Payments News Update – June 28, 2024
Legal and Regulatory Developments
SPOTLIGHT: Federal Judge Rejects $30 Billion Settlement Between Visa, Mastercard and Retailers
CNN – June 25, 2024
A federal judge overseeing a $30 billion preliminary swipe-fees settlement between Mastercard, Visa and retailers formally rejected the deal Tuesday. The ruling likely means the credit card processors will have to make more concessions to resolve their long-standing dispute with merchants.
Mastercard and Visa, two of the world’s largest credit card networks, reached their proposed multi-