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Payments News Update – December 15, 2023

Posted  December 15, 2023

Legal and Regulatory Developments

SPOTLIGHT: Governor Hochul Signs Four New Laws to Protect Consumers from Price Gouging, Medical Debt and Unfair Business Practices
New York State Press Release – December 13, 2023

Governor Hochul today signed legislation . . . that will curb predatory subscription services, and confusion over the price of many goods and services. . . .

Legislation S.5941B/A.3245D requires businesses to notify consumers of an upcoming automatic renewal or a continuous service charge 45 days prior to the charge. It also requires businesses to include instructions for how to cancel automatic renewals or continuous service charges as part of the notice to the consumer. . . .

Legislation S.1048A/A.2672B requires businesses to clearly post the highest price that a consumer might pay for certain transactions, including any surcharges. The legislation also establishes a civil penalty of up to $500 per violation. Businesses in New York are permitted to offer two-tiered pricing systems in which the credit card price for certain sales transactions is posted alongside the cash price. By requiring businesses to post the highest price that a consumer might pay, this legislation helps to promote transparency and ensure that consumers are informed about their purchases. . . .

UK Payments Regulator Proposes Cap on Mastercard, Visa Cross-Border Fees
Reuters – December 13, 2023

Britain’s payments regulator on Wednesday provisionally proposed a cap on cross-border interchange fees on retailers and other businesses charged by Mastercard and Visa on transactions made between the UK and European single market. The Payment Systems Regulator (PSR) said a cap would protect businesses from overpaying, after it published interim findings of a market review on interchange fees charged since Brexit, when the bloc’s longstanding cap ceased to apply in Britain.

UK lawmakers had piled pressure on the PSR to consider re-introducing a cap in Britain, and the watchdog said last year it would conduct two market reviews, but that an outcome could take years. The PSR said the review focused on charges set by Mastercard and Visa, as they account for 99% of debit and credit card payments in the UK. . . .

Exclusive: Apple Offers to Let Rivals Access Tap-and-Go Tech in EU Antitrust Case, Sources Say
Reuters – December 12, 2023

Apple has offered to let rivals access its tap-and-go mobile payments systems used for mobile wallets, three people familiar with the matter said, a move that could settle EU antitrust charges and stave off a possible hefty fine.

The EU competition enforcer last year charged Apple with curbing rivals’ access to its tap-and-go technology, Near-Field Communication (NFC), making it difficult for them to develop rival services on Apple devices. It said this benefited Apple Pay, Apple’s own mobile wallet solution on iPhones and iPads, and pointed to the company’s significant market power in the market for smart mobile devices and dominance in mobile wallet markets. The European Commission is likely to seek feedback next month from rivals and customers before deciding whether to accept Apple’s offer, the people said. . . .

Industry Developments

SPOTLIGHT: US Payments Trends Seen Gaining Ground in 2024
Tearsheet – December 11, 2023

As we stand on the cusp of the new year, a mere three weeks away, we delve into the upcoming payment themes expected to take center stage in 2024.

I sought perspectives from experts in the payments industry, aiming to unravel insights and predictions regarding the trends that are anticipated to make it big. I also explored the strategic initiatives some of the top companies in the space are undertaking in response to these expectations for the year ahead.

From improving B2B payments to the modification of retail payments and more, we take a look at the threads that continue to weave the narrative of the payment industry’s evolution going forward. . . .

Google Pay Pilots BNPL as Consumers Clamor for Payment Choice at Checkout
PYMNTS – December 13, 2023

Concert tickets are expensive, even if you’re not a Swiftie angling for a seat at the Eras tour or a golden oldie seeking Stones tickets (sponsored by the AARP, naturally). Travel isn’t cheap, and neither is clothing.

