Payments News Update – June 14, 2024
Legal and Regulatory Developments
SPOTLIGHT: Why Illinois’ Budget Bill Has Bankers Sounding the Alarm
American Banker – June 10, 2024 (subscription required)
A first-of-its-kind swipe fee measure recently passed in Illinois could have dramatic implications for banks both within and beyond the state’s borders, experts say.
Illinois Gov. J.B. Pritzker, a Democrat, late on Friday signed a budget bill including a provision barring the collection of interchange fees on sales taxes, excise taxes and tips for transactions that would be subject to the state’s sales taxes.
It’s a tradeoff between lawmakers and Illinois retailers — who are getting a separate tax exemption eliminated — that is designed to pass the cost of that elimination to banks and payment processors rather than consumers. But trade groups say the measure creates an unworkable situation for banks and card companies and will impact not just Illinois financial firms, but any bank that has customers that pass through the state. . . .
UK Payments Watchdog Rejects Industry Call to Delay Fraud Refund Plan
Financial Times – June 10, 2024 (subscription may be required)
The interim head of the UK payments regulator has rejected a call from some companies in the sector to delay a contentious fraud reimbursement plan, two weeks after his predecessor resigned amid growing criticism of the proposals.
David Geale said the Payment Systems Regulator needed to “act quickly” on authorised push payment fraud, and that new rules forcing banks and payment companies to reimburse victims up to £415,000 per claim would be introduced in October.
“We will continue to engage with and support industry, taking into account all feedback as we move forward and as industry works hard to implement the systems and processes needed for the new reimbursement requirements,” he added in a statement on Monday. . . .
So, Restaurant Fees Could Still Be Legal After All
Eater San Francisco – June 6, 2024
There seems to be no end to the restaurant surcharge and junk fee ban saga. The latest in the legal back and forth, however, is a new piece of legislation introduced Thursday, June 6. The Chronicle reports Senator Bill Dodd, D-Napa, is behind Senate Bill 1524 which would keep restaurant fees legal so long as they present additional fees “clearly and conspicuously.” In other words, how the majority of food purveyors in the state already operate, be it on menus, online, or in reservation notices.
The paper writes this legislation is meant to specifically clarify State Bill 478, a “junk fee ban” outlawing undisclosed fees from rental car dealers and ticket sellers to concerts alike. On July 1, 2024, that law will go into effect, and it was unclear why restaurant owners were roped into this bill as many already explain to diners and consumers which fees — be it the SF Mandate fee or gratuity for groups of eight or more — are accounted for on the bill. . . .
Industry Developments
SPOTLIGHT: Payment Choice Is a Key Driver in the Customer Experience, Fiserv Finds
Digital Transactions News – June 11, 2024
Providing consumers more ways to pay and engage with merchants play key roles in driving consumer purchasing decisions, according to Fiserv Inc.’s Spring 2024 Carat Insights Report.
One way for merchants to engage on a deeper level with consumers is to offer apps featuring loyalty and rewards programs and that are easy to use. When asked to provide the key reasons why they favor a merchant’s app, 79% of respondents said quantity of rewards motivated them, 75% said relevance of rewards, and 73% said exclusivity of rewards. Overall, 73% of respondents deem loyalty programs important to the brand experience, up from 67% from the same period a year ago.
Ease of use is another factor influencing consumer usage of merchant apps, according to 84% of respondents. . . .
Cash Use Persists in US Beyond Pandemic
Payments Dive – June 11, 2024
Consumers’ cash use remained steady last year, even while they pulled out credit and debit cards more frequently, as the overall number of payments increased during a three-day period in October when the Federal Reserve conducted its annual cash use survey.
Consumers used credit cards for 32% of their payments, debit cards for 30% and cash for 16% during the period last year, the Fed report published last month said. They used automated clearing house payments 13% of the time, checks 3% of the time and other methods 6%.
Still, for the first time, cash was not the most preferred payment method when it came to transactions of less than $25, details of the Fed study showed. . . .
Mastercard to Phase Out Manual Card Entry for Online Payments in Europe by 2030
CNBC – June 11, 2024
The experience of paying for products and services online could feel a lot different in the coming years.
Starting from 2030, Mastercard will no longer require Europeans to insert their card numbers manually when checking out online — no matter what platform or device they’re using. Mastercard will announce Tuesday in a fireside chat with CNBC that, by 2030, all cards it issues on its network in Europe will be tokenized.
In other words, instead of the 16-digit card number we’re all accustomed to using for transactions, this will be replaced with a randomly-generated “token.” The firm says it’s been working with banks, fintechs, merchants, and other partners to phase out manual card entry for e-commerce by 2030 in Europe, in favor of a one-click button across all online platforms. . . .
Affirm’s BNPL and Tap to Cash Are Coming to Apple Pay Later This Year
Digital Transactions News – June 11, 2024
Apple Inc. says iPhone users will be able to send funds to each other by simply holding their iPhones next to each other. It’s a further refinement of Apple’s financial services, which jumped off in 2014 with the launch of Apple Pay.
In a video presentation Monday, Apple executives say the new feature will be part of its iOS18 operating system for its mobile devices. That software is typically released in the autumn. Apple also shared a slide that indicated Apple Pay would become available for third-party browsers later this year. Apple says Apple Pay can be used with any third-party Web browser and computer by scanning a code on their iPhone to complete the payment. . . .