t all agree on all of the issues here but I am encouraged by the shared consensus that privacy is such a foundational principle for sound payment systems Data breaches and data arbitrage pose inherent and under-appreciated risk to consumers and we do need a new architecture to protect personally identifiable information and Congress needs to set clear parameters on what data can be collected or transferred We also need to preserve what has worked so well for so long with the U S dollar Cash is an incredibly important tool and the features of it were alluded to by Mr French Hill when he was talking about a system that could work for banks and for individuals The U S dollar if I exchange it I don’t have to go to a bank I can transfer it between any one person It is recognized as legal tender throughout the United States And I don’t necessarily have to share all kinds of personally identifiable information when I get it Some people hate that But the reality is when you go to a bank our system of laws requires the bank to know all sorts of things and frankly to spy on all their customers in order to continue to be permitted to operate and they do that largely to keep us safe and to protect us from crimes and things like that but there is this system of cash that is still permissible for peer-to-peer So as we talked about blockchain in a—I don’t think everyone would agree in terms of where we are at with blockchain or cryptobased assets but I think it is largely a matter of whether it is understood or rightly understood in my opinion because there is a fear that there is all this abuse There has been some fraud in the cryptospace and the solution isn’t to just avoid that space altogether It is the exact opposite It is to provide regulatory certainty and legislative clarity that does not exist currently Blockchain broadly protects personally identifiable information and done correctly it eliminates or can eliminate intermediaries true distributed ledger technology So how could we do this It is not a partisan issue as I said I have cosponsors for legislation that include people who support Bernie Sanders and cosponsors who support Donald Trump co- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 24 sponsors from the North South East and West Republicans and Democrats The real issue is whether we will confront the innovator’s dilemma Will we continue the broken status quo that protects incumbents at all costs or will we embrace innovation that will inherently disrupt the current system When confronted with this opportunity in the 1990s Congress got it right and the internet flourished Congress did not try to understand everything about the architecture of the internet and clearly any time there is a hearing on the topic Congress still does not understand everything about the internet In fact no one has yet envisioned all the use cases for the internet or internet technology How does all this relate to payments Innovators and payment systems are flourishing but unfortunately they are often launching projects outside of the United States not to avoid our regulations but to find legislative clarity in places like Switzerland or Singapore So will we unleash the power of our innovative economy Will we provide legislative certainty where it is absent with bills like the bipartisan Token Taxonomy Act Will we finally address the foundational problem of privacy And finally will we allow all Americans to interact freely and privately without intermediaries that collect monetize and often compromise our data They slow the payment system charge fees and do make banking less accessible to some people So I think if we are talking about this—and Mr Ahmed perhaps as the bridge between the old economy and the new economy what are your thoughts on the framework that I have laid out here Mr AHMED I completely understand the framework and I understand the need for anonymity and I think it is the cryptography aspect of cryptocurrencies or payment solutions that leverage the blockchain that really enables that and I think you see that in varying degrees as I mentioned with tokenization technology reducing the amount of actors that have access to sensitive financial information So I think it is certainly is something that people demand I think it is certainly something that there are technological fixes for but as you also acknowledge there are real concerns from a government perspective about terrorist financing and money laundering and figuring out a balance between those two and how to resolve those I think is the key question that you are raising Mr DAVIDSON Yes Good points and I think I am encouraged by things like the technology on a distributed ledger that lets you follow it so you do have privacy but you don’t truly have secrecy You have a much more transparent system with a distributed ledger than you have with cash And so far I haven’t heard calls to eliminate cash thankfully My time has expired Thank you all Chairman LYNCH The gentleman yields back The Chair now recognizes the gentleman from Ohio Mr Gonzalez for 5 minutes Mr GONZALEZ OF OHIO Thank you Mr Chairman and thank you to our panel today I too have thoroughly enjoyed this discus- VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 25 sion We kind of have a lot of different perspectives and opinions on this which I think reflects frankly some of the challenges that we have legislatively It has always seemed to me that with respect to fintech we are not quite sure where we want to go We think we kind of have a destination in mind but how we get there is always different Ms Del Rio I want to start with you I just want to kind of try to summarize part of your testimony and just give me a yes or no as to whether you think I kind of got it I saw a lot of claims that seem to be that fintech is primarily or more about jargon that ultimately is exclusionary in its application as opposed to providing real innovation that expands access Is that a fair characterization Ms DEL RIO Sort of Mr GONZALEZ OF OHIO Okay Can you clean it up for me Ms DEL RIO Sure So again it is not to malign innovation or technology They are not intrinsically bad or good and that is the point I think my point is that there has been a lot of sort of reifying of technology as a solution and so it was going to solve the problem of the unbanked and solve inequality and all of these deeply-entrenched problems that we have talked about today and that your committee is well aware of and so I think that my point was to sort of—this is the Task Force on FinTech—underscore that our experience and those of other advocates community groups financial institutions as well that work with low-income people with immigrants with these marginalized communities that don’t experience these benefits of fintech yet and in fact it is often the reverse where they promise that this is a stepping stone to greater access and to a greater opportunity when it is not Mr GONZALEZ OF OHIO Okay Ms DEL RIO It is reinforcing the segregation Mr GONZALEZ OF OHIO Thank you I want to turn to Mr Ahmed Can you talk specifically about the work that you all have been able to do by being in the digital payment space specifically with respect to expanding access to affordable credit for small businesses minority