Payments News Update - May 7, 2020
Legal and Regulatory Developments
SPOTLIGHT: Sabre, Farelogix Deal Called Off but U.S. Defeat Still Stands
Bloomberg – May 1, 2020
Travel technology companies Sabre Corp. and Farelogix Inc. called it quits on their $360 million deal, but their recent legal victory against antitrust charges is likely to help other firms escape scrutiny. Sabre terminated its planned acquisition of Farelogix Friday, less than a month after the companies defeated a Justice Department antitrust lawsuit that said the deal would limit competition in the airline booking industry and drive up fees.
Now with the deal off the table, the DOJ is stuck with an adverse district court opinion that could hinder its ability to challenge other mergers. “Companies are likely to exploit this decision going further,” Michael Kades, the director of markets and competition policy at the Washington Center for Equitable Growth, told Bloomberg Law. . . .
London Hotels Sue Visa, Mastercard Over Swipe Fees
Law360 – May 6, 2020 (subscription required)
A group of businesses including London hotels Montcalm, Shaftesbury and Park Grand Paddington have launched new claims against Visa and Mastercard over swipe fees that they allegedly overpaid on over the past six years.
The 59 British and European companies, which include insurer Allclear Ltd., brought two separate High Court suits against the U.K. and European businesses of Visa Inc. and Mastercard Inc. on April 16. They claim the payment giants abused their dominant positions and infringed European Union competition law to force the businesses to pay higher merchant service charges than they would have had to. . . .
The coronavirus pandemic has thrown a wrench into the federal government’s review of open banking, causing concern that the delay could further wound financial-technology companies, while leaving scores of Canadian consumers sharing their financial data in potentially risky ways.
Open banking generally describes a regulatory framework that gives consumers control and ownership of their financial history. Prime Minister Justin Trudeau’s government announced its intention to study the merits of open banking in its February 2018 budget, but waited about seven months before taking the “first step” of announcing the appointment of a four-person advisory committee. . . .
Merricks v. Mastercard: “Passing on” the U.S. Experience
Competition Policy International – May 5, 2020
The mission of the Antitrust Division of the U.S. Department of Justice is to promote and protect competition in the American economy. As mergers, collusive agreements, and exclusionary conduct cross national borders, the Antitrust Division must keep an increasingly close eye on developments in competition law around the world in order fully to discharge its responsibilities. Economic globalization has also led us to work more closely with other competition agencies and to deal more frequently with the competition-law regimes of other nations.
The importance of dialogue with other competition agencies and our shared interest in the appropriate enforcement of competition laws has led the Antitrust Division to engage internationally to promote cooperation and convergence in the development of competition law. We work bilaterally with our counterparts around the world and through multilateral organizations such as the Competition Committee of the Organization for Economic Cooperation and Development (“OECD”) and the International Competition Network (“ICN”) to facilitate international discussions of important issues common to competition law enforcement. . . .
Libra Association Names Stuart Levey as CEO Ahead of Regulatory Push
American Banker – May 6, 2020
The Libra Association, the group behind the proposed digital currency invented by Facebook, named former U.S. Treasury Department official Stuart Levey as its first chief executive officer. Levey has been chief legal officer at London-based bank HSBC Holdings PLC since 2012. As leader of the Libra Association, he will work with global regulators to push the project forward, a daunting task that already led the group to revise its plans for releasing a digital coin. The association is currently working with regulators in Europe and the U.S. to obtain the necessary payment licenses.
Stuart Levey is a former undersecretary for terrorism and financial intelligence at the Treasury Department. He has been chief legal counsel at HSBC since 2012. Before joining HSBC, Levey was under secretary for terrorism and financial intelligence at the Treasury Department, where he helped “combat illicit finance,” the Libra Association said Wednesday. Much of the skepticism about Libra has centered on concerns that the coin could be used for illegal activity. . . .
Venmo Users Say Plaid Secretly Sold Bank Account Info
Law360 – May 5, 2020 (subscription required)
Plaid Inc., a financial technology startup whose software connects users’ bank accounts to apps like Venmo and Stripe, has been accessing and selling the app customers’ personal banking data without their consent, according to a proposed class action filed in California federal court.
Consumer plaintiffs James Cottle and Frederick Schoeneman claimed on Monday that Plaid has collected a “trove of data” from at least 200 million different bank accounts over the past few years by exploiting its role as a “middleman” between payment apps and their customers. The company estimates that one in four Americans have linked a bank account to an app via Plaid, the consumers said. . . .
