International Payments Alliance Meeting Part 1

In this episode of "Wrestling Payments," host Joe Casali sits down with Kevin Olsen, also known as the "Payments Professor." The discussion kicks off with Kevin's signature introduction and his enthusiasm for making payments engaging. They delve into their experiences at the Nacha Payments Alliance international meeting in Berlin, where both were deeply impressed by the city's historical significance and the intense professionalism of its business community. Kevin shares his personal experiences of exploring Berlin with his son, highlighting the city's rich history and its mix of architectural styles.

The conversation shifts to the core of the episode: the insights and learnings from the Nacha Payments Alliance meeting. Joe and Kevin reflect on the valuable networking opportunities the event provided, allowing them to connect with key decision-makers in the global payments industry. They discuss the significance of the meetings, particularly the discussions on fraud prevention, and the innovative approaches being taken to tackle fraud globally. Kevin emphasizes the importance of the Payments Innovation Alliance meetings and how they bring together leaders from various countries to share their approaches and solutions to common problems in the payments landscape.

Finally, Joe and Kevin explore specific topics discussed during the meeting, such as the implementation of the Legal Entity Identifier (LEI) and the concept of verification of payee. They express their admiration for the collaborative efforts seen in Europe to enhance payment security and efficiency and ponder the potential challenges and benefits of adopting similar measures in the United States. The episode wraps up with reflections on the importance of such international collaborations and the shared goals of improving the payments industry worldwide.

To hear this episode and many more like it, listen here or subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts.

For show notes, transcripts, and other resources visit www.wrestlingpayments.com.

Host: Joe Casali, EVP, NEACH

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Transcript

NEACH - Wrestling Payments - episode 2.11 

International Payments Alliance Meeting Part 1 with Kevin Olsen - 

Kevin Olsen: [00:00:00] The way the regulators get involved, they basically, the regulators there are more like Here's what we think is a problem. You go figure it out. Our regulators in the U. S. go, wait, what's happening? Let's do something about it. And it's a totally different approach to the problem. 

​Joe Casali: Welcome to Wrestling Payments. I'm here today with a special guest. Kevin Olsen, the payments professor. Kevin, you want to just remind the audience who you are?

Kevin Olsen: Well, I got to start off with my signature. Hey, everybody. I am Kevin Olson. I am the [00:01:00] payments professor. You'll find me out there on YouTube doing all I can to find fun and exciting ways to make payments fun, engaging, and entertaining because payments are just phenomenal. I do happen to also work for a payments company called Pigeon that delivers faster payments options though.

Joe Casali: Excellent, excellent. Today we're here to talk about a meeting we both attended. It is the NACHA Payments Alliance and it's their international meeting, which this year took place in Berlin, Germany. Kevin, what were your thoughts on Berlin in general?

Kevin Olsen: Wow. I mean, I get goosebumps actually kind of thinking about it because I was so excited to go there. I'd never been to Germany, never been to Berlin. I happened to take my 14 year old son, Liam, with me, who some people have seen on some of my older YouTube podcasts and videos and to be able to go around the city with the history that it had was phenomenal.

I mean, seeing the wall, seeing the places where the wall had been, some of that representation, I know, at least [00:02:00] for my decade, my generation growing up that it was just like, wow. And to see places like, where Hitler died in it to be such a non-eventful place too, was phenomenal. And I, well, in the experience payments there, that was also a bit interesting and surprising to me. 

Joe Casali: I found Berlin to be super interesting as well. I was not a big history student back in the day. I knew about the big events, but I didn't know Berlin in general. Where did it come from? Who, how did it develop? It was really interesting and certainly the amount of history.

There's a split place. We got, went to, we had a tour guide that was actually a friend of ours. Andrew Gomez from Olympus Advisors. And he gave, took us on an unofficial walking tour and. The thing that stuck with me was the Brandenburg Gate and the Brandenburg Gate on top of it.

