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Payments News Update – January 12, 2024

Posted  January 12, 2024

Legal and Regulatory Developments

SPOTLIGHT: 6 Payments Trends to Watch in 2024
Payments Dive – January 9, 2024

Swipe fee battles, real-time payments, fraud prevention and acquisition plans will be among the hot topics pulsing through the industry this year.

Battles over card interchange fees, also known as swipe fees, will take center stage again this year, with payments industry forces clashing over them in Washington, at state capitols and in the courts. While retailers, merchants and consumer advocates seek to rein them in, bank card issuers and partner networks are poised to push back, promising an escalation of tension over credit and debit fees. . . .

Real-time payments are bound to play an oversized role in payments and banking industry conversations this year following the launch of the Federal Reserve’s new instant payments system FedNow last year. . . .

Debit Card Users Can Sue American Express as a Class Over Fees, Judge Rules
Reuters – January 10, 2024

A U.S. judge on Tuesday said debit card users in nearly a dozen states may pursue class-action claims accusing American Express of driving up merchants’ fees on transactions and causing consumers to pay hundreds of millions of dollars in overcharges.

U.S. District Judge Nicholas Garaufis in Brooklyn certified a class of debit card users that includes consumers in Illinois, Ohio, North Carolina and other states and the District of Columbia.

Garaufis denied class action status for credit card users, however. The judge found credit card reward programs and other variables introduced too many differences among the potential class members. . . .

Can Banks Benefit From the DOJ’s Pressure on Apple Pay?
American Banker – January 10, 2024 (subscription required)

Apple’s control over its payments technology may soon face its largest legal challenge yet from the U.S. government. The outcome could give banks a long-desired edge in building their own mobile wallets for smartphones.

The Department of Justice is close to finishing an investigation into Apple that could soon result in an antitrust lawsuit, according to The New York Times. The DOJ is potentially targeting Apple policies that give it control over how people use Apple’s devices to access and pay for other products via the technology company’s ecosystem. Apple faces similar pressure in Europe to open its payment apps to outside developers. . . .

An accumulation of international political and legal pressure could provide a chance for rival payment providers, such as PayPal’s Venmo, Block’s Cash App or the new bank-led Paze mobile wallet to directly challenge Apple Pay on Apple devices, cutting into the technology giant’s advantage and its business model. . . .

Big Tech Rebuffs US Consumer Watchdog Plans to Supervise Digital Wallets
Reuters – January 8, 2024 

A U.S. watchdog’s plan to supervise companies like Apple and Alphabet’s Google that provide digital wallets and payment apps risks stifling innovation and keeping some players out of the market, their lobby group said on Monday.

The warnings from the Computer & Communications Industry Association (CCIA) – whose members also include Amazon, Facebook parent Meta and X, formerly known as Twitter – responded to a proposal in November by the U.S. Consumer Financial Protection Bureau (CFPB), which said tech giants’ smartphone payments and wallets services rivaled traditional payment methods but lacked the same consumer safeguards.

The CFPB proposal, which has yet to be finalized, would subject such companies to the same kind of supervision currently imposed on banks, with agency examiners inspecting compliance with laws on unfair or deceptive practices and privacy protections, as well as scrutinizing executives’ conduct. . . .

Industry Developments

SPOTLIGHT: Visa Cracks Down on Surcharge Programs
Payments Dive – January 8, 2024 

Visa, the largest U.S. credit card network company, is increasing enforcement of rules related to programs under which merchants impose surcharges on consumers who use a credit card to pay for goods or services, according to a memo last month from one payments processor.

The payments processor, a unit of Priority Technology Holdings, told independent sales vendors that offer its services that their merchant clients who don’t comply with Visa’s surcharge rules could be fined between $50,000 and $1 million.

“In our ongoing commitment to adherence to industry standards, we would like to make you aware of the increased enforcement by Visa on non-compliant surcharge programs,” the Dec. 21 memo said. . . .

Visa Wants to Eliminate Friendly Fraud Without Alienating Honest Consumers
PYMNTS – January 9, 2024 

Friendly fraud is a bit of a misnomer; first-party card misuse would be more accurate. That’s because, just like other types of fraud and cybercrime, friendly fraud is anything but friendly. And with more people conducting transactions online and purchasing digital goods, the opportunities for friendly fraud have expanded. “As merchants look at [friendly fraud], they’re seeing it become a bigger part of their overall costs,” Mike Lemberger, senior vice president, regional risk officer for North America at Visa, told PYMNTS CEO Karen Webster.

One type of friendly fraud encompasses situations where disputes arise due to misunderstandings or buyer’s remorse, with individuals taking advantage of zero-liability policies to obtain refunds. But there is also a more malicious form of friendly fraud, where individuals intentionally make purchases with the intent of disputing them and getting their money back. . . .

New Payment CEOs Taking the Spotlight for 2024
American Banker – January 5, 2024 (subscription required)

For the people who recently took the top job at their payments company, there’s a tough juggling act in store, including navigating an uncertain economic and regulatory environment, while figuring out how revolutionary advancements in technology fit their firms’ goals. These leaders will have major decisions to make on technology trends such as generative AI. While gen AI burst onto the technology scene in 2023, 2024 will be a “year of implementation,” according to Shannon Johnston, CIO of Global Payments, in an earlier interview. . . .

Beyond technology, CEOs will need to spot opportunities in cryptocurrency and blockchain, and seek ways to compete for a share of payment flows for cross-border transactions, a potential loosening of app store payment policies and the continued need to diversify business models beyond traditional payment acceptance. Here are some high-profile payment executives who became CEO in the past year, and the distinct challenges they face at their new firms. . . .