Payments News Update – January 21, 2021
Legal and Regulatory Developments
SPOTLIGHT: CFPB Under Chopra Will Be Aggressive Consumer Watchdog, Experts Say
Compliance Week – January 19, 2021
Rohit Chopra, currently a Democratic commissioner on the Federal Trade Commission, has been nominated by President-elect Joe Biden to lead the Consumer Financial Protection Bureau (CFPB). Unlike some Biden nominations (think Janet Yellen at the Treasury Department) that will be seen as compromises, Chopra’s nomination represents a full-throated return to the combative CFPB under former director Richard Cordray, experts say.
Chopra is a protégé of Sen. Elizabeth Warren (D-Mass.), who developed the CFPB and is a polarizing figure herself. In a tweet Monday, Warren had this to say about Chopra’s nomination: “He’s been a fearless champion for consumers at the FTC and will be a fearless champion leading the consumer agency.” . . .
A World of Regulatory Pressure on Installment Payment Firms
PaymentsSource – January 21, 2021 (subscription required)
Providers of installment payments — also called buy now/pay later — have risen in popularity over the course of the past year. And they’re starting to catch the attention of regulators. The BNPL industry won its first battle when the U.K. Parliament voted against a bill that would more heavily regulate BNPL firms, which fall outside of the U.K.’s lending laws. The Labour-led proposal would have introduced new regulations within three months of the passage of a broader financial services bill.
While the bill failed, BNPL firms will likely face new regulations in the U.K. following a Treasury review of unsecured credit. This follows regulations in Sweden, requiring merchants to initially present payment methods that do not create consumer debt. And merchants cannot pre-select the option of paying with invoices or installments in their online checkout pages. . . .
Biden’s Treasury Pick Yellen Leary of Crypto
PYMNTS – January 21, 2021
Janet Yellen, President Joe Biden’s nominee for Treasury Secretary, is expected to take a hard stance on cryptocurrencies, calling digital currency a “particular concern” that is used “mainly for illicit financing,” Arstechnica and other news outlets reported on Thursday (Jan. 21). “The technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with tech terrorist financing, change along with changing technology — cryptocurrencies are a particular concern,” Yellen said before the Senate Finance Committee, according to CoinDesk. If confirmed, she will be the first woman named Treasury Secretary.
The anonymity of the blockchain and lack of oversight makes it a magnet for cyberthieves. No individual agency controls blockchain-based financial networks, and it’s hard to enforce adherence to money laundering legislation. . . .
China Plans Tougher Antitrust Rules for Non-Bank Payments Industry
Reuters – January 20, 2021
China’s central bank has proposed stepping up antitrust measures for companies in the non-bank payments industry, such as Ant Group’s Alipay and Tencent’s WeChat Pay. Under draft rules proposed on Wednesday, the People’s Bank of China (PBOC) can advise the state council’s antitrust committee to stop companies abusing their dominant position or even break up a non-bank institution if it “severely hinders the healthy development of the payment service market”.
So far China has 233 licensed players, with the market dominated by Alipay and WeChat Pay in terms of online transactions, according to a report by consultancy iResearch. The PBOC’s proposed rules coincide with a wider government clampdown on the financial activities of Chinese technology giants amid growing concern over the risk of financial contagion resulting from their empire building. . . .
EC and ECB Join Forces to Investigate Digital Euro
Finextra – January 20, 2021
The European Commission and European Central Bank are working together to investigate the policy, legal and technical questions emerging from a possible introduction of a digital euro. Having just closed a public consultation on the subject, the ECB says it will now consider whether to start a digital euro project towards the middle of the year as it looks to answer design and technical questions ahead of any decision to actually issue the CBDC.
Now, the ECB and the EC have created a joint technical group to look at the policy, legal and technical aspects of the possible introduction of a digital euro. The EC says that one of the reasons a digital euro is appealing is that it could help promote global use of the currency. . . .
Proposed Crypto Wallet Rule Among Those Frozen by Biden Pending Review
Coindesk – January 20, 2021
President Joe Biden has frozen all agency rulemaking, including former Treasury Secretary Steven Mnuchin’s controversial proposal on “unhosted wallets,” according to a prominent cryptocurrency lawyer. The freeze, effective until the proposed rules undergo further review, is already being hailed by cryptocurrency advocates, who fiercely opposed both the proposed rule and the initial attempt by the previous administration to rush it through.
“We fought hard & earned the right to take a breath & reset,” tweeted Jake Chervinsky, general counsel of Compound Finance and the DeFi Group co-chair at the Blockchain Association. “[Treasury Secretary nominee] Janet Yellen isn’t Steve Mnuchin. I’m optimistic.” . . .
New Regulations Could Push Us Dollar Stablecoins Into the Payments Mainstream
PYMNTS – January 15, 2021
For stablecoins, concept is edging closer to reality, especially for digital dollars – with a dose of regulatory clarity.
To that end, as Jeremy Allaire, CEO of Circle, told PYMNTS’ Karen Webster, a number of trends are converging to bring stablecoins into the mainstream of commercial and consumer payments. As noted in this space earlier in the month, the Office of the Comptroller of the Currency (OCC) said that banks can utilize stablecoins in transactions, among other banking activities. To get a bit more granular, in an interpretive letter, the OCC said that regulated financial institutions (FIs) can participate in independent node verification networks (INVN for short – namely, a blockchain network). . . .