And it's, it's a gate. It's like big arches and cement and columns, and I don't know the [00:03:00] architecture, but it had specific types of columns and on top of This Brandenburg gate, which I keep calling Bridge. So forgive me if I say bridge was a statue, right? The statue was of a warrior, a woman, I think, in a chariot being drawn by four horses and to find out that was stolen by Napoleon and the Germans took it back. It was just really interesting. So it was a fun place to visit. I don't know if it's going to be on the top of my list to return to but it was clean. It was a mix of all types of architecture. You could imagine that some buildings existed pre, international incident, let's say, and Some of those buildings were destroyed and some buildings were built.

So there's lots of hodgepodge of different architecture. And the other thing that stood out, I don't know if it stood out for you, Kevin, the business people, the people that were doing business, they don't kid around. [00:04:00] They were three piece suits, in the middle of the day. 

exactly right. Remember the last time I wore, I think it was probably prom where I wore a three piece suit, but they were dressed to the nines,

Kevin Olsen: Well, see, I like that because, I'm a bow tie guy every day, so I like that. I thought that was great to see. But granted, they weren't colorful. I also noticed that they were very, gray, black, brown suits.

Joe Casali: exactly right. But that was not why we were there, really. We were there to attend a meeting and I'll give you my impression of the meeting. I looked at the agenda as I was going, I'd committed to go. I looked at the agenda and initially I was like, I don't know what I'm going to get out of this meeting because there was, it was heavy duty European and I, at the beginning of this meeting, had trouble seeing how we could connect to that information.

By the end of the meeting, I can't imagine missing this meeting because it was so [00:05:00] informative. 

Kevin Olsen: Joe, that's the same thing I'm telling people. I love Payments Innovation Alliance. The two U. S. meetings are something that everybody in U. S. payments should be going to, no doubt about it. You want to be members and you want to be involved because of what the work groups do, what the presentations we learn, but the Payments International meeting that they have once a year.

This is my third one. And I go every year. Alone for the context that I'm able to make, I mean, to be able to sit there and you've got the head of EBA payments in there, European banking association, for those of you don't know, sitting there, you've got the head of Dutch Payments sitting there.

And years previous, we've had the head of like the European ACH, even in there. I mean, not just, somebody that shows up and works for them, the leaders, I mean, the presidents, the CEOs of these companies are there in the same room from multiple countries. I mean, I get goosebumps just thinking about the people I'm talking to that are major decision makers for a global system.

Joe Casali: I, [00:06:00] and I so appreciate that. Cause I, I get starstruck. So if you weren't there they would have said head of, head of EBA and I would have went, Oh, it's a head of the EBA. Oh my God. Kevin's like, Hey, how are you doing? Haven't seen you in a while. How, and introductions. It was, thank you for those introductions that I would have been sitting in the back corner of the room if you weren't there,

Kevin Olsen: It's nice that Payments Innovation Alliance did, because I know we're going to talk about what we learned there as far as some of the material that was presented to us. But the fact that we get to sit in the room with these people is 1 thing, but we also get to know them. Like you said, the introductions, because I've gone years in a row.

I've gotten to know them and they even organize. meals like the no host dinners where we get to go and sit down and learn about these people on a somewhat personal level, but definitely deeper in a professional level of what they're looking at, what their concerns are and Joe, I got a feeling [00:07:00] you learned what I learned too is they have the same issues.

They may look at it differently. But they have the same issues.

Joe Casali: Exactly. That was, I don't know why that was a discovery, but completely, it's the same. It's the same problems, just different geo and different solutions. They definitely take a different approach. I did, I don't know if I told you, I ran into a, just a Brit in the lobby.

And he's like, well, what are you doing here? They're very, very traveler friendly. And When I explained to him that there are 7, 000 institutions in the U. S., he was like he got, he stuttered. He was like, so it, solving a problem for, less than a hundred financial institutions versus solving a problem for 7, 000 institutions.

It's different math.