businesses I hear about this from folks in my district frankly that they love products like yours because now they have the ability to access credit in a way that they otherwise would not have Mr AHMED Certainly Thank you for the opportunity We have a product called PayPal Working Capital and it leverages the merchant payments data that we secure We partner with a bank and then offer a loan and what we find is that 70 percent of these loans are going to the counties that lost 10 or more banks as Ms Del Rio mentioned since the financial crisis So kind of going and filling in that gap we found that 32 percent of these loans go to women-owned businesses whereas in traditional financial institutions it is 16 percent And actually in the U S statistics women-owned businesses are 32 percent of the economy So it is the ability to offer that loan to the individual who needs it anywhere in the country very very quickly in a secure manner and in a convenient manner that I think is really the distinctive part of the product VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 26 Mr GONZALEZ OF OHIO And of course it is because you have access to that proprietary data for those businesses right You can see dollars coming in and out and that allows you to price credit more effectively Ms DEL RIO Absolutely yes Mr GONZALEZ OF OHIO Great So in your experience at least with that product the innovation has been working It has been expanding opportunity which completely mirrors the feedback that I get I am sensitive to the comments of Ms Del Rio I think it is absolutely legitimate that we need to as we are thinking through the regulatory environment making sure that access is a central component of what we are doing right Ms DEL RIO Yes Mr GONZALEZ OF OHIO But I do think if we are in a world where we are going to try to stop all innovation in advance because of a fear of something that may or may not happen I think that is a dangerous place to be And then with respect to—you also mentioned—we have 50 seconds—AML BSA compliance As we transition or potentially hopefully transition to more of a blockchain system that is one concern that everybody raises Can you just provide your perspective on that Is that a tech challenge Is that a regulatory challenge How can we be comfortable in that world Mr AHMED I think as we heard there are technological solutions to be able to track transactions even with cryptography depending on the type of cryptography and it is quite a prism and quite a range depending on what the solution is that is being offered and then there is a regulatory challenge of how you actually go after the types of things that you are worried about but ensure that legitimate transactions are getting through so I think it is probably a little bit of both Mr GONZALEZ OF OHIO Great Thank you And I yield back Chairman LYNCH The gentleman yields back The Chair now recognizes the gentleman from New Jersey Mr Payne for 5 minutes Mr PAYNE Thank you Mr Chairman and let me thank you for allowing me to sit in today with the task force Being a guest here and allowing the members on the task force to go before me my thunder kind of gets stolen but I would just like to associate myself with the comments Mr Davidson of Ohio made in terms of cash For me it is about choice and I will ask Ms Del Rio and Mr Klein What happens to that segment of the country that does not come along with this move towards other currencies What happens to the grandmother who just can’t learn all of this rigamarole on the phone What happens to the child that their dad gives a dollar to go get candy What you have to carry a card now or say ‘‘Here son here is a credit card go get yourself a lollipop ’’ It is about choice and that is—when the issue is raised is cash still king I don’t know if it is king or not but in the United States of America there should VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 27 be a choice and there are underserved underbanked communities that are not going to ride I still unfortunately don’t use PayPal because I have not learned to use it yet and I would consider myself fairly—well fairly savvy but there are just communities that I am concerned about that I represent that are just not going to ride this change And privacy issues Cash is still the only way that you have total privacy in this country Wawa the convenience store was just hacked several days ago 30 million people’s information—30 million Americans’ information Forget about Target several years ago So cash is really America It is the American way—a legal dollar George Washington’s face on the dollar and we are talking about doing away with that You are doing away with a segment of the country The statistics are right behind you 34 percent of African Americans use cash That is a major segment of the country What do you say to making sure that there is a choice in this country That is what this nation was built on having a choice Not that we aren’t going down that road but to not have a choice in the matter is my concern Ms Del Rio Ms DEL RIO Yes Thank you I appreciate your comments very much I want to say that I have been doing this work since the mid-1990s and at that point I remember people were predicting the demise of cash and there were going to be no more bank branches anywhere Everything was digital and technology-based and that hasn’t borne out So I appreciate your comments and I just want to note also that in New York City our city council just last week passed a ban on cashless businesses for all the sort of reasons you outlined the impact that would have the racially-exclusionary impact it would have of keeping people out of certain storefronts which is just fundamentally problematic When I started doing this work is when public benefits were starting to be transferred to electronic benefits cards And at that point our organization and many others raised some of the concerns that you are mentioning How would that impact people who don’t have easy access to bank branches or ATMs in order to access their food stamps And what we have warned about and have seen bear out is that people end up paying huge amounts of their public benefits in fees to access their cash benefit or publicly-subsidized benefits They have to take buses to use their benefits cards and things like that That is just one small example but it bears out in many other ways So I think we absolutely agree and I think this panel agrees that cash shouldn’t disappear that people should have their choice preserved and protected and that stronger action by Congress to make sure that people are protected no matter what choice they make these are just fundamentally key things if we are going to build infrastructure that allows for greater options for people Mr PAYNE Thank you and I see my time is up I yield back Chairman LYNCH The gentleman yields back and the Chair now recognizes the gentleman from Wisconsin Mr Steil for 5 minutes VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 28 Mr STEIL Thank you very much Thank you Mr Chairman for holding today’s hearing I think we have heard a lot of discussion today that is focused on the idea that innovation and the adoption of mobile payment technology can lead to financial exclusion There are people in this