ETA's new CEO must provide clarity in an evolving industry
In many ways, the payments industry resembles the health care business — pulled into the future by rapid digitization and conflict over the role of government.
This puts organizations like the Electronic Transactions Association, which represents about 500 companies in 30 countries, in the role of finding clarity for their constituents. This job is made more difficult by the fact that some of the ETA's constituents are also in a state of flux, viewing each other as competitors or acquisition targets.
These acquisitions mostly involved larger merchant acquirers and bank technology vendors joining forces to serve both sides of the merchant/bank relationship — and to gain scale against fintech startups. The deals, and the underlying moves to place payments into a larger context of digital shopping and commerce, are changing the nature of many of the companies the ETA represents.
“What this means for us as a trade association is we have to be nimbler and on our toes to see how the industry is evolving and lend support to that,” said Jodie Kelley, the new CEO of the ETA.
Kelley has been in this role for about three months, taking over for Jason Oxman, who left earlier in 2019 to lead the Information Technology Industry Council after seven years as the ETA’s CEO. The ETA dates to 1990, when it was formed as the Bankcard Service Association. It changed its name in 1996 to cover an umbrella that includes ISOs, payment networks, financial institutions, processors and a growing number of businesses that have ties to payments processing.
There's also new innovation to consider. Kelley anticipates the expansion of IoT and other web connected devices will also fundamentally change business for the ETA's members, as will voice enabled payments and checkout-free retail.
Before joining the ETA, Kelley was senior vice president and general counsel of BSA, the Software Alliance for about 10 years.
“Payments is different so I’m learning a lot, but it’s not totally unfamiliar because there is overlap between software and payments,” Kelley said. “The technology and payment industries are increasingly on the same arc, innovating to meet consumer demands for customer experience and leveraging software to do that.”
Kelley's advocacy function must navigate myriad forces that are pressuring payment companies, ranging from tariffs and security risk to how legacy processing can catch up to the immediacy of e-commerce and autonomous retail.
An initial effort to support real-time payments in the U.S., the Clearing House’s Real-Time Payments rail (RTP) is gaining ground, picking up key support from banks in recent months. The Federal Reserve’s plan, FedNow, is also advancing, though it’s not expected to be live for at least two years.
“We are supportive of FedNow, and we do think interoperability is the key,” Kelley said.
While the forward-looking influence of FedNow may have played a role in hastening the adoption of the RTP rails, the idea of a “public option” for real-time payments has caused as much arguing as the health insurance market's prospect of medicare for all.
For example, Thomas Aiello, a policy and government affairs associate with the National Taxpayers Union, has written that a “government run” scheme will chill the entire payment system and will slow investment from private market parties. Eric Grover, a principal at Intrepid Ventures, has also argued FedNow’s government role will chill competition among payment technology firms.
There’s a counter argument. Kelly Siedl, the co-founder and chief technology officer of BillGo, has written FedNow will provide “speed, equal access and an infrastructure that enables the private sector to build cross-platform solutions.” Austen Jensen, senior vice president of government affairs at the Retail Industry Leaders Association, has said FedNow’s influence will speed transactions for small businesses and enable flexible payrolls.
The ETA is supportive of FedNow, though not without reservations, Kelley says.
The association recently expressed its concerns to the Fed’s Board of Governors, noting FedNow is a “much larger challenge” to the private marketplace than services such as Fedwire and ACH.
“There are potential issues with a regulator also being a competitor but we assume those issues are navigable,” Kelly said.
There are other points of contention. The ETA recently pushed the Canadian government to take stronger steps to protect small businesses from cyber crime, noting more than two thirds of data breaches in Canada involve small businesses. The ETA also weighed in on the trade war, saying tariffs potentially harm businesses by increasing the cost of hardware such as cash registers and point of sale terminals.
“As the technology evolves, that’s where our education efforts kick in, where we [engage] with intra-industry groups and policy makers,” Kelley said. “We want to make sure they understand what the technology means and what the industry is doing to mitigate that risk.”