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Payments News Update – April 26, 2024

Posted  April 26, 2024

Legal and Regulatory Developments

SPOTLIGHT: CFPB Internal Shakeup to Supercharge Fintech, Big Bank Cops
Bloomberg Law – April 19, 2024 (subscription may be required)

The Consumer Financial Protection Bureau’s enforcement and supervision teams, including those overseeing financial technology firms and other nonbank lenders, will soon get a direct line to Director Rohit Chopra to correct potential violations.

The organizational restructuring, teased this week, will remove a buffer between the units and the head of the agency, potentially allowing the CFPB to act faster in going after the wide array of companies under its purview.

The change is part of Chopra’s broader plan to speed the agency’s response to developments in the marketplace, said Jenny Lee, a former CFPB enforcement attorney. . . .

NY’s ‘Buy-Now, Pay-Later’ Oversight Bill Delayed But Not Dead
Law360 – April 22, 2024 (subscription required)

A New York state proposal to start licensing and supervising buy-now, pay-later providers didn’t make the final cut in lawmakers’ just-approved $237 billion budget, but a version being advanced through standalone legislation could still make it into law.

The budget legislation passed Saturday by the New York State Legislature omitted provisions floated earlier this year by Gov. Kathy Hochul that sought to ramp up state-level regulation of the buy-now, pay-later market, a fintech-heavy field that has surged in popularity as a credit card alternative.

Those provisions, which would put New York’s financial regulatory agency, the Department of Financial Services, in charge of BNPL oversight in the state, have instead been stripped out into a separate bill, A9588, that Assemblywoman Pamela Hunter, D-Syracuse, said Monday remains very much in play. . . .

US Senators Introduce New Stablecoin Bill
Cointelegraph – April 17, 2024

United States Senators Kirsten Gillibrand and Cynthia Lummis have introduced legislation establishing a regulatory framework for payment stablecoins.

In an April 17 announcement, the two U.S. Senators said they had introduced the Lummis-Gillibrand Payment Stablecoin Act, a bill the lawmakers had been drafting for months and expected to make public in 2024.

According to Gillibrand and Lummis, the legislation prohibits “unbacked, algorithmic stablecoins” — likely a nod at TerraUSD (UST) depegging from the U.S. dollar in 2022 — requires one-to-one reserves for issuers, creates state and federal regulatory regimes for firms and prevents illicit uses of stablecoins. . . .

Industry Developments

SPOTLIGHT: Fed Courts Nonbanks for FedNow Growth
Payments Dive – April 22, 2024

The Federal Reserve won’t provide fintechs with direct access to its new instant payments system FedNow, but it’s still courting their participation in the new real-time ecosystem.

Fintechs can help the Fed see what’s on the horizon for the new faster payment system and allow the new real-time payments services to be easier to use, said Mollie Markham, a Federal Reserve Bank of Chicago industry specialist who works with nonbanks. Fintechs can also assist the Fed in providing services that make the most of FedNow’s data-rich capabilities, she said during a conference this month.

She made the comments at an April 12 fintech conference sponsored by the San Francisco Federal Reserve as well as San Francisco State University and the University of California at Santa Cruz. The conference included a panel discussion with Markham and others addressing the subject of “It Takes a Village — FedNow and Fintech.” The panel also included representatives from the fintechs Plaid and Modern Treasury. . . .

JPMorgan Chase’s Plan for Face and Palm Payments
American Banker – April 22, 2024 (subscription required)

JPMorgan Chase is preparing a broad rollout of a biometric authentication system at U.S. retailers in 2025, following experiments it has run over the past year.

It worked with Pasadena, California-based biometrics technology provider PopID on two pilots to evaluate consumer and merchant response. The first biometric pilot was at the Miami Grand Prix Formula 1 race in May 2023, while the second, involving many more users, ran for six months in 2023 at a JPMorgan office cafeteria, operated by food concession provider Aramark.

The pilots’ aim was to get merchant and consumer feedback, as well as to understand and enhance the technology before a full market launch in 2025, said Prashant Sharma, JPMorgan’s executive director of biometrics and identity solutions. “We want to streamline the customer and merchant experience by using biometrics to reduce checkout time and increase loyalty,” he said. . . .

Mastercard Brings Commercial Cards to Digital Wallets
PYMNTS – April 18, 2024

Continuing the industry’s migration of business payments and expense management to digital platforms, Mastercard announced today (April 18) that it is bringing its commercial cards to mobile wallets.

The move comes in the form of a mobile virtual card app engineered to provide financial institutions with options for delivering secure, contactless payment services—a demand increasingly voiced by the companies’ banking and corporate customers.

The app will use Mastercard’s robust virtual card and tokenization technology to offer enhanced data security and spend control features, accessible via a consumer-like interface. It extends Mastercard’s commitment to business payments and management across various sectors, including healthcare, insurance, and corporate travel. It also comes at a time when business travel and expense management has changed with the advent of remote working and addresses the shifting payment preferences by younger demographic groups. . . .

Visa Launches Enhancements for Its Acceptance Platform
Digital Transactions News – April 17, 2024

Visa Inc. on Wednesday unveiled enhancements intended to further remove friction from the customers’ payment experience for merchants of all sizes. The enhancements, which are being launched on Visa’s Acceptance Platform, were developed in response to merchants’ needs for simpler implementation of payments technology, Visa says.

The enhancements include Developer Assist, an artificial intelligence-based tool to help software engineers develop sophisticated payment flows, answer questions on testing and certification, and suggest sample code.

The Visa Acceptance platform is used by more than 450 payment-service providers and connects to more than 100 independent software vendors supporting more than 450,000 active merchants each month in 160 countries, according to Visa. . . .