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Payments News Update – April 12, 2024

Posted  April 12, 2024

Legal and Regulatory Developments

SPOTLIGHT: Visa, Mastercard CEOs Throw Hearing Off Track
Payments Dive – April 9, 2024

Sen. Dick Durbin opted to postpone a Senate Judiciary hearing this week focused on Visa and Mastercard’s business practices after CEOs of the credit card companies declined to appear Tuesday.

But Durbin, who chairs the committee, is still angling to bring those chief executives to Washington, according to his staff. “The witnesses and date of the hearing remain part of what’s being negotiated,” said a spokesperson for this office. “Nothing has been cancelled.”

The Democratic senator from Illinois and a Republican colleague, Sen. Roger Marshall of Kansas, have been angling to put Visa CEO Ryan McInerney and Mastercard CEO Michael Miebach in the hot seat before the committee to have them explain how their companies impose fees on merchants every time a credit card is swiped by consumers. . . .

CFPB, DOJ Boost Teamwork on Cases
Payments Dive – April 9, 2024

The Consumer Financial Protection Bureau and the Department of Justice are working together more closely to address antitrust issues and criminal conduct, CFPB Director Rohit Chopra said at a Washington event Monday.

Chopra underscored the existence of a new agreement, signed last year, between the CFPB and DOJ during a panel discussion at the enforcement conference cohosted by the Federal Trade Commission and DOJ’s antitrust division for state and international regulators.

“Assistant A.G. Kanter and I, we have formed a new agreement,” Chopra said. The bureau will refer “potentially criminal conduct,” including “anti-competitive mischief,” to the DOJ for action, Chopra said. . . .

Industry Developments

SPOTLIGHT: Mastercard Restructures Leadership Organization
Business Travel News – April 9, 2024

Mastercard is restructuring its leadership team to three “interdependent areas,” with commercial cards grouped with “new payment flows” and the development of a new data and AI organization in another area, the company announced.

The commercial and new payment flows area will be led by newly named chief commercial payments officer Raj Seshadri and will include commercial cards, B-to-B accounts payables and receivables, non-carded bill payments, remittances and disbursements. Mastercard said payments and data flows beyond the consumer side is a “scalable opportunity” for the company. . . .

The new data and AI organization, led by Mastercard executive Greg Ulrich as chief AI and data officer, will focus on commercializing the technology for both internal and external applications and governing those functions across the entire company. . . .

Despite BNPL’s Popularity, Overspending and Missed Payments Remain Top Issues, Bankrate Finds
Digital Transactions News – April 11, 2024

Consumer demand for buy now, pay later loans may be high, but consumers are still at risk of overspending when using BNPL to finance a purchase or missing a payment.

A survey released Thursday by Bankrate LLC reveals that overspending and missing a payment are two of the most common issues BNPL users encounter. According to the study, 29% of respondents say they have spent more than they should with BNPL, while 18% have missed a payment. On behalf of Bankrate, YouGov Plc surveyed 2,276 U.S. adults, 875 of which have used BNPL to finance a purchase.

Despite the risk that BNPL users will financially get in over the heads, BNPL loans themselves are not the root cause of the problem, since most BNPL users do not encounter those issues, says Ted Rossman, a senior industry analyst for Bankrate. . . .

AI: A Double-Edged Sword
Green Sheet – April 8, 2024

Here’s an old story that some younger readers may not recognize, but what the heck. Willie Sutton, a bank robber from the early 20th century was famously asked why he robbed banks. His reply: because that’s where the money is.

Today, of course, a crook doesn’t need to go inside any bank buildings, as there are ample ways to steal money from banks and their customers—online and other ways. With more of our financial lives going digital, we face more risk than ever. That is why it is critically important that the card brands, issuers and acquirers protect transaction and cardholder information.

These days, artificial intelligence is a go-to tool for fraud and risk management, just as it has become a go-to technology for crooks. That’s what makes AI a double edge sword. . . .

Mobile Wallets and Contactless Payments Growing in Popularity, NFC Forum Says
Digital Transactions News – April 5, 2024

Consumers are not only favoring contactless payments more, they are relying more on their mobile wallets to initiate payments, according to the NFC Forum’s bi-annual Near Field Communication Usage and Adoption study.

The study, conducted by ABI Research, reveals that 95% of respondents have left their physical wallets at home in favor of taking a mobile wallet with them at least once. Of those respondents, 17% take their mobile wallets with them daily, 36% take their wallets multiple times per week, 31% take their wallets multiple times per month, and 11% rarely take their wallets. ABI surveyed more than 2,600 consumers across nine countries. . . .

What’s Driving Mobile-Wallet Spending at High and Low Values
American Banker – April 5, 2024 (subscription required)

More U.S. consumers have been using mobile wallets at the point of sale since 2019, driven initially by the COVID-19 pandemic and subsequently because of the additional utility and security built into the payment method.

Mobile wallet spending rose from 0.6% of all U.S. card spending in 2019 to 5.9% in 2023 and 7.2% in the first two months of 2024, according to Milwaukee, Wisconsin-based payments technology firm Fiserv’s SpendTrend report. Fiserv’s mobile wallet data comprises in-person, in-app, and online mobile wallet payments.

Alongside the growth in mobile wallet use, there has been a drop in the average value of transactions, suggesting a greater number of small-value payments in the mix. . . .