Payments News Update -- June 19, 2019
Legal and Regulatory Developments
SPOTLIGHT: A Court Ruling May Affect Acquirers’ Ability to Pass Along Data-Breach Fines to Merchants
Digital Transactions News – June 12, 2019
A common assumption among merchant acquirers and retailers is that merchants are the ones who ultimately are liable for network fines after a merchant’s data breach. But a recent decision by a federal appellate court that ruled against First Data Corp., the nation’s largest payment processor, sends a message that such assumptions aren’t always valid.
The unanimous June 7 decision by a three-judge panel of the Sixth U.S. Circuit Court of Appeals in Cincinnati involves a Houston-based liquor-store chain, Spec’s Family Partners Ltd., which sued its acquirer, First Data’s First Data Merchant Services unit. Malware on Spec’s payment system in 2012 and 2013 compromised about 550,000 cards, according to court filings and press reports at the time. . . .
Facebook’s Libra Turns Foes into Allies in Regulatory Face-Off
PaymentsSource – June 18, 2019
Facebook is focusing the initial discussions around its cryptocurrency project as a preemptive strike against the privacy and legal concerns the public and politicians have about the huge social network.
Perhaps there is no better company than Facebook to wage this war. For years, payments-industry heavyweights like Visa and Mastercard have had their plans challenged by regulators across the globe, such as China’s habit of moving the goalposts for their payment processing application and India’s demands that they store data locally. Now they and others are joining forces with Facebook to launch an entirely new method of payment. . . .
Accept Cash, Credit Card or Mobile Payment? Government Wants a Say
PaymentsSource – June 14, 2019 (subscription required)
When shoppers reach the cash register, they typically have an array of payment choices.
They can charge their purchases to a variety of credit cards. They can pull out a debit card, a prepaid card or a gift card. Mobile payment apps are often an option. So are old standbys like cash and personal checks. . . .
Banks May Be Forced to Introduce Real-Time Payments by End of 2019
Finder – June 14, 2019 (read the full RBA report here)
The Reserve Bank of Australia (RBA) has recommended that Australia’s banks be mandated to introduce New Payments Platform services to their customers. The recommendation is one of 13 made by the regulator in a new report, announced in April, looking into the functionality of and access to the New Payments Platform.
The New Payments Platform (NPP) is Australia’s new payments infrastructure and was launched on 13 February 2018. Through the NPP, individuals and businesses can send and receive data rich and near-real-time payments between financial institutions. The NPP is also open access and supports overlay services to develop payment innovations. . . .
Delaware Poised to Become Fintech Powerhouse
Law360 – June 14, 2019 (subscription required)
Delaware’s burgeoning financial technology sector could grow even stronger from continued development of the talent pool, a regional focus on the greater Philadelphia area and the exploration of new regulatory opportunities, according to a report published Thursday.
The “Delaware in a Fintech Future” report, co-authored by the Delaware Prosperity Partnership, First State Fintech Lab and the University of Delaware’s Institute for Public Administration, looks at the existing fintech ecosystem in the state as well as strategies for growth as the fintech industry continues to gain power. . . .
The 8-Bin Migration Looks Like a Marathon, but It’s Really a Sprint
PaymentsSource PayThink – June 13, 2019
A new card identification standard seems to be a long way off, but it’s getting closer and issuers need to get ready.
In 2015, the International Standards Organization mandated that banks switch over from the current six-digit Bank Identification Number to the new eight-digit BIN on all credit and debit cards. . . .
SEC Concerned Over Maturity Of Cryptocurrency Markets
Law360 – June 13, 2019 (subscription required)
Questions about market maturity are at the root of the U.S. Securities and Exchange Commission’s concerns about cryptocurrency, not the nature of the digital currencies themselves, an SEC commissioner said Thursday during a fintech conference in New York.
Once cryptocurrency markets become more liquid, increase their transparency and add larger players, the SEC will react favorably to cryptocurrency proposals, SEC Commissioner Robert Jackson said at the CB Insights’ Future of Fintech conference. . . .
Lawmaker Challenges Dimon Over JPMorgan Arbitration Plan
Bloomberg – June 13, 2019
U.S. Representative Katie Porter is butting heads with Jamie Dimon again. The Democrat from California claims the bank’s new policy of making credit-card customers use arbitration instead of the courts to resolve payment disputes violates her state’s laws.
“Consumers and your bank should be able to choose arbitration to resolve a dispute but not be forced into such an arrangement merely by failing to wade through pages of disclosure,” according to a copy of the letter sent Thursday to Dimon, JPMorgan’s chief executive officer. . . .
How A Small Bank’s Fed Account Quest May Impact Fintechs
Law360 – June 12, 2019 (subscription required)
A David and Goliath battle playing out in New York federal court between a small bank startup and the Federal Reserve may shed light on an issue that’s dogged fintech firms interested in becoming federally chartered banks: Will they be allowed to access the Fed’s payments system?
Next month it will be one year since the Office of the Comptroller of the Currency started offering a special-purpose national bank charter to fintech firms that don’t take deposits, but a big question mark hanging over the project remains the Fed’s willingness to extend to these charter holders the same payment and settlement services it provides to regular banks. . . .
SPOTLIGHT: Facebook Announces Libra Cryptocurrency: All You Need to Know
TechCrunch – June 18, 2019 (read the White Paper here)
Facebook has finally revealed the details of its cryptocurrency Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger, and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association including Visa, Uber, and Andreessen Horowitz who’ve invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra blockchain and developer platform with its own Move programming language plus sign up businesses to accept Libra for payment and even give customers discounts or rewards. . . .
Banks Can’t Be Counted on to Lead Faster Payments
PaymentsSource PayThink – June 19, 2019
History has shown that banks cannot be trusted with exclusive rights to payments innovation. They have never done it in the past and likely never will in the future.
