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Payments News Update – July 5, 2024

Posted  July 5, 2024

Legal and Regulatory Developments

SPOTLIGHT: Supreme Court Lets Complaint on Debit Fees Proceed
Payments Dive – July 1, 2024

The Supreme Court ruled Monday that a lawsuit by a North Dakota merchants group challenging a debit card interchange rate set by the Federal Reserve can proceed.

The case, filed in 2021, had been blocked previously because a lower court ruled, and an appellate court agreed, that the complaint was barred by a six-year statute of limitations.

But the Supreme Court disagreed in a 28-page opinion issued Monday, saying that the statute of limitations didn’t apply “until the plaintiff is injured by final agency action,” and therefore the lawsuit isn’t extinguished in this instance. . . .

How California’s ‘Junk Fee’ Laws Could Impact Legislation Nationwide
Hotel Dive – July 1, 2024

According to California’s Department of Justice, “the price a Californian sees should be the price they pay.” Now, two bills addressing that — California Senate Bill 478 and Assembly Bill 537 — have come into effect.

In recent months, politicians from the state level to the Oval Office have pledged to tackle the issue of “junk fees.” But California’s laws, effective July 1, will constitute “the most effective piece of legislation in the nation to tackle this problem,” California Attorney General Rob Bonta said last Fall.

As such, California hotels are now a testing ground for junk fee legislation across the country. . . .

Restaurants Can Charge Service Fees and Gratuities After Gov. Newsom Signs Last-Minute Carve-Out to Junk Fee Bill
LAist – June 29, 2024

Governor Newsom signed a last-minute exemption allowing restaurants and other establishments selling prepared food to keep charging service and gratuity fees. The move was made to clear confusion about whether a new law banning junk fees in California would apply to those businesses.

The original law, SB 478, takes effect July 1. It would have made it illegal “for businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs,” according to an interpretation of the law that California Attorney General Rob Bonta released in May.

In this statement, Bonta indicated that these requirements would apply to restaurants, a clarification that sent lawmakers back to the drawing board to carve out an exemption for restaurants. . . .

Visa, Mastercard Can Likely Handle Settlement Much Bigger Than $30 Billion, Judge Says
Reuters – June 28, 2024

A federal judge said Visa and Mastercard can likely withstand a “substantially greater” settlement with merchants who said they overpaid on swipe fees than the $30 billion accord she rejected this week.

U.S. District Judge Margo Brodie in Brooklyn made her assessment in an 88-page opinion released on Friday, three days after announcing her rejection of the preliminary settlement.

The accord covering more than 12 million merchants would have lowered and capped swipe fees, also known as interchange fees, they pay to handle Visa and Mastercard transactions. . . .

Making Plans for BNPL Consumer Protection Compliance
Law360 – June 26, 2024 (subscription required)

On May 22, the Consumer Financial Protection Bureau issued an interpretive rule that has the effect of requiring providers of closed-end buy-now, pay-later credit products to apply certain open-end credit consumer protections from the Truth in Lending Act and its implementing Regulation Z.

These protections include the right to allege transaction disputes, the right to receive paper statements and other disclosures, and the right to a prompt refund when a merchant accepts a return.

The interpretive rule takes effect July 30 and raises several questions about how BNPL providers are expected to comply. . . .

Industry Developments

SPOTLIGHT: Data: Consumers Are Using Digital Wallets for More Than Payments — Here’s How
PYMNTS – June 27, 2024

Consumers’ use of digital wallets is evolving beyond just making purchases, and younger generations are showing the way forward.

The PYMNTS Intelligence report “Digital Wallets Beyond Financial Transactions: A Global Perspective,” created in collaboration with Google Wallet, drew from a survey of more than 12,000 consumers across the United States, the United Kingdom, Brazil, France and Germany. The study examined how consumers use their digital wallets beyond making payments and how they intend to use them in the future.

Here are three of the broad-stroke takeaways. . . .

Contactless May at Some Point Include Functions Beyond Payment, the NFC Forum Says
Digital Transactions News – July 1, 2024

Contactless transactions were supercharged by the pandemic, and now slightly more than half of U.S. cardholders are using the technology when they pay with either cards or wallets, according to Mastercard Inc. research. With that kind of momentum behind them, researchers are looking at ways to expand near-field communication technology, enabling a tap or wave to trigger a range of functions beyond payment.

Such an expansion at a single tap may include receipts, loyalty points, and personal identification, according to the NFC Forum, a payments trade group that performs research on tap-and-pay technology to set up specifications and enable interoperability. The Wakefield, Mass.-based group early Monday announced it has released its first paper on what it calls “multi-purpose tap.”. . .