country who are unbanked and lack access to smartphones but we should be working I think to ensure that the public policy creates an environment where everybody benefits from innovation that we are creating I think there is an opportunity here to talk a little bit about how we can use this technology to improve financial inclusion I look to Mr Ahmed and I think for us it is important to step back maybe and just put a little bit of context to this And so if I can I dug up some numbers from Pugh research 96 percent of Americans own a cell phone Ten years ago it was about 85 percent The same study found that 81 percent of adults owned a smartphone Back in 2011 it was about 35 percent The numbers for smartphone ownership rates by White Black and Hispanic adults this study found was nearly identical 82 80 and 79 percent respectively reasonably identical rates And while lower-income adults are less likely than those with higher incomes to own a smartphone the overwhelming majority of respondents earning less than $50 000 per year did own a smartphone Some interesting data 71 percent of those earning less than $30 000 have a smartphone 78 percent of those earning between $30 000 and $50 000 do And we are seeing this trend not only in the United States but globally 60 percent of adults in Brazil 52 percent in Mexico and 41 percent in Kenya have smartphones and the numbers are continuing to rise at a very aggressive rate And so given the adoption of smartphones and the near total market penetration I think we should be having a conversation about how mobile payments can foster financial inclusion rather than simply identify the risks of financial exclusion We should identify the risks but I think we should spend some more time on how this could actually help us moving forward and how technology can actually help those who are unbanked Mr Ahmed in your testimony you mentioned that the most significant barrier to mobile payments for underbanked consumers is their poor compatibility with the way in which unbanked consumers often earn and use money Can you elaborate on that comment just a bit Mr AHMED Certainly So if your employer pays you in cash and then if you are living in a community where most of the options available for you to get your groceries or to take transportation— if the common method of acceptance or the preferred method of acceptance is going to be cash then it makes a lot of sense for you to be using cash But I appreciate you highlighting the point about financial inclusion in the way that we are thinking about it—PayPal is really about financial health—can we create value propositions using the full suite of financial services to say actually there is a better option here if the digital payment is accepted by the merchant whether you are offering credit to the merchant as an incentive or VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 29 lower cost or on the consumer side So that is really where we are trying to focus and to do it in partnership with a lot of the entities on the ground Mr STEIL Thank you And as we go back and look at the widespread adoption of smartphones and the continuing trend lines across the United States and across different demographic groups can you comment on how that is allowing PayPal to serve some of these individuals who were previously unbanked Mr AHMED We are riding a very strong trend in this space in the mobile access space and we are seeing mobile payments grow as a result of that so certainly a lot of the core focus of our company whether it is in Venmo or in our core PayPal product is to create better and more experiences using the mobile device for people to be able to use again everywhere they go Mr STEIL I appreciate your comments And I appreciate your time here today I do think as we spent a lot of time today identifying some of the risks I think it is important that we also identify a lot of the positives in how some of these mobile-payment technologies can assist those who are currently unbanked in our system Thank you very much I yield back Chairman LYNCH The gentleman yields back The Chair will now recognize the ranking member for 5 minutes for closing remarks Mr EMMER Thank you Mr Chairman and again thank you to the panel for this interesting discussion I really appreciate my colleague from Wisconsin I think pushing the reset button and getting us to refocus because a lot of what I hear when we talk about technology reminds me of what humans have dealt with since the beginning of time We fear what we don’t understand And by acting before we really understand what we are dealing with we have a tendency to drive innovation and more importantly the entrepreneurs responsible for the great science everything else out We should lead when it comes to these technology advances Frankly I was listening to the comment by—when you said that we banned cashless businesses That is actually kind of sad because—and the next follow-up was we need government to give us more solutions If you think back to 2007 I believe we had roughly 9 000 community banks on Main Streets across this country We had roughly 9 000 credit unions like the one that you Chair A year later after the crash we still had roughly—between 2008 to 2010 or 2011 we still had roughly 9 000 of each And then Congress rushed in to help like Congress did with the savings and loan crisis and every other crisis because the government has to save us from ourselves And ever since it has accelerated the pressures on small community banks and credit unions to the extent that we now have roughly I think less than 6 000 of each and we are losing more every day rather than trying to create an environment where we are creating more Main Street banking opportunities So the idea that government is going to solve it by banning it I just want to give you something because I think it is funny when VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 30 I hear from even one of my own colleagues that crypto is the preferred method of laundering money Well my colleague Mr Payne just pointed out the only truly private thing left is cash We can identify people on the internet You can’t necessarily identify somebody who is carrying around suitcases of cash and I think the comment was that El Chapo had $200 million in cash on his property I had my guys check I don’t think he had any cryptocurrency by the way His son might have but he didn’t I would suggest to anybody who is interested again because I think the rhetoric really is this is dangerous technology is going to disenfranchise because we don’t learn it And by the way to my colleague who says What about the grandmother who doesn’t know or the child I agree with him but I am one of those people that when I go through the checkout line in the grocery store and they say ‘‘Sir the self-serve is open ’’ No no I’m going to the person I want to talk to somebody The young people are going through—besides if I go through the self-serve I want the employee discount because I am doing the job right I should get the discount But I think while we should be concerned always and I respect and am very sensitive to the fact that we are all thinking I hope in the same vein We want people to have access We want people to be empowered and to grow and be