In 2015, Benjamin Lawsky, New York’s then-superintendent of financial institutions, referred to the U.S. as having a “disco-era payments system.” At the time, he was speaking in reference to New York being the first state to license digital currency. Looking back over the past four years, it seems we’ve made very little progress in modernizing payments in the U.S., while many other industrialized nations have embraced all sorts of faster and more convenient payments. . . .
P2P Payments Set The Stage For B2B RTP
PYMNTS – June 18, 2019
Is it prime time for real time, especially for B2B?
The rise of Zelle, and any number of peer-to-peer (P2P) payment options, has increasingly brought consumers on board with the need for speed in payments — where settlement is marked by seconds and minutes, not hours or days. It’s a well-known fact, too, that corporate payments (the B2B kind) are ripe for digitization, and for a wholesale move away from the paper chase, where checks are still stubbornly tied to 50 percent of corporate transactions. . . .
Open Banking Can Scale With Incentives And API Aggregation
PYMNTS – June 17, 2019
Open banking is nothing if not a lot of moving parts and complications. But could merchant incentives help fuel this ongoing effort at digital payments innovation?
That was one of the questions raised in a new PYMNTS interview with Ireti Samuel-Ogbu, Citigroup’s head of payments and receivables for Europe, Middle East and Africa. In a discussion with Karen Webster, Samuel-Ogbu talked about the role of API aggregation and how incentives can help to ignite open banking, one of the main efforts now taking place in the world of payments and commerce. . . .
Discover Bank Ends Fees on All Deposit Products
Press Release – June 17, 2019
Discover announced today the elimination of deposit account fees, promising to help customers keep more of what they earn and save. Customers with a checking, savings, money market or CD account from Discover Bank now can rest easy knowing their money will stay where they put it without fees for an occasional oversight or pressing need.
“Helping our customers lead better financial lives, is at the heart of everything we do, whether that’s removing fees, offering industry-leading rewards or consistently delivering distinctive customer experience,” said Arijit Roy, vice president of deposits at Discover. “Removing all deposit account fees was an easy decision for us based on our commitment to offer the most rewarding banking products in the industry.” . . .
Why B2B Payments Are Stuck In The Past
Forbes – June 16, 2019
An extraordinary amount of money passes between businesses every day; the Business to Business (B2B) payments industry itself is worth around $127 trillion—but, despite its size, the industry continues to utilize outdated solutions that hinder its efficiency.
While numerous solutions have emerged supporting Business to Consumer (B2C) payments, not as many innovative ideas have been brought to the market for B2B payments. To learn more about why this might be the case, we sat down with Jordan Weber, the Chief of Staff at Currency. A subject matter expert when it comes to the B2B payments industry, Weber discusses some of the most prominent pain points in the industry. . . .
As Finance Gets Less Centralized, Cross-Border Payments Get Better
PaymentsSource PayThink – June 14, 2019
The Financial Stability Board recently detailed the impact of decentralized financial technology, giving a boost to transactions such as cross-border payments.
The report says distributed ledgers can improve performance for cross-border payments and serve as a disruptive force. The findings of this FSB report indicate that decentralized finance has the potential to significantly reduce factors in the traditional financial world which often hinder financial stability. . . .
New EMV Checkout Standards Look to Create Secure, Frictionless Environment
Mobile Payments Today – June 14, 2019
While ecommerce has exploded in terms of driving consumer shopping preference in recent years, the process of conducting transactions over computer browsers and mobile phones continues to be a cumbersome and in some cases insecure process that frustrates consumers and leaves billions of dollars on the table in abandoned transactions, payment fraud and other vulnerabilities.
A new remote checkout standard announced by U.K.-based EMVCo is being closely watched by the credit card industry, retail merchants, card processors and banks to see if progress can be made on creating a more secure and streamlined system for consumers to complete mobile and online purchases. . . .
A Core Group of Consumers Continues To Prefer Cash, Researcher Finds
Digital Transactions News – June 14, 2019
The debut of cashless stores has led to pushback by several cities, the state of New Jersey, and a member of Congress concerned that card or mobile-payments-only options will leave cash-dependent consumers unable to shop in such stores. Now, new research from the Federal Reserve Bank of Atlanta concludes that a proliferation of cashless stores could indeed impose a burden on consumers who don’t have a credit or debit card.
The “Cashless Stores and Cash Users” working paper by Atlanta Fed researcher Oz Shy says some consumers prefer cash even if they have the option of buying prepaid cards. The research is based an analysis of data collected by the Federal Reserve’s separate survey and diary of consumer payment choice studies in 2017, the latter of which includes information on thousands of payment transactions. . . .
Discover Extends Merchant Acceptance in Spain Through Agreement with Redsys
Press Release – June 13, 2019
Redsys, the largest payments processor in Spain, and Discover Global Network, the payments brand of Discover Financial Services, announced that they have signed an agreement that will extend merchant acceptance throughout Spain. The agreement enables Discover to work with additional acquirers in the region in an effort to increase acceptance for Discover, Diners Club International, PULSE and affiliate network cards.
Redsys provides its high value services to acquirers that hold approximately 90 percent of the market share in Spain with regards to card processing and point of sale systems. . . .
Alipay Has Tripled Its Merchants in Europe Amid ‘Booming’ Chinese Tourism Market
CNBC – June 4, 2019
Alipay is making big inroads in Europe as Chinese tourists flock to the region, according to the leader of the Chinese firm’s European division.
Roland Palmer, head of Europe for Alipay, told CNBC on Tuesday the company has tripled the number of European merchants accepting its online and mobile payment platform to “tens of thousands” in the past year. . . .