With a New ACH Rule Looming, Open Banking Takes on Added Urgency
Digital Transactions News – January 15, 2021
Online account debiting has grown in usage and prominence as consumers and businesses turn to e-commerce in the face of the coronavirus pandemic. But now many businesses are reckoning with a rule that will take effect in March that requires sellers using the automated clearing house to perform more rigorous checks for fraud.
That looming requirement led to an announcement on Friday that Southwest Business Corp., known as SWBC, will use Mastercard Inc.’s Finicity network to scope out buyers’ accounts. San Antonio, Texas-based SWBC sells insurance, mortgages, and wealth-management services, but it also enables its clients to receive both ACH and card payments at call centers, on Web sites, and via mobile devices. . . .
SPOTLIGHT: The Failed Plaid-Visa Merger Is Interesting Fintech Tea
Marketplace – January 21, 2021
The financial tech firm Plaid announced this week that it’s doubling its workforce in Europe. That is largely because its planned $5.3 billion merger with Visa fell apart earlier this month after the Department of Justice filed an antitrust lawsuit. Plaid is a platform that lets you, a customer, link your bank account to a fintech app like Venmo or Robinhood. You log in using Plaid’s interface, but the bank itself is cut out of the loop. The banks hate that.
Visa could have used Plaid to expand beyond payments and maybe be legitimized in the eyes of banks. I spoke with Lisa Ellis, who researches payments at the firm MoffettNathanson. She said the DOJ also worried Visa might be trying to kill the competition. The following is an edited transcript of our conversation. . . .
A Look at the Dark Web Shows How Thieves Market Payment Data—and the Prices They Get
Digital Transactions News – January 20, 2021
Amazon Go and Hudson Landing Airport Autonomous Checkout Store
PaymentsJournal – January 20, 2021
Soon to be arriving at an airport near you. That would be a Hudson Nonstop store using Amazon Go technology at Dallas Love Field. Last year Amazon stated they would be licensing their autonomous checkout system to retailers. Amazon Go has proven successful within the Amazon ecosystem and now it’s ready to be installed at retail partners.
Airports are a likely venue due to the fast, grab and go, self-service shopping. This will be the first of many stores that are planned according to Hudson. Passengers running through airports and the absence of checkout lines will prove to be a winning combination for this autonomous checkout. . . .
Payment Technology to Propel Post-COVID Travel Rebound in 2021 – Report
The Paypers – January 20, 2021
Nuvei, the payment technology partner of thriving brands, has announced the release of “Redefining travel payments in the post-COVID-19 era”. The white paper report and survey pinpoints growth strategies for travel operators in the aftermath of the pandemic, driven by payment technology.
Produced in collaboration with Edgar, Dunn & Company (“EDC”), with participation from Visa, this study contains data, insights and actionable intelligence for the travel sector as it plans its 2021 comeback, including the critical importance of a digital-first strategy, the most effective and innovative payment models to adopt, and what organisational changes could more swiftly catalyse growth opportunities. . . .
Three Years On, Open Banking’s Progress and Roadmap Ahead
PYMNTS – January 20, 2021
Anniversaries offer a moment to pause and reflect, and look back on what’s past and what’s to come. That includes anniversaries in the payments space, of course. Last week, Jan. 13 to be specific, marked the third anniversary of open banking’s official launch across the pond in the United Kingdom.
In broad strokes, open banking lays out a path and process for banks and other financial institutions (FIs) to share their customers’ data with third parties (even competitors), where that data tie into apps and new products and services. Generally speaking, that data sharing paves the way for a streamlined banking experience, especially over online and mobile conduits, via regulated providers. And though the initiative may have had ground zero in the U.K., open banking, in principle and practice, has spread to other countries (such as in Taiwan and in Australia) throughout the world. . . .
Walmart Adds to Its Financial Services With Western Union Money Transfers at U.S. Stores
Digital Transactions News – January 19, 2021
Walmart Inc. is adding money-transfer services from The Western Union Co. to its more than 4,700 U.S. stores this spring, the giant retailer announced Tuesday. Western Union will be the third money-transfer provider to be offered at Walmart stores, joining MoneyGram International Inc. and Ria, a subsidiary of Euronet Worldwide Inc. Consumers shopping at Walmart will be able transfer money via Western Union domestically and internationally.
“The addition of Western Union will be additive to our current marketplace model, providing customers more choice than ever before,” Walmart says in a statement issued to Digital Transactions News. “When Western Union money services become available at Walmart stores in the spring of 2021, Walmart will become the first major retailer in the United States to provide international and domestic money transfers through multiple money transfer principals, including Western Union, Ria, and MoneyGram.” . . .
PayPal Becomes First Foreign Firm in China With Full Ownership of Payments Business
Reuters – January 14, 2021
PayPal Holding Inc has become the first foreign operator with 100% control of a payment platform in China, according to Chinese government data, as the U.S. fintech giant eyes a bigger foothold in a booming market for online payments. PayPal acquired the 30% stake it doesn’t already own in China’s GoPay, formally known as Guofubao Information Technology Co., on Dec. 31, 2020, according to shareholder data from the National Enterprise Credit Information Publicity System.
Financial details weren’t disclosed in the data. The stake purchase came a year after PayPal bought a 70% stake in GoPay for an undisclosed amount, then becoming the first foreign company licensed to provide online payment services in China. PayPal declined to comment. . . .