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Payments News Update – January 31, 2025

Posted  January 31, 2025

Legal and Regulatory Developments

SPOTLIGHT: Credit Card Convenience Comes at a Price. This Olympia Bill Aims to Change That
KUOW – January 21, 2025

Paying by credit card is more common these days. But for each swipe, or tap, the credit card company charges businesses what’s called an interchange fee. And those fees add up.

Washington state Senate Bill 5070, sponsored by Sen. Rebecca Saldana (D-Seattle), would bar fees on sales taxes and gratuities.

At a recent hearing by the Senate Committee on Labor and Commerce, many small businesses applauded the proposal. Owners said these fees are the second highest operating expense for businesses, after labor. . . .


Opponents of the Illinois Interchange Law Hedge Their Bets With Legislation to Repeal It
Digital Transactions News – January 29, 2025

A bill was introduced late Tuesday in the Illinois House of Representatives seeking to repeal the Interchange Fee Prohibition Act. The legislation, introduced by Rep. Margaret Croke, chairperson of the House Financial Institutions and Licensing Committee, is the latest twist in an ongoing battle over the IFPA, which became law in June.

This new legislation, consisting of a single sentence, simply calls for the repeal of the Interchange Fee Prohibition Act “effective immediately.”

Supporters are planning to introduce a similar bill in the Illinois Senate at a later date. That bill will be introduced by Mark Walker, chairperson of the Senate Financial Institutions Committee, according to the Community Bankers Association of Illinois, a supporter of both bills. . . .


Mastercard and Visa Resist RBA Plan to Force Disclosure
Australian Financial Review – January 28, 2025 (subscription may be required)

Global payments giants Visa and Mastercard are pushing back against the Reserve Bank’s attempt to force them to reveal to Australian businesses the fees they charge banks to process transactions on their privately owned networks.

The central bank’s review of card payment costs is a source of tension within the card schemes, which are resisting the potential for regulation of their fees.

American Express, Visa and Mastercard receive $1.8 billion every year for processing transactions in Australia, according to RBA data. The costs are passed on to merchants and often to customers in the form of surcharges. . . .


Staples Settles Out of Visa, Mastercard Swipe Fee Battle
Law360 – January 28, 2025 (subscription required)

Staples on Tuesday settled out of an over decade-long antitrust battle lodged against Visa and Mastercard for allegedly overcharging merchants via swipe fees, leaving the payment card companies with one less retailer to face in trial this year over their alleged anticompetitive fee scheme.

According to the New York federal court docket for the lawsuit brought by retail giants including Staples, Target Corp. and Macy’s Inc., U.S. District Judge Alvin K. Hellerstein on Tuesday signed off on Staples’ stipulation filed Monday that stated it was dismissing its claims and action against Visa and Mastercard “with prejudice.”

The office supply retailer had said in the stipulation that it “fully settled all of its claims against all of the defendants in the Target action.” . . .


Ousting the CFPB’s Chopra Wasn’t a ‘Day One’ Priority
Banking Dive – January 27, 2025

For all the signals of policy change President Donald Trump brought in the first week of his second term in the White House, two banking regulator figureheads remained perhaps surprisingly constant: Consumer Financial Protection Bureau Director Rohit Chopra and the Office of the Comptroller of the Currency’s acting chief, Michael Hsu.

Given the breakneck pace with which the CFPB was issuing final rules (see, open banking; overdraft reduction) and opening legal action (see, Capital One, Zelle, Comerica) in the waning days of the Biden administration, it may have been logical to assume that Chopra’s ouster would have been a “day one” event.

The Supreme Court, after all, ruled in 2020 that the CFPB director is an at-will employee – and there’s precedent: Former President Joe Biden asked for Trump-era CFPB Director Kathy Kraninger’s resignation less than an hour after he’d been sworn in. . . .


Industry Developments

SPOTLIGHT: Merchants Are Turning To Credit Card Surcharges as Processor Satisfaction Declines, J.D. Power Finds
Digital Transactions News – January 23, 2025

Merchants are increasingly levying surcharges on purchases made with credit cards to help offset processing fees, a new study from J.D. Power finds.

Some 34% of merchants surveyed are adding surcharges for credit card transactions, the study says. The study also found that flat-rate pricing lends merchants greater impetus to add surcharges on credit card transactions. And new and small merchants are more likely to pass along processing costs to their customers through surcharges.

“Card-transaction costs, inflationary pressures, and small-business economic concerns together are the drivers of surcharges,” John Cabell, managing director of payments intelligence for J.D. Power, says by email. . . .


X Teams With Visa on New Digital Payments Tool
Payments Dive – January 28, 2025

Elon Musk’s social media company X, formerly known as Twitter, has teamed with card network giant Visa in its quest to launch a digital payments tool, according to a post on the site by its CEO.

In her post on X Tuesday, the company’s chief executive, Linda Yaccarino called the X Money account an “everything app” that will launch later this year. The digital wallet will provide for the instant funding to an X digital wallet via the card network’s cross-border payments rail called Visa Direct as well as the option for peer-to-peer payments using a debit card, she said.

It’s the “first of many big announcements about X Money this year,” Yaccarino said in the post. . . .