Kevin Olsen: Yeah, by far. And well, we learned that too, in some of the sessions, because there's also different views from society on how things are going to work. Like for [00:08:00] example, the digital Euro, when you talk digital dollar in the U S people like no, no digital Euro there. They're like, Hey, this sounds like a good idea society wide.

So that was phenomenal. The way the regulators get involved, they basically, the regulators there are more like Here's what we think is a problem. You go figure it out. Our regulators in the U. S. go, wait, what's happening? Let's do something about it. And it's a totally different approach to the problem. 

Joe Casali: Really good. Do you want to talk about any session in general? 

Kevin Olsen: All of them, I really have to say, because I think the best place to start off with was just the way it started, fraud. When we started off, and I think, I had the same thing you did on the agenda. I'm looking at the agenda. I'm like fraud part one fraud part two. Is there really that much fraud to talk about?

The answer was yes. there really was. And it wasn't a situation we're talking about. This is the fraud that's happening. It was more like, this is what we're doing to [00:09:00] solve for it 2 sessions over 2 hours of here's what we see as ways to be able to solve for the least lower limit, maybe even somewhat control the fraud that's taking place.

Joe Casali: It was, that was one of those moments where you said it's the same problems and I didn't realize that we just had a bunch of episodes on elder financial abuse, which also leads to just fraud in general. Your son's, your grandson is picked up by the police and he needs bail money right now in cash or put it on prepaid cards.

The romance scams are there too. So that was eye opening. Oh it's the same problem. They're having the same problems. I touched on that for a minute, and I certainly don't know enough about this topic, but PSD two was really interesting because it was, in my opinion, it was, let the fintechs [00:10:00] into the accounts.

Let them, if it's the customer's account. Give them, let them have access. If the customer wants a FinTech to have access, I understood that something the U S kind of was playing with and it's playing with more and more. The PSD three is about a, and correct, really jump in if you want, Kevin, the sharing and resolving of fraud issues by identifying names. So I recently took part in some rulemaking at NACHA and there was a, there was an initiative that fell off the most recent rule changes, but there was an initiative to kind of standardize the name in an ACH file. A lot of pushback around that. I pushed back around that. I, it's been doing what it's been doing for 50 years.

Why change it? Well, here's why I change So it definitely changed my opinion. 

Kevin Olsen: And you nailed it right there and saying this wouldn't be done for 50 years because [00:11:00] we look technology wise going backwards. And there was a reason why we didn't want to look at names. We wanted things to be just numbers. It was so much easier for things to be able to process. But as things evolve, especially fraud, technology goes along with it too.

I know one of the things we learned in that 1st session was. By being able to have the multiple layers of communication between different entities beyond just financial institutions, beyond just the central banks or operators to, I mean, they went levels deep with what the phone providers they had the service providers in there too.

And they would share the name, they would share the information. And I mean, I get goosebumps thinking about it. I think it was Phillip Straley, FNA was talking about. We can now take if information shared correctly and detect fraud happening in one location and are able to determine it's about to happen here, and here, or we can start seeing the trends and patterns that it's actually happening across the network in multiple places.[00:12:00] 

It just hasn't been reported or other systems haven't detected it yet. And I was like, are you kidding? But he proved it. I mean, he showed he's like, here's how.

Joe Casali: Yeah. He was another one of those, I would have never introduced myself if you weren't there. So thanks again on that one. He was a great guy too. Had dinner with him. Oh, literally I'm on the page FNA Phillip.

Kevin Olsen: Yeah.

Joe Casali: This is great. There was. There was one more piece to that I thought was super interesting.

Oh, here's another. And I've been on a couple of these international meetings as well, but I didn't put it together until this meeting, always trying to and do you remember Cindy Thompson from what was it, Michigan ACH, would say, when you train people, give them something that they know and then hook the new knowledge on it.

So the thing I made, the connection I made this time was, imagine the US and if payments were flowing and we're comparing it to the EU, if payments [00:13:00] were flowing, New York had its own currency. And Massachusetts had its own currency, but they also shared a currency. Imagine the complexities around that.

