Payments News Update – September 13, 2024

Legal and Regulatory Developments

SPOTLIGHT: Banks Push for Quick End to Illinois Law Reducing Credit-Card Processing Fees
Crain’s Chicago Business – September 3, 2024 (subscription may be required)

Lawyers representing bank and credit union trade groups argued Tuesday for a quick ruling in a lawsuit seeking to strike down enforcement of a new Illinois law that reduces the fees retailers pay credit-card processors.

The industry is already racking up costs to prepare for implementation of the law, which is to take effect next summer. . . .

The Illinois Attorney General’s office downplayed the urgency, arguing there was currently no enforcement of the law so there was no need to expedite a hearing on the banking industry’s request for a preliminary injunction. . . .

CFPB’s Zelle Scrutiny Leaves Banks Guessing on Next Moves
Law360 – September 6, 2024 (subscription required)

As federal regulators turn up the heat on major banks over long-simmering complaints about fraud and scams on Zelle, the largest U.S. peer-to-peer payments platform, it remains unclear whether more banks could face scrutiny and what they can do to get ahead of it.

Last month, JPMorgan Chase & Co. made headlines by disclosing a regulatory investigation tied to Zelle, saying it was responding to inquiries from the Consumer Financial Protection Bureau and was considering litigation if the agency tries to escalate to an enforcement action.

The disclosure highlighted the risks of regulatory blowback that banks like JPMorgan face amid mounting criticism from Democratic lawmakers, public interest groups and consumers who say more should be done to combat the scourge of digital payment fraud and ensure victims are compensated. . . .

Industry Developments

SPOTLIGHT: U.S. Merchants Pay the Highest Card Acceptance Costs in the World, a CMSPI Report Contends
Digital Transactions News – September 10, 2024

Merchants in the United States paid $224 billion in card-acceptance costs in 2023, the highest toll for merchants in any country in the world, according to payment consultancy CMSPI’s State of the Industry Report. Interchange fees alone accounted for $143 billion of that total.

Since 2009, U.S. merchants’ like-for-like payment costs have increased 34 basis points. In addition, increased e-commerce spending since 2019 has resulted in an estimated $2.4 billion per annum increase in interchange and network fees, the report says.

“Payment acceptance costs are very high for merchants and are growing,” Callum Godwin, chief economist at CMSPI says by email. “In particular, the U.S. has become one of the most expensive credit card payment markets, and that’s in part due to the fact that the tender mix has become more expensive and regulatory approaches in the U.S. have been lighter-touch than in Australia and the EU.”. . .

Google Wallet Debuts Digital IDs and Enhances Commuter Features
PYMNTS – September 12, 2024

Google Wallet on Thursday (Sept. 12) unveiled enhanced features to improve the travel and commuting experience.

Starting soon, per a Thursday Google blog post, U.S. users can create digital IDs from their passports for use at select TSA checkpoints, making domestic travel more convenient. The service also expands support for state-issued IDs and prepaid commuter benefit cards, with plans to integrate more transit options globally.

In the blog post, which announced these new features, Google Wallet Vice President and General Manager Jenny Cheng said: “People are increasingly looking for ways to digitize everyday items — with one of the top requests being a digital ID. Last year we began rolling out the ability to save select state-issued digital IDs to Wallet. Starting soon, we’ll begin beta testing a new type of digital ID in Google Wallet, giving more people in more places a way to create and store a digital ID.” . . .

U.S. Bank Credit and Debit Cards Are Now in the Paze Wallet
Digital Transactions News – September 11, 2024

Credit and debit cards from U.S. Bank are now ready to use with Paze, the online checkout platform, which comes preloaded with access to up to 150 million payment cards. Paze is in the midst of a national rollout as it seeks to give issuers an edge in e-commerce checkout.

JPMorgan Chase & Co. also is readying its Paze deployment. It emailed cardholders last week saying that their credit and debit cards would soon be available in Paze. Early Warning Services LLC, a bank-owned fintech, announced Paze in 2023.

Minneapolis-based U.S. Bank, which would not disclose the number of cards it issues, says it will offer special promotions to entice cardholders to use Paze, though it has not provided details. . . .

Fraud Against Banks, Consumers Declines in 2024
American Banker – September 9, 2024 (subscription required)

Suspicious activity reports, or SARs, from banks related to fraud are on pace to level off this year for what would be the first time since 2014, when the Financial Crimes Enforcement Network began releasing SAR data in its modern form. These reports include loan fraud, check fraud, credit card fraud and other scams that mainly victimize financial services companies.

Through the end of July, FinCEN had received 890,000 fraud-related reports from depository institutions and loan or finance companies — i.e., banks, credit unions, digital lenders and the like. . . .

Check fraud is also slightly down so far this year, but accounting for an aberrant spike in reports at the start of last year, 2024 could still set another record. . . .

PayPal Tackles In-Store Payments With ‘PayPal Everywhere’
PYMNTS – September 5, 2024

PayPal is integrating its debit card with Apple Wallet to enter the in-store payment arena.

The company announced its omnichannel “PayPal Everywhere” solution Thursday (Sept. 5), and with it an expansion of its rewards program, letting users pick a monthly category of spending, such as groceries or clothing, to receive 5% cash back.

“E-commerce has obviously been one of the fastest growing areas where people are spending their dollars … but it’s not everything,” PayPal President and CEO Alex Chriss said in a Reuters report. “Now consumers can use PayPal for every purchase, everywhere, every time.”. . .