A Look at the Impact of New Developments in Payment Systems on Low-Income Consumers

Consumer Finance Monitor

Our special guest is Mark Budnitz, Professor Emeritus, Georgia State University College of Law. In an article recently published in the Georgetown Journal on Poverty Law and Policy, Prof. Budnitz explores the impact on low-income consumers of the increasing use of digital technology for consumer payments. Prof. Budnitz first explains why, in his view, the current laws governing digital financial services, particularly the Electronic Funds Transfer Act and Reg. E, do not adequately protect low-income consumers. We then discuss the benefits of various methods he believes could provide protection for low-income consumers using payment systems, such as agency enforcement of existing laws, amendments to existing laws, and enactment of new laws, as well as the limitations of those methods. We also discuss the use of government-run consumer financial services to help low-income consumers, such as the recently-launched FedNow instant payments system, proposed legislation to allow the U.S. Postal Service to offer banking services, and a proposal for the Federal Reserve to issue a central bank digital currency. We conclude with a discussion of Prof. Budnitz’s recommendations for how agencies can better address the needs of low-income consumers when considering new initiatives.

Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.