I didn't, I didn't put together until this meeting the Frank and the And the, well, the pound, not so much. I keep including the UK in the EU and I know they said, yeah, we're

Kevin Olsen: And they were there, but took that exit.

Joe Casali: Yeah. And then the lira imagining how different combinations of technically international payments flow.

It was a, usually I'm a little cocky and I say, Oh, I know how I would fix that. I don't know how to fix that. It's really interesting.

Kevin Olsen: Yeah, I'm with you too, because I've tried to tell people we look at SEPA, SEPA the European Payment Association, where they've got all these different countries able to do even instant payments. And I say, well, think about it. Like you just said, think about it as the different states, because we are seeing in the US where different states are getting their own rules.

They're [00:14:00] passing their own laws that they're In some ways do and don't apply to payments because it doesn't trump federal regulation, but still it shows that the need to be able to have that communication can be done because they're able to do it between different countries. I think we should be able to do between different states, but they also stated there is a lot of political pressure, especially on romance scams type of stuff.

The fraud. They do have a lot of political pressure. I feel like we have some. Because we have seen at least zell in the news. We have seen Bank of America chased having to testify before Congress on some of that stuff, too. But I do think it's a little different as far as how that pressure maybe is applied. 

Joe Casali: And the other part of that conversation is one geo will have a solution in place. They have, this is our payment system. This is how it works. And the idea that someone suggests, we need to coordinate better. The personalities of the different states saying, Oh, we can do that.

Our solution will [00:15:00] work. And the next one saying, Oh yes, we agree. But we think our solution will work that that fighting of which solution wins, super interesting,

Kevin Olsen: Well, and they talked about that, too, that the different countries all said they had a solution and what it took was an independent that would represent all equally and they all finally went. Okay, we'll do that.

Joe Casali: super interesting. I remember sitting next to you and saying, what the heck is an L E I?

Kevin Olsen: Oh, yeah. Wait. Before we get to LEI, can I tell one more thing about the fraud blew my mind? The National Scam Prevention Centers. Like, this is the thing. I got back home, and one of the first things I did after catching up on sleep was I started researching these National Scam Prevention Centers, especially the two that Philip mentioned, which was Malaysia, And also Singapore that they're very heavy in this.

And the fact is, and I did an internal white paper already for it too, that I'm going to be putting out. If it is basically where you have those [00:16:00] layers, you have the government, you have the central bank or the operator, you have the different banks that are involved, you have the service providers that are involved, and you even have the telephone companies, the technology providers that aren't even part of the payment.

They're all involved and they communicate to a central location, which is a location in these countries. Where citizens can call in and say, Hey, I've been scammed. I've been robbed. My money was taken away and they get immediate solutions. They show the detection rates of, kind of like I was saying earlier, seeing it before it happens because the communication level is there.

They are able to react so much faster to where they are able to get some funds back. At least they're at least able to also identify and shut down some of the mule accounts that are very popular in those, but it is also. A case of they have to have those layers of identification, which leads in to that L.

E. I. You're talking about. 

Joe Casali: And you mentioned the white paper, how do you think that would [00:17:00] work in in the U S if, all of a sudden someone came up with, Hey, you know what, we should have a national scam prevention or I don't know, regional scam preventions. Thoughts? Is that in your paper? Any thoughts on that?

Kevin Olsen: I didn't put too much on that subject yet because there is again the difference between European views on privacy versus U. S. Views on privacy. Now, Europe is much bigger. Like, every time I went to any website, I've been to many times before in the U. S. While I was over there. I have all these check boxes on how I want the cookies to be used, like, not the same as here.

Here. I just accept or reject, right? There, I had levels of how it could be used because they, again, are more concerned with privacy. Yet! They're more willing to allow their data to be used in this capacity in the U. S. I have found or my experience at least has been that more people are just too reserved to be able to allow that to be used because they're not understanding how it's going to be used or they're afraid that it would be used in malicious ways.

