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Episode Summary

In this episode of Wrestling Payments, host Joseph Casali breaks down three timely developments in the payments world. First, he tackles the slow adoption of faster payments among smaller financial institutions. Despite strong growth in RTP and FedNow, integration costs and a lack of clear pricing models continue to hold many back.

Next, Joe explores Square’s move to offer consumer loans through Cash App. With FDIC approval in hand, Square—under its parent company Block—is entering the credit space with small, short-term loans. Joe weighs the pros and cons of fintechs stepping into traditional banking roles, especially as regulators start paying closer attention.

Finally, the discussion shifts to stablecoins. The OCC has relaxed its stance, making it easier for banks to engage in crypto-related activities. Joe walks through proposed legislation and asks the big question: who should regulate stablecoins, and what does that mean for banks and consumers?

KEY INSIGHTS

Small Banks Lag in Real-Time Payment Adoption

Despite the growing infrastructure behind faster payments like RTP and FedNow, smaller financial institutions continue to trail their larger peers. Joe points out that big banks are six times more likely to offer real-time payments. The reasons? Integration complexity, unclear pricing strategies, and rising deposit costs. About 30% of hesitant institutions lack a pricing model, and 35% cite tech integration as a barrier. While over 70% of regional and national banks allow consumers to send real-time payments, only 44% of credit unions do the same. The opportunity is there—but hesitation remains.

Square’s Cash App Loans Signal Fintech’s Banking Ambitions

Square, now operating under parent company Block, has secured FDIC approval to offer small-dollar loans through Cash App. Joe unpacks how these short-term, low-cost loans are aimed at underbanked consumers facing steep fees from payday lenders or overdrafts. The average loan is under $100, repaid within a month, and has a default rate below 3%. With nearly $9 billion originated already, this product has clear demand. Joe raises important questions around regulation, noting that while fintechs offer convenience, they aren’t held to the same standards as banks—yet.

OCC Opens the Door to Crypto Activity in Banking

The Office of the Comptroller of the Currency (OCC) has issued new guidance making it easier for banks to engage in crypto-related services like stablecoin issuance and blockchain verification. This removes the previous requirement for individual “non-objection” letters, streamlining the process. Joe explains how this policy shift reflects growing acceptance of crypto in financial systems and reduces compliance hurdles for banks. But he also warns: without consistent regulation across fintechs and banks, consumer trust and financial stability could be tested.

Stablecoin Legislation Could Reshape the Payments Landscape

Congress is actively working on several stablecoin bills, including the Stable Act and Genius Act. Joe reviews draft proposals that would require stablecoin issuers to hold liquid reserves—like short-term Treasuries—and submit to state or Federal Reserve oversight. One provision caps stablecoin issuance at $10 billion per entity, which Joe questions as being too low to make real market impact. With PayPal and other major players eyeing this space, the legislation could set the tone for how digital currencies coexist with traditional money movement.