U.S. House Proposes Legislation for Contactless, Cashless Payments
The Tokenist – May 4, 2020 (click here for the proposed bill)
When it comes to direct payments with paper currency and touchpoints during points-of-sale (POS), paranoia is increasing. This has prompted banks, financial authorities, and now governments to introduce more effective means of financial transactions.
Congressman French Hill, a member of the US House Financial Services Committee, is proposing a bill titled the “Touchless Transactions Act of 2020” which will eliminate the need to touch a terminal for a point-of-sale (POS) transfer. Any swipe, dip, or tap transaction at a merchant POS terminal won’t require a signature. . . .
The COVID-19 pandemic may have stalled open banking developments, but 2020 is still shaping up to be a crucial year for such sharing and privacy regulations. This is especially true in Asia Pacific (APAC) countries, many of which followed the EU’s lead in launching open banking platforms to more easily connect FIs, FinTechs and third parties over the past two years. They had set 2020 deadlines for these plans, and appear to be keeping them while also safeguarding businesses and consumers during the pandemic.
The APAC is a massive region, and its consumers and banks have varied expectations about what they want from open banking and data privacy. One third of the world’s 1.7 billion unbanked consumers currently live in China, India, Indonesia or Pakistan, and they have different needs than their banked counterparts. China also has one of the highest mobile banking and payment penetrations worldwide, with 57 percent of its consumers able to access personal mobile banking tools as of 2018. . . .
Amex to Face Some Anti-Steering Claims 2 Years After SCOTUS Win
Bloomberg Law – May 1, 2020 (subscription required)
American Express Co. must face some state law antitrust claims over “anti-steering” rules that bar merchants from pushing customers toward less costly payment methods, a Brooklyn federal judge ruled, two years after the U.S. Supreme Court handed down a related ruling in AmEx’s favor.
Judge Nicholas G. Garaufis partly greenlighted and partly threw out the proposed class action Thursday. The suit asserted state and federal antitrust claims on behalf of consumers without AmEx cards, who have argued that the anti-steering rules indirectly made their preferred payment methods more expensive by eliminating incentives for other credit cards to compete on fees. . . .
SPOTLIGHT: Visa Postponing Most Interchange Rate Changes Until April 2021
Digital Transactions News – May 5, 2020 (click here for interchange schedule change analysis)
Citing the business disruptions caused by the Covid-19 pandemic, Visa Inc. announced late Tuesday that it will delay until next April most of the interchange rate changes it had planned for July. The network also publicly confirmed the six-month postponement of its EMV liability shift for fuel pumps, and further said it will be waiving Covid-related dispute fees.
A package of interchange rate changes, the first major adjustments in Visa’s interchange schedule in years, originally had been set to take effect last month. The package included increases for e-commerce transactions and decreases for supermarkets. In late March, Visa said it would delay implementation by three months because of the distress many merchants are experiencing from the pandemic. Mastercard Inc., American Express Co. and Discover Financial Services followed suit with postponements of their own planned April pricing changes. . . .
Is SWIFT’s Cross-Border B2B Payment Monopoly Under Threat by New Entrants?
Spend Matters – May 5, 2020
Most cross-border payments occur primarily through a correspondent banking network. Yet sending payments through the network can be a costly proposition for corporations, fintechs, challenger banks, foreign exchange brokers and others that must use banks.
The co-op provider SWIFT provides a money messaging network that enables banks to move money. With its SWIFT gpi service, the company has really upped its game on the cross border front. Nearly $77 trillion was transferred through cross-border and intergroup payments over SWIFT gpi in 2019. More than 50% of SWIFT gpi payments were credited to end beneficiaries within 30 minutes. . . .
Fiserv’s Pin-On-Glass Enables Online Snap Payments
Digital Transactions News – May 5, 2020
Processor Fiserv Inc. is testing online acceptance of SNAP electronic benefits transfer payment as part of a U.S. Department of Agriculture program. Consumers using Supplemental Nutrition Assistance Program EBT cards can pay online via a digital PIN pad in tests at 33 ShopRite grocery stores in New York, Brookfield, Wis.-based Fiserv says. SNAP is the successor to what many called food stamps.