But if we [00:18:00] share that data in the right way, it's protecting everyone. Overall,

Joe Casali: Yeah. Didn't realize it till you just said it, but the cookies were more complex. I went to a couple of websites and I'm like what? I have two options here. I didn't, I knew something was happening, but I didn't get to that place where, Oh, I know what's happening.

And interesting. So that LEI, I don't remember what it stands for, 

Kevin Olsen: it's

Joe Casali: don't know if 

Kevin Olsen: identification. Because, at first, if you remember to, we're very beginning of this presentation, they're showing all the different components that they can look at and identify in the payment. And I look over to you and I'm like, what's like, I'm like, I have no idea. I don't want to sound stupid, even though I'm never afraid to ask a question in a group.

And I did, I had to raise my hand and be like, Hey, what is that? And so I had to write it down, but it is a legal entity identification. And the way I understood it, because we got to mention Ivan at some point in time to differentiate European [00:19:00] payments. Big time

Joe Casali: Kevin, what is an IBAN?

Kevin Olsen: It's an identifier that is used in the European markets.

That is unique to each country. Every individual in business. So it's basically like, we have a social security number that identifies us. I think of it as being like a social security number for your banking information. So it's more than just a routing number and account number combination.

It's kind of combining the two in a way so that you have a number that is uniquely you. For European payments, but this takes that to another level. It is basically saying it is. It's kind of, again, similar to our routing number accounting number combination, but it's outside of payments in a way because the legal identification numbers that they're talking about those entities.

It's like signing up and say as the payments professor, I do have a tax ID number that I use. So it's in a way being able to say this specialized identification for banking along with this specialized identification for you as a business gets added [00:20:00] together to give yet another layer of protection to be able to help say, Hey, you are or are not doing these payments

Joe Casali: And if I remember this was a project and it wasn't like this, everyone uses it, this is how it works. It was, this is what we're trying to do. This is the problem it solves. And one more comment on that IBAN. I don't think anyone, even if you are a payment geek or a payment nerd, walks around and say, Oh yeah, you need my routing number and account number here.

But with that IBAN. They are, here it is, you can take my IBAN here to use it. I want to pay a bill. I want to get a credit. That was a different feel. And the last piece of that, correct me if I'm wrong, they are, there is a state difference, a country difference. So my UK IBAN isn't the same as if I have a French residence.

Kevin Olsen: that it's actually, there's an identifier within it. So similar, like I'd say for, Payments geeks in the U. S. who know [00:21:00] IAT, we have the country identification in there within the IAT. There's something very similar in the IBANs for that. So how they're distributed, how they're identified, there's actually differences in that.

Joe Casali: Excellent. But I did at the end of the day, after we figured out what they were talking about I did like the concept. of the LEI. Again, I don't know how we could implement that here. I know I get that question five times a year. Oh, can you look up that originator ID? Nope, I can't because it's sort of, sort of made up by ODFI

Kevin Olsen: Well, see, I love that you just brought that up, because that is one of the things I didn't think of. There, but since I realized it is basically like having a national database that is originator IDs. And instead of it just being assigned, well, I do the original IDs this way as an ODFI and Oh, at this ODFI, we do it this way.

It is being able to say that wherever your bank is a business, this is your originator ID, that it [00:22:00] actually is assigned at a higher level or a more central level. So that it is much more unique.

Joe Casali: We are not starting a US LAI business, but imagine how useful that would be in saying, Hey, there's transactions over here, but there's transactions over here from the same originator.

Kevin Olsen: Well, Joe, I don't know if your CEO listens to your podcast or mine listens to mine, but maybe we got a business idea right there. Maybe there's something. Hey.

Joe Casali: I have an investor, but yeah, we can talk offline. Can you tell me do you recall, was this the EBA CEO that said one of the things that they keep in mind, and I have it in my notes, is they want to do two things. They want to do no harm and they don't want to crowd anyone out so we could compete in the EU.