Drew Olson, senior director at Google Pay, told PYMNTS CEO Karen Webster in an interview that individuals shopping on Google — more than 1 billion times daily — are demanding more choice at checkout as they grow ever more familiar with buy now, pay later (BNPL) as a favored form of credit. “Whatever calculus the user performs to determine the payment methods that they want to use, they want more options across more merchants,” he told Webster.

To that end, Google Pay announced a pilot program with Affirm and Zip that will “surface” those providers’ multiple BNPL options at select apparel/accessories, theater and travel merchants in the United States that offer Google Pay at online checkout. . . .

FedNow May Have Spurred RTP Adoption
Payments Dive – December 13, 2023

If you want to attract attention to a market, create a rivalry. That’s the lesson learned so far this year from a rush by U.S. banks and credit unions to adopt real-time payments services. The Clearing House began selling its RTP network services in 2017, becoming the first entity to offer real-time payments services in the U.S. Since then it’s been a slog to attract banks and credit unions to connect to the network. But after the Federal Reserve launched the competing system FedNow in July, interest surged.

About 200 banks and credit unions have joined the RTP network this year as of Friday, with about 130, or two-thirds, jumping on board since July, a spokesperson for TCH said. That annual tally is already double the number of financial institutions that hooked up to RTP last year. It now has a total of 460 participants.

And FedNow has been pulling in new participants too, with about 320 hooking up so far, up from the less than 50 that were there at the start. . . .

Visa Launches a Service Aimed at Stopping Fraud Caused by Illegitimate Token Requests
Digital Transactions News – December 13, 2023

Tokenized credentials are supposed to stop fraud by masking card account numbers when a transaction is processed, but according to Visa Inc. global losses owing to illegitimate tokens totaled $450 million last year. That’s bad enough to prompt the network to announce early Wednesday it is launching Visa Provisioning Intelligence, a service aimed at combatting token requests from fraudsters.

The new service, which relies on machine learning to rate the probability that a token request is fraudulent, comes as the widespread adoption of the EMV standard has led criminals to sidestep the standard’s obstacles by submitting bogus token requests. With legitimate requests, the card network converts a given account number into a so-called hash that enables the transaction to proceed but would be useless to criminals if stolen. “However, tokens may be illegitimately provisioned to bad actors,” Visa says in its announcement of the new service. . . .

Mastercard Ties Growth to Digital Strategy
Payments Dive – December 11, 2023

Biometric authentication, tokenization and contextual commerce are “priorities” for Mastercard in spearheading digital growth, the card company’s chief digital officer, Jorn Lambert, told Bank of America analyst Jason Kupferberg, according to a report last week from the bank’s research arm.

Such digital card technologies allow for ongoing “cash displacement,” the report said, adding that another such technology, contactless payments, now enable about 60% of Mastercard’s global transactions.

“The evolution from hardware-centric to software-centric” point-of-sale has enabled Mastercard to grow to acceptance at 110 million merchants, up from 80 million two years ago, via payment facilitators and independent software vendors, the report said. . . .

Why Digital Gift Cards Are Quickly Replacing Their Plastic Swipe Cards
ModernRetail – December 11, 2023

Gifts cards are a perennially popular holiday gift, but they’re increasingly showing up in email inboxes rather than on a plastic card, thanks to services and brands rolling out new means of delivery. Evite, the 25-year-old digital invitation and greeting card business, rolled out a new service this fall that allows shoppers to add gift cards, with popular options like Target, Amazon and Roblox. So far, said CEO David Yeom, about 25% of greeting card senders are adding a gift card. . . .

About 55% of shoppers say they would like to receive a gift card for a holiday present, according to the National Retail Federation. In turn, as much as $29.3 billion is expected to be spent on gift cards, especially on restaurants, general use bank-issued cards and department stores. Already, about 25% of shoppers bought gift cards during the Cyber 5 weekend.

But the medium of how these cards reach their intended recipient is shifting. PayNXT360, a digital payments research firm, anticipates the U.S. gift card market is expected to see compound annual growth rate of 5.7% through 2027, led by the growth of digital services. . . .