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Payments News Update - August 25, 2023

Posted  August 25, 2023

Legal and Regulatory Developments

SPOTLIGHT: New Jersey Limits Card Surcharging to Merchants’ Processing Fees
Digital Transactions News – August 22, 2023

New Jersey has implemented a law that prohibits merchants in the state from profiting from credit card surcharging and requires merchants to clearly disclose any surcharges to consumers.

The law, which was passed by the New Jersey legislature in June and went into effect immediately upon New Jersey Governor Phil Murphy’s signature on Friday, allows merchants to levy a credit card surcharge but prohibits them from charging more than what they pay to process credit card transactions. . . .

L.A. Might Ban Cashless Businesses. Here’s What’s at Stake
Los Angeles Times – August 22, 2023

A growing number of restaurants and businesses in Los Angeles have decided cash is no longer king. If you can’t pay via credit card or a digital payment app, you can’t pay at all.

That’s a problem, according to City Councilmember Heather Hutt of L.A.’s 10th District. Hutt introduced a motion last week to ban cashless retail businesses in Los Angeles. “Not accepting cash payment in the marketplace systematically excludes segments of the population that are largely low-income people of color,” the motion said. . . .

Why PayPal’s Stablecoin Is Likely to Succeed Where Facebook’s Libra Failed
Reuters – August 21, 2023

PayPal’s (PYPL.O) stablecoin is likely to succeed where Facebook’s failed, thanks to the payment giant’s standing in Washington and policymakers’ greater understanding of the issues in the last three years.

PayPal this month said it was launching PayPal USD, a crypto token pegged to the U.S. dollar, making it the second major global company to launch a stablecoin after Facebook, now Meta Platforms META.O, unveiled Libra in June 2019. . . .

BNPL Risks Raise Questions for Consumer Reports
Payments Dive – August 21, 2023

BNPL’s ubiquity and growing use for everyday purchases should grab regulators’ attention, said Consumer Reports’s senior policy counsel. In her recent research on buy now, pay later, Consumer Reports Senior Policy Counsel Jennifer Chien was surprised by the wide variety of installment plan lengths and fees in the rapidly evolving market.

“I came out of the research thinking the market is more complex and muddier than when I went into it,” said Chien, a lawyer by training who is focused on financial fairness for Consumer Reports. . . .

Visa Faces DOJ Scrutiny for How It Prices ‘Token’ Technology
Bloomberg – August 16, 2023

Visa Inc. is facing fresh scrutiny from the US Justice Department over how it charges merchants for technology it uses to protect cardholder information.

As part of a long-running DOJ investigation, enforcement officials have begun probing the payment giant’s policies for charging retailers more if they don’t use Visa’s proprietary “tokenization” technology, according to people familiar with the matter. . . .

Apple Returns Fire on CBA, Defends Payment Service From New Regulation
Australian Financial Review – August 14, 2023

Apple says the federal government’s plan to regulate its payment services is a dangerous overreach and is being driven by the self-interested misrepresentations by major banks about how the iPhones work.

Pushing back against a proposal being considered by the government to extend Reserve Bank powers to digital payment platforms, Apple said the move could backfire by weakening the privacy and security of iPhones. . . .

Industry Developments

SPOTLIGHT: Contactless and Mobile Wallets Are Gaining Ground Among Debit Users, a Pulse Study Finds
Digital Transactions News – August 18, 2023

Consumer affinity for in-person transactions that reduce points of contact are taking hold as contactless payments made with debit cards swelled to 16% of the U.S. card-present share last year from 8% in 2021.

It’s a similar story with debit cards used with mobile wallets. Their use increased from 5% of the transaction mix to 10% in 2022, according to the 2023 Debit Issuer Study from Pulse, the debit network owned by Discover Financial Services. . . .

JPMorgan Debuts Tap to Pay for Merchant Clients
PYMNTS – August 22, 2023

J.P. Morgan Payments has debuted a contactless payment solution for its merchant clients. The new Tap to Pay offering lets merchants accept payments using their iPhones, without the need for a physical terminal, according to a Tuesday (Aug. 22) press release.

“Enhancing the ability for consumers to pay with their preferred method of payment is part of our broader, customer-centric approach to simplify omnichannel payment acceptance for our merchant clients,” said J.P. Morgan Global Head of Payments Takis Georgakopoulos in the release. . . .

US Check Use for Payments Exceeds Other Countries: Fed
Payments Dive – August 22, 2023

The Fed’s latest check use report points to the persistence of checks in U.S. payments relative to other countries. Though the proportion of checks used in India’s cashless transactions surpassed the U.S. at 44.4% in 2012, the figure in that Asian country dropped to 1.1% in 2021, the Fed said.

In 2021, the U.S. took the top spot in the number of checks used for cashless payments at 5.1%, followed by Canada (4.1%), France (4.1%) and Mexico (1.6%). . . .

More Than 93% Of Card Present Payments Worldwide Were Made Using EMV Chip Cards in 2022
NFCW – August 15, 2023

Just over 93% of card present transactions worldwide were made using EMV chip-enabled payment cards during 2022, up from 90.44% in 2021 and 88.55% in 2020, according to standards body EMVCo.

The total number of EMV payment cards in circulation also rose by 7% over the course of 2022, from just under 12bn at the end of 2021 to 12.8bn at the end of 2022, accounting for 69.25% of all cards issued worldwide, up from an average global adoption rate of just over 68% as of December 2021. . . .

Using a Credit Card? At These Restaurants It’ll Cost You.
The New York Times – August 14, 2023 (subscription required)

Last year, when food prices rose along with so many other costs, José Theoktisto began to think about how to lower operating expenses at the Venezuelan restaurant he runs in upstate New York. He worked with different suppliers, and he raised menu prices. Then he took a closer look at his statements and found that he was paying $2,000 a month in credit card fees.

“They pile fees on top of fees, on top of fees,” Mr. Theoktisto said about credit card processing companies. . . .

How ‘Pay by Bank’ Could Affect U.S. Card Volume
American Banker – August 14, 2023 (subscription required)