Kevin Olsen: David and that is exactly what he said is they want to do no harm to and do no harm is more than just [00:23:00] not harming an individual. It is also corporate treasures. It's also about different countries and their economic systems. It's also the payment service provider. So they want to make sure everybody gets an equal stance in that.

So it's like the 2 go together in a sense. And making it to where it's applicable to everybody. I mean, I really love that, too. Of course, working for Fintech, I want to see it to be equal ground on what people are able to do, what people are able to offer from the top to the bottom, whether it be from the service provider to the actual consumer.

Joe Casali: I did think that was remarkable because I don't recall hearing that sort of motto in any other speech I've heard anywhere. So I did think that was interesting.

Kevin Olsen: Well, it's great though. It's the Senate Payments Innovation Alliance, because that is something that we do see that everybody is treated equally in all of those meetings, whether it's internationally or here in the States.

Joe Casali: Yes. Excellent. Excellent. Excellent. Next topic you want to talk about?

Kevin Olsen: Well, in the L. E. I. Two, something that came up during the, that [00:24:00] was the confirmation of payee or verification of payee. They're the same thing. You'll hear them discussed a lot. I have done a lot to try and get that across at many different sessions. I've done it in the U. S. When I come across and I'm like, hey, people are like saying, what are we going to see in the next couple of years?

The payments professor’s payments predictions. It's something I get asked to do a lot and I'm constantly telling them about. Confirmation to pay E, verification to pay E. The LEI is taking that to a higher level. It is being able to not just verify one field, it's multiple fields of verification.

The way that these work, the confirmations, the verifications are requiring the names, like we were mentioning earlier. Identifiers, of course, and what it will do is you go to send a payment and this is especially important to say an instant payment and you'll get something back before the payment is sent saying, hey, this matches this name matches who you're sending to.

We're going to proceed or you get something back that says you put in. Joe Casali, but we're seeing ownership as Joseph [00:25:00] Casali. Would you like to be able to continue or get something back? You put in Joe Casali, but this says Kevin Olson is the owner of the account. This is a big red flag.

Something's wrong here. So it is a great system and I love how they are looking at implementing more of that over in the uk and I do think we'll see it here. And we also see that this is where they are years ahead of us. That they're now taking that system and adding the extra levels to it. So from a corporate side of things, corporate treasures, especially that of LEI, something like that in the U.

S. I think it would be very helpful.

Joe Casali: Yeah and I remember them I remember them talking that the, what would I guess be our AFP being very involved in the development of that. So all the treasurers were in on it. They were, it wasn't like, here's a solution, you should use it. Let's work on this solution.

And I just want to pause for a second because that was a big thought. I mean, that verification, payee. It's a, how [00:26:00] could that improve fraud or not? And I hate when I say things that sound bad. How do you improve fraud? How do you prevent fraud? How could that add a comfort level to a payee?

Did I, so many times I know we've gotten this question with ACH, and ACH which I love, you send into the network and then way. And Did it get there? Did my bill and my bill really need to get paid? Did it get there? And did it get to the right account? I even make a deposit for my kid's account.

And even when I'm making an over the counter deposit, I say, this is the right name on the account, right? So just that comfort level I think it would be a really interesting addition to our payment system.

Kevin Olsen: Joe, I completely agree. I mean, and I love ACH as well, but in what you just described is where I prefer an instant payment, but I also, if anything recurring though, anything scheduled, I want it to be an ACH. And it's interesting mentioning [00:27:00] ACH rules changes coming up too, because we've got the new rules for risk management that are going to be taking place this year and in 2026.

And they talk about and give examples of scams, which were the same Exact scams that we heard in the LEI discussion, the same exact scams that were in the verification of payee. You got the vendor imposters, you got the CEO imposter, you got the payroll imposter things taking place, same exact things. And this is how they're solving for it.

I do love the NACHA’s new rules and how they're going to solve it and what they'll be doing too, to be able to have increased monitoring in place and capabilities for RDFIs and being able to take action.