Payments News Update – July 26, 2024
Legal and Regulatory Developments
SPOTLIGHT: BNPL Firms Ask for 5 More Months to Prepare for CFPB Rules
PYMNTS – July 17, 2024
The end of the month is speeding toward the buy now, pay later (BNPL) industry — and with it, new rules and regulations regarding consumer disputes and new operational burdens in the drive toward compliance.
The Consumer Financial Protection Bureau’s (CFPB) rule classifying BNPL as credit card providers takes effect July 30, meaning these firms must provide legal protections and rights delivered by conventional credit cards.
As for the rule-making, which through its interpretive designation is applying existing rules to what is, in effect, a new (or at least nascent) industry, the newly governed are asking for more clarity, as well as a delay in the implementation of the rule itself. . . .
Britain Will Soon Lay Out New Plans to Regulate ‘Buy Now, Pay Later’ Firms Like Klarna After Delays
CNBC – July 25, 2024
Britain’s new Labour government will soon set out updated plans to regulate the “buy now, pay later” industry, a government spokesperson told CNBC.
A Treasury department spokesperson said the government will do so “shortly,” echoing earlier comments from Tulip Siddiq, the new economic secretary to the U.K. Treasury, to Parliament on Wednesday.
“Regulating Buy Now Pay Later products is crucial to protect people and deliver certainty for the sector,” the Treasury spokesperson told CNBC via email Thursday. . . .
FTC Demands Pricing Input From Mastercard, Others
Payments Dive – July 23, 2024
The Federal Trade Commission requested information from Mastercard, and seven other companies, in a quest to better understand differential pricing strategies based on personal consumer data, the federal agency said in a Tuesday press release.
The federal agency is focused on how third-party firms are using consumer demographics and observed behaviors in tailoring pricing to shoppers, especially those using digital tools to purchase. The agency wants to better understand those methods in the interest of making sure consumers don’t face discrimination in pricing, or have their privacy put at risk.
The agency is particularly interested in how the intermediaries may be using technology in these pricing strategies and how those actions may be impacting “privacy, competition, and consumer protection,” the FTC said in the release. . . .
6 Ways the CFPB Wants to Keep Its Eyes on Fintech Middlemen
Banking Dive – July 17, 2024
Fintech firms continue to face scrutiny as regulators work to ensure tech intermediaries aren’t subjecting consumers to high fees, surveillance of transactions and anti-competitive activities.
Speaking in Washington at a Semafor event last week, Consumer Financial Protection Bureau Director Rohit Chopra said the activities of fintech middlemen — particularly those with data-based business models — will continue to be the subject of rigorous oversight.
“We are on the lookout for people who want to be gatekeepers and charge tolls through the whole system,” he said. “We want to see who’s exploiting, misusing, abusing data. And we also want people to build businesses on something real, not just regulatory arbitrage.”. . .
Industry Developments
SPOTLIGHT: Chase Is Changing How People Can Pay Credit Card Bills: What to Know
Newsweek – July 19, 2024
Chase has updated its payment options, and millions will have fewer options to pay their credit card bills. The bank’s new credit card statements stipulate customers will no longer be able to use their cards with third-party buy now, pay later platforms.
The new policy goes into effect October 10, so customers have several months to adjust their payment plans before Chase will start declining all payments rendered by those platforms, such as Klarna and AfterPay.
Chase already offers customers a buy now, pay later option through its own banking system, Chase Pay Over Time, available to eligible cardholders when they make purchases of $100 or more, or those of $50 or more on Amazon. . . .
Europe’s Rival to Visa and Mastercard Soon to Roll Out in Belgium
Euro News – July 24, 2024
US payment giants Visa, Mastercard, PayPal, Apple and Google Pay are getting a new rival in Europe: it’s called Wero and it’s already available to some consumers in Germany and by the end of July in Belgium – how does it work and what are its features?
Wero is the result of years of work by the European Payments Initiative (EPI), a network of 16 European banks and financial institutions set up in 2021 to provide a single digital payment service for all businesses and citizens.
Based on systems such as the existing Payconiq and iDEAL, the digital wallet allows customers to transfer money with just a phone number, no IBAN required – with the novelty of gradually offering them the option to send money to other users in Europe. . . .
Data Compromises Have Dipped, but the Running Total Remains Scary
Digital Transactions News – July 17, 2024
Instances of data compromise in the United States were down in the second quarter, but the good news pretty much ends there, according to information released early Wednesday by the Identity Theft Resource Center.
Cybercriminals pulled off 732 total compromises online in the second quarter, a total that was down nearly 13% from the first quarter, according to the ITRC’s reckoning. Still, the total of 1,571 cases for the first half of the year more or less maintains a pace seen last year in which 3,203 compromises were recorded. That 2023 total exceeded the number recorded in 2022 by 78%.
What criminals do with the data they harvest in these compromises also poses a disturbing question. . . .