Payments News Update – August 2, 2024
Legal and Regulatory Developments
SPOTLIGHT: BNPL Regulation Debate Heats Up as Comment Period Closes
PYMNTS – July 31, 2024
Klarna argues for a bespoke regulatory framework, while AARP supports the rule, emphasizing the need for consumer protections as buy now, pay later (BNPL) usage grows among older Americans.
Time has expired for companies looking to comment on the Consumer Financial Protection Board’s (CFPB) interpretive ruling on BNPL plans. With the CFPB holding options open to revise the regulations after the comment period is over Thursday (Aug. 1), two companies threw what could be termed a Hail Mary pass in the closing minutes.
Klarna — which was joined on the last day of comments by AARP — expressed its concerns in a strongly worded letter to the CFPB. While the filing indicates that Klarna supports regulation of the BNPL industry, it argues that the CFPB’s approach is misguided. . . .
Drip Pricing Exemption Isn’t a Free Pass for Calif. Eateries
Law360 – July 31, 2024 (subscription required)
Just days before California’s drip pricing ban, S.B. 478, went into effect on July 1, California Gov. Gavin Newsom signed S.B. 1524 into law. The bill came just in time to relieve California bars and restaurants from the pricing and fee advertising requirements of S.B. 478.
While S.B. 1524 exempts California bars and restaurants, among others, from the advertising and disclosure requirements of S.B. 478, these establishments are not entirely off the hook.
It is important for businesses to know that S.B. 1524 imposes different disclosure requirements that will go into effect on July 1, 2025. . . .
Gift Card Scams Surge as Maryland Enacts Law Amid Federal Crackdown
PYMNTS – July 29, 2024
Gift card scams are back in the news, with two federal agencies issuing warnings about their proliferation and one state now passing a law aimed at stopping its latest iteration called card draining, where scammers deplete the value of gift cards before they are used.
First, the good news. Maryland has enacted the Gift Card Scams Prevention Act of 2024 which mandates several preventative measures and imposes new obligations on merchants and third-party gift card resellers.
The law requires merchants conducting online gift card sales to register annually with the Division of Consumer Protection within the Office of the Attorney General. These merchants must also display a consumer warning about gift card scams online and at physical retail locations where gift cards are sold. The bill also stipulates that physical gift cards be enclosed in secure packaging to prevent tampering unless the card is chip-enabled and numberless or sold exclusively for use at the merchant’s own establishments. . . .
Takeaways From Tossed Deal in Visa, Mastercard Class Action
Law360 – July 29, 2024 (subscription required)
On June 13, U.S. District Judge Margo Brodie held a hearing on preliminary approval of a proposed settlement agreement in the long-running merchant antitrust class action against Visa and Mastercard in the U.S. District Court for the Eastern District of New York.
During the hearing, spectators witnessed the novel sight of mostly small merchants aligned with Visa and Mastercard arguing in favor of the proposed settlement. Despite their efforts, the objections of mostly large retailers carried the day, and on June 25, Judge Brodie issued a sealed memorandum and order, publicly released on June 28, rejecting the settlement.
We have previously considered the terms of the proposed settlement and the reasons it was unlikely to be approved. In this article we examine more closely Judge Brodie’s rationale for denying the motion for preliminary approval of the settlement and the likely course of action to follow. . . .
Zelle, Big Banks Challenge Senators on Scam Reimbursements
Payments Dive – July 25, 2024
Bank executives aired their concerns about expanding a provision of the Electronic Funds Transfer Act in a Senate hearing earlier this week.
Those executives said a proposal by Sen. Richard Blumenthal of Connecticut to expand Regulation E of the 2016 law wouldn’t address the source of scams and would encourage customers to take advantage of the rules.
Regulation E requires banks to reimburse customers for fraudulent or unauthorized transactions, such as when a crook hacks into your bank account and transfers money out of it. Blumenthal wants the provision to include authorized transactions made after a consumer is duped into sending money to a scammer. . . .
Industry Developments
SPOTLIGHT: Is Visa Readying for an Expiration of Cards?
Payments Dive – July 31, 2024
Earlier this month, one Wall Street analyst made a rare call: He downgraded Visa to a “neutral” rating, questioning the future of the company’s card business. . . . That analyst, Bank of America’s Jason Kupferberg, called the quarterly performance even “worse than expected,” and said in a July 23 report that the results could “spark louder debates about the growth outlook for [Visa’s] core business.”
While doubts about the long-term sustainability of the card business have been swirling around Visa for years, threats on the horizon seem to be coming into sharper focus lately. Digital competition, including real-time payments, related pay-by-bank options and buy now, pay later financing, are increasing the alternatives to card payments. In addition, legislative and regulatory pressures are building. . . .
The Nuances of Surcharging and Cash Discounting Draw Many Questions From VARs and ISVs
Digital Transactions News – July 30, 2024
Value-added resellers and independent software vendors enticed by the attractiveness of surcharging and cash-discount programs find there’s no one-size-fits-all approach for enrolling merchants. Questions about the programs abound at RetailNow 2024, the annual conference sponsored by the Retail Solutions Providers Association and in progress this week in Las Vegas.
The most prominent questions are, what are these terms and how are they different. Surcharging enables merchants to add a fee, which is typically the lesser of the cap allowed by card brands or a limit set by states in some cases, to help recoup their credit card processing costs. Cash discount programs, sometimes known as dual pricing, offer consumers a less expensive price when paying by cash or debit card, which are prohibited from being surcharged. . . .