able to lift themselves up We just look at it a little differently I suggest if you haven’t to take a look at the book ‘‘The Age of Cryptocurrency ’’ This book begins with a story of Afghani women who are typically excluded and shunned from partaking in finances It is a cultural issue These Afghani women were using bitcoin to build up a financial livelihood and to store value that is solely theirs This is the kind of empowerment that is not something that I think we should just be tossing aside again because we can’t see all the things out on the horizon We have to make sure we are very careful and this institution in particular has to start moving a little quicker with the certainty questions that we talked about in the marketplace because at the end of the day that is where we are going And I think people need to be very clear We can either help facilitate this technology advancement or it is going to happen without us and God forbid it happens somewhere else where we don’t have any say So again thank you to the witnesses And Mr Chairman thank you very much for having this hearing today Chairman LYNCH Absolutely Thank you Thank you for your remarks as well In closing I do want to point out the difficulty here that we face I was in Somalia last week We did a codel there to the Horn of Africa and I am keenly aware of the need within Somalia for a secure banking apparatus to help that country recover All of the big banks have left because of the threat of reputational damage due to the control of al-Shabaab and terrorist elements in that country but you do see the need for a value-transfer system that is secure and that will allow that country to recover So clearly there are VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 31 some advantages to be had in a digital system that is secure It is a very different circumstance but I clearly see the benefits But I also see the benefits that our regulatory system has secured Most of our regulatory system on the financial side the traditional system has been created as a result of responses to calamities in this country right We had 9 000 bank failures during the Depression—9 000 So Congress in coordination with the SEC and others created the Federal Deposit Insurance Corporation FDIC So we have the Federal Deposit Insurance Corporation and even though we had a major catastrophe in the recession in 2007 2008 we didn’t see all the banks closing down like we did before So there are advantages to having those intermediaries And now I am a bit concerned about the push for blockchain and a system that eliminates the intermediaries It is peer-to-peer ledger So we go around the Federal Reserve because it is peer-to-peer We go around the SEC We go around Treasury and the Financial Crimes Enforcement Network FinCEN We go around all these intermediaries that allow us to rebalance and correct some of the inequities So it is a big challenge but it is extremely interesting And I agree we have to try to tackle this and get the best out of a system like that while protecting against the worst aspects of what some of this new untested technology might present I want to thank you all for the wonderful testimony All of you brought your ‘‘A game’’ here today and really helped us work through some of these issues that are extremely complicated but we want to understand how this affects everyone The banking industry has tended to gravitate toward the needs of the wealthy right I remember when I was an ironworker I was an ironworker for 20 years and I became union president and we had accounts so that the men and women on the jobs could go cash their checks at the end of the workday and I remember a bank a big bank still around who told me as union president that they didn’t want to do business with my workers anymore because the amount of money they were making on their transactions didn’t cover the cleaning of the rug because my guys and gals were coming in with muddy boots So that type of elitist attitude that we want to take care of the rich folks and not the workers so much and that is where the money is on the high end of this spectrum We have to be careful We have to be careful when we are designing a system that it is inclusive of everyone and I think we can do it I think we can accomplish the goals that have been articulated up here We just have just to be smarter about it Part of it is the way we engineer this and part of it is the way that we not only engineer the architecture but also regulate it on behalf of the American people because we are the only group who can really intercede on behalf of those people in our economic system and our legal system So thank you very much for your testimony Without objection the following letters will be submitted for the record letters from Americans for Common Cents C-E-N-T-S Coinstar the Electronic Payments Coalition Nacha the Electronic VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI 32 Transactions Association the Money Services Business Association the National Association of Convenience Stores the National Association of Federally-Insured Credit Unions the payment card industry the Payment Card Industry Security Standards Council Square the American Bankers Association Javelin Advisor Services and the Honorable Donald Payne Jr Thank you The Chair notes that some Members may have additional questions for this panel which they may wish to submit in writing Without objection the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record Also without objection Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record This hearing is now adjourned Thank you Whereupon at 11 15 a m the hearing was adjourned VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K DOCS HBA030 000 TERRI APPENDIX January 30 2020 33 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 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2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00079 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 40 here 42795 040 73 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00080 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 41 here 42795 041 74 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00081 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 42 here 42795 042 75 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00082 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 43 here 42795 043 76 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00083 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 44 here 42795 044 77 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00084 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 45 here 42795 045 78 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00085 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 46 here 42795 046 79 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00086 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 47 here 42795 047 80 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00087 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 48 here 42795 048 81 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00088 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 49 here 42795 049 82 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00089 