Fintechs ramp up lobbying over earned wage access, crypto, AI

Dive Brief:

Major fintech firms increased lobbying spending in the first half of 2024, with some hitting new spending records, according to a report from nonprofit OpenSecrets published last week.
Neobank Chime spent $1.05 million, nearly matching its total for 2022. PayPal spent more than $800,000, higher than the same time period during every prior year. And Block, which spent just under $1 million, hit its biggest six-month lobbying expenditure to date.
“That trend that new companies providing a new kind of service are getting involved in lobbying to limit the regulation of these new services from the very beginning is notable,” said Dan Auble, senior researcher at OpenSecrets. Companies lobbied on legislation covering taxes and payments, and on broader advocacy efforts on banking, cryptocurrency and artificial intelligence, OpenSecrets reported.

Dive Insight:

Many companies behind popular digital financial services — including peer-to-peer payments and earned wage access — spent more on lobbying in the first half of this year than any of their previous spending for the same time frame in previous year, OpenSecrets reported, citing filings the companies made to comply with the Lobbying Disclosure Act.

A major topic among PayPal’s efforts was increasing the $600 reporting threshold for business transactions on P2P payment apps and e-commerce platforms, established in the American Rescue Plan Act of 2021. The legislation significantly reduced the threshold — from $20,000 — for taxpayers receiving a Form 1099-K.

Meanwhile, some of Block’s lobbying initiatives focused on cryptocurrency and AI. Early Warning Services, the company behind P2P payments service Zelle, spent $180,000 for the first six months of this year, focusing on broader issues relating to payments systems, fraud and risk management.

Fintechs that offer earned wage access services also stepped up lobbying investments. Earnin — which spent $300,000 on federal lobbying during the first half of this year, more than the total amount it spent the prior year — focused on the Earned Wage Access Consumer Protection Act, a bill introduced in February by Rep. Bryan Steil, R-WI, that sets guidelines for the industry but exempts earned wage access payments from the Truth in Lending Act.

The Consumer Financial Protection Bureau in July proposed an interpretive rule under which some earned wage access payments would be subject to the Truth in Lending Act and other consumer loan protections. Neobank Chime also undertook lobbying efforts related to this topic, OpenSecrets reported.

“Three of [Chime’s] 23 lobbyists are officially working on specific legislation, the Earned Wage Access Consumer Protection Act, while the rest are working on categories similar to those of Early Warning Services,” the report said. “With about 30 legislative days left scheduled for the year in both chambers of Congress, the fate of a lot of the legislation being lobbied by the fintech sector may remain up in the air until the 119th Congress convenes.”

After Chime, the next-largest neobank to report lobbying spending was Varo Bank, which spent $20,000 a quarter since 2023 on broader issues related to digital banking, with efforts not tied to specific legislation.