The challenge is that SNAP transactions always require a PIN entry. For this new development, Fiserv created a PIN-on-glass product that enables grocers to accept SNAP PINs online. Fiserv says it currently offers the only USDA-approved service for accepting EBT payments online. ShopRite, a brand of Wakefern Food Corp., says it was part of the SNAP Online Purchasing Pilot last year and was pleased with the results. It hopes to expand the service to its other brands, PriceRite and The Fresh Grocer. . . .
Amex Extends Fuel-Pump EMV Liability Shift Date
Digital Transactions News – May 5, 2020
American Express Co. tells Digital Transactions News that it is postponing its EMV liability shift for automated fuel dispensers by six months, until April 16, 2021. The move comes four days after Visa Inc., citing the problems created by the Covid-19 pandemic, notified the fuel-retailing industry that it was postponing its October 2020 EMV liability shift until April 17 of next year. “We have been speaking with fuel retailers and understand the challenges they are now facing in upgrading their AFD terminals because of the Covid-19 global health crisis,” an AmEx spokesperson tells Digital Transactions News by email. “To aid them, we are extending the deadline to April 16, 2021.” Mastercard Inc. and Discover Financial Services did not respond to Digital Transactions News inquiries Tuesday morning about whether their scheduled October fuel-pump liability shift dates will be changed. . . .
Nearly 50 million credit card customers in the U.S. said they have had their credit limit slashed or their card closed in the past month as lenders move to minimize their risk amid the COVID-19 shutdown, a new study revealed. The survey, released on Monday (May 4) by CompareCards, a division of LendingTree, found one in four Americans say their credit card terms have been changed involuntarily since the start of the coronavirus pandemic.
“Given the enormous impact of the coronavirus outbreak on the American economy, and especially the unprecedented spike in unemployment that has occurred in recent weeks, it is no surprise to see banks reining in lending,” the study’s authors wrote. “Something similar happened a decade ago when lenders slashed credit limits and closed card accounts at the outset of the Great Recession.” . . .
Is Shopify Getting Ready to Challenge Amazon?
The Motley Fool – May 4, 2020
Shopify recently launched Shop, a new consumer-oriented shopping app that lets shoppers access a searchable feed of products from its merchants. The app also integrates the package tracking features of its Arrive app for merchants, as well as its Shop Pay checkout service.
16 million shoppers have used Arrive to track their shipments from retailers, while Shop Pay has processed over $8 billion in sales. Shopify wants to build an e-commerce marketplace on top of those foundations, but can it leverage its strengths in the merchant market to expand into Amazon’s backyard? . . .
Visa Will Postpone Its Fuel-Pump EMV Liability Shift for Six Months, C-Store Group Says
Digital Transactions News – May 1, 2020 (click here for announcement from NACS)
Visa Inc. has informed petroleum retailers that it will delay its planned EMV fuel-pump liability shift set for October until April 17, 2021, the convenience-store trade group NACS disclosed Friday.
“The network’s delay was in response to letters NACS sent on behalf of its retail members to the four global networks requesting a delay of the October deadline, given the extreme disruption to the workforce and supply chain due to the coronavirus pandemic,” Alexandria, Va.-based NACS said in a news release. . . .
Fiserv, Inc., a leading global provider of payments and financial services technology solutions, today announced that it will temporarily increase PINless transaction approval limits from $50 to $100 for eligible transactions on its STAR® debit payments network. This change, implemented in response to COVID-19, will increase the number of transactions that can be completed without the need to enter a PIN on a physical device at checkout. The change takes effect on May 1, 2020.
STAR, along with the Accel® debit payments network from Fiserv, is the first debit payments network in the U.S. to announce increased limits for PINless transactions. In an environment of social distancing, low and no-touch payment alternatives and speed at checkout are critical to consumers and merchants, helping address concerns about interactions at the physical point of sale (POS). . . .
Amex Retools Its Platinum Card as Pandemic Crimps Global Travel
PaymentsSource – May 1, 2020
American Express Co., long synonymous with premium travel rewards, will now offer a meditation app and credits for streaming services as the coronavirus pandemic forces its customers to stay home. As the outbreak made its way to the U.S., the credit-card issuer realized that many of its rewards tied to spending on airlines and hotels were becoming less relevant, said Doug Buckminster, president of global consumer business.
“We decided to play offense here and we decided to lean into our opportunities to support our customers,” he said. “If we were going to play defense on this, we would have just hung back and reacted to customers once they expressed dissatisfaction with the price and value equation.” . . .