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 50 here 42795 050 83 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00090 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 51 here 42795 051 84 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00091 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 52 here 42795 052 85 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00092 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 53 here 42795 053 86 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00093 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 54 here 42795 054 87 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00094 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 55 here 42795 055 88 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00095 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 56 here 42795 056 89 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00096 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 57 here 42795 057 90 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00097 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 58 here 42795 058 91 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00098 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 59 here 42795 059 92 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00099 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 60 here 42795 060 93 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00100 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 61 here 42795 061 94 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00101 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 62 here 42795 062 95 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00102 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 63 here 42795 063 96 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00103 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 64 here 42795 064 97 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00104 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 65 here 42795 065 98 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00105 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 66 here 42795 066 99 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00106 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 67 here 42795 067 100 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00107 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 68 here 42795 068 101 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00108 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 69 here 42795 069 102 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00109 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 70 here 42795 070 103 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00110 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 71 here 42795 071 104 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00111 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 72 here 42795 072 105 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00112 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 73 here 42795 073 106 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00113 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 74 here 42795 074 107 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00114 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 75 here 42795 075 108 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00115 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 76 here 42795 076 109 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00116 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 77 here 42795 077 110 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 78 here 42795 078 111 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00118 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 79 here 42795 079 112 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00119 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 80 here 42795 080 113 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 81 here 42795 081 114 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 82 here 42795 082 115 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00122 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 83 here 42795 083 116 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00123 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 84 here 42795 084 117 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00124 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 85 here 42795 085 118 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 86 here 42795 086 119 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00126 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 87 here 42795 087 120 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00127 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 88 here 42795 088 121 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 89 here 42795 089 122 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00129 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 90 here 42795 090 123 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00130 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 91 here 42795 091 124 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 92 here 42795 092 125 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00132 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 93 here 42795 093 126 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00133 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 94 here 42795 094 127 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 95 here 42795 095 128 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 96 here 42795 096 129 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00136 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 97 here 42795 097 130 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00137 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 98 here 42795 098 131 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00138 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 99 here 42795 099 132 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 100 here 42795 100 133 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00140 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 101 here 42795 101 134 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00141 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 102 here 42795 102 135 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00142 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 103 here 42795 103 136 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00143 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 104 here 42795 104 137 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00144 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 105 here 42795 105 138 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00145 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 106 here 42795 106 139 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00146 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 107 here 42795 107 140 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00147 