Delivering for American Consumers: A Review of FinTech Innovations and Regulations
House Subcommittee on Digital Assets, Financial Technology and Inclusion
2026-01-13
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Source: Congress.gov
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The Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. Today's hearing is titled Delivering for American Consumers, a Review of FinTech Innovations and Regulations. Without objection, all members will have five legislative days within which to submit additional material for the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. Technology continues to revolutionize our financial system, from payments to newer applications like earned wage access. Digitalization, cryptography, and artificial intelligence give consumers faster, cheaper payment, flexible access to earn income, and new ways to manage everyday purchases. These innovations have the potential to improve Americans' financial well-being by making their day-to-day finances more practical, predictable, and affordable. Historically, workers were paid when they earned wages. Yet today, many workers in our economy go home without their earnings. Holding an employee's pay until the end of a payroll cycle is a relatively modern practice. Earned wage access helps restore this link between work and pay by allowing workers the flexibility to access their wages as they earn them. This flexibility can help families deal with unexpected expenses, from medical bills to car repairs, or simply pay recurring bills timelier. By providing timely access to earned income, EWA can help Americans achieve their financial goals and help businesses improve worker satisfaction, retention, and overall productivity. Importantly, innovations like EWA and buy now, pay later options often coexist and intertwine with traditional financial institutions. Banks and other lenders are vital partners with fintechs, providing liquidity and credit as well as access to infrastructure like payment rails.
These partnerships provide more efficiency and options for consumers and create new products to enhance competition. Our financial institutions can also benefit from partnering with fintech companies by enhancing their offerings and allowing small and community institutions to deploy cutting-edge tools. As we explore the benefits of fintech innovation, we must make sure that our regulatory framework is fit for purpose. A well-functioning framework for FinTech should focus on risks posed by specific activities, not the identity or business model of the provider. FinTech products that meet consumer demand and improve Americans' financial lives should have clear, practical legal pathways for operation and strong consumer protections. By supporting thoughtful and balanced regulation, we can encourage innovation while ensuring consumer protection and promoting financial well-being for American households and businesses alike. Today's hearing will inform these efforts, and I thank our witnesses for their upcoming testimony. I'll now recognize the ranking member of the subcommittee, Mr. Lynch, for four minutes for an opening statement. Thank you very much, Mr. Chairman.
I'd also like to thank our witnesses for your willingness to come forward and help the committee with its work. This hearing continues our committee's work to examine FinTech innovation, including the use of FinTech liquidity products. such as buy now, pay later services and earn wage access. This is an area of great promise and potential to overcome pre-existing barriers and to expand economic opportunity. If we include proper guardrails that assure necessary consumer protections, this hearing It continues our work, and these products present an attractive source of capital liquidity to help people meet short-term needs. However, some consumer advocates and other stakeholders have pointed to multiple consumer protection concerns associated with fintech business models that incorporate hidden fees, lack meaningful underwriting, and are not subject to adequate oversight. And they may target vulnerable consumers with deceptive claims about credit bills. With the use of these products surging since the beginning of the COVID-19 pandemic, our committee's work on this issue has become increasingly vital to ensure that the proper oversight and adequate consumer protections are in place. As ranking member of the subcommittee, I've participated in multiple hearings to examine the proliferation of FinTech-powered earned wage access services that enable employees to receive a cash advance on their paycheck prior to payday, often at an inflated fee, or at the cost of a voluntary so-called tip. Whether offered through an employer or through a direct-to-consumer provider, this on-demand pay market has grown rapidly, with employers and providers now advancing billions of dollars in wages to millions of employees annually. As reported by the Harvard Kennedy School in a recent study on the proliferation of earned wage access products, 40% of the people who have access to an earned wage access application through their employer
use it at least once a week. Over 75% of respondents indicated that they were using their money to pay for regular bills rather than emergency expenses, with one typical user noting, quote, it just turned into a cycle of always taking money out, close quote. Moreover, the rush fees, tipping options, and other hidden charges associated with certain business models, not all, collectively amounted to an estimated annual percentage rate of more than 300% in some cases. Similarly, a growing number of consumers are now relying on buy-now-pay-later services to make ends meet. With Federal Reserve data indicating that nearly 100 million Americans use buy-now-pay-later, at least in 2025, these services which allow consumers to pay for purchases over multiple partial payments are now widely available at checkout both online and in-person where a customer can opt into it and services and receive approval in minutes without a hard credit check. Despite preparing to offer free services, some buy-now-pay-later loans, especially longer-term loans, can ultimately be more costly than using a traditional credit card. The Federal Reserve reports that nearly one-fourth of buy-now-pay-later users did not make payments on time and face later fees. Considering the proliferation of buy-now-pay-later, earned wage access, and other fintech liquidity products, the consumer protection and enforcement mission of the Consumer Financial Protection Bureau is more important than ever. Unfortunately, President Trump does not agree. The Trump administration has undertaken unprecedented and unlawful efforts to dismantle the very agency that should be protecting consumers against fraud and exploitation in this very area, including the issuance of cease work orders that
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