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 108 here 42795 108 141 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00148 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 109 here 42795 109 142 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00149 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 110 here 42795 110 143 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00150 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 111 here 42795 111 144 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00151 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 112 here 42795 112 145 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00152 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 113 here 42795 113 146 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00153 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 114 here 42795 114 147 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00154 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 115 here 42795 115 148 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00155 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 116 here 42795 116 149 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00156 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 117 here 42795 117 150 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00157 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 118 here 42795 118 151 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00158 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 119 here 42795 119 152 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00159 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 120 here 42795 120 153 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00160 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 121 here 42795 121 154 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00161 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 122 here 42795 122 155 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00162 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 123 here 42795 123 156 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00163 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 124 here 42795 124 157 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00164 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 125 here 42795 125 158 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00165 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 126 here 42795 126 159 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00166 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 127 here 42795 127 160 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00167 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 128 here 42795 128 161 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00168 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 129 here 42795 129 162 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00169 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 130 here 42795 130 163 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00170 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 131 here 42795 131 164 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00171 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 132 here 42795 132 165 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00172 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 133 here 42795 133 166 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00173 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 134 here 42795 134 167 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00174 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 135 here 42795 135 168 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00175 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 136 here 42795 136 169 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00176 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 137 here 42795 137 170 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00177 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 138 here 42795 138 171 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00178 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 139 here 42795 139 172 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00179 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 140 here 42795 140 173 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00180 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 141 here 42795 141 174 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00181 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 142 here 42795 142 175 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00182 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 143 here 42795 143 176 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00183 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 144 here 42795 144 177 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00184 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 145 here 42795 145 178 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00185 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 146 here 42795 146 179 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00186 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 147 here 42795 147 180 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00187 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 148 here 42795 148 181 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00188 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 149 here 42795 149 182 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00189 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 150 here 42795 150 183 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00190 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 151 here 42795 151 184 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00191 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 152 here 42795 152 185 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00192 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 153 here 42795 153 186 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00193 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 154 here 42795 154 187 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00194 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 155 here 42795 155 188 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00195 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 156 here 42795 156 189 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00196 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 157 here 42795 157 190 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00197 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 158 here 42795 158 191 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00198 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 159 here 42795 159 192 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00199 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 160 here 42795 160 193 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00200 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 161 here 42795 161 194 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00201 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 162 here 42795 162 195 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00202 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 163 here 42795 163 196 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00203 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 164 here 42795 164 197 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00204 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 165 here 42795 165 198 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00205 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 166 here 42795 166 199 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00206 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 167 here 42795 167 200 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00207 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 168 here 42795 168 201 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00208 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 169 here 42795 169 202 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00209 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 170 here 42795 170 203 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00210 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 171 here 42795 171 204 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00211 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 172 here 42795 172 205 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00212 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 173 here 42795 173 206 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00213 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 174 here 42795 174 207 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00214 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 175 here 42795 175 208 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00215 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 176 here 42795 176 209 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00216 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 177 here 42795 177 210 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00217 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 178 here 42795 178 211 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00218 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 179 here 42795 179 212 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00219 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 180 here 42795 180 213 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00220 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 181 here 42795 181 214 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00221 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 182 here 42795 182 215 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00222 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 183 here 42795 183 216 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00223 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 184 here 42795 184 217 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00224 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 185 here 42795 185 218 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00225 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 186 here 42795 186 219 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00226 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 187 here 42795 187 220 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00227 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 188 here 42795 188 221 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00228 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 189 here 42795 189 222 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00229 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 190 here 42795 190 223 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00230 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 191 here 42795 191 224 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00231 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 192 here 42795 192 225 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00232 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 193 here 42795 193 226 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00233 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 194 here 42795 194 227 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00234 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 195 here 42795 195 228 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00235 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 196 here 42795 196 229 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00236 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 197 here 42795 197 230 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00237 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 198 here 42795 198 231 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00238 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 199 here 42795 199 232 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00239 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 200 here 42795 200 233 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00240 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 201 here 42795 201 234 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00241 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 202 here 42795 202 235 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00242 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 203 here 42795 203 236 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00243 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 204 here 42795 204 237 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00244 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 205 here 42795 205 238 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00245 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 206 here 42795 206 239 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00246 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 207 here 42795 207 240 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00247 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 208 here 42795 208 241 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00248 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 209 here 42795 209 242 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00249 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 210 here 42795 210 243 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00250 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 211 here 42795 211 244 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00251 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 212 here 42795 212 245 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00252 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 213 here 42795 213 246 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00253 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 214 here 42795 214 247 VerDate Nov 24 2008 15 10 Jan 16 2021 Jkt 095071 PO 00000 Frm 00254 Fmt 6601 Sfmt 6601 K DOCS HBA030 000 TERRI Insert offset folio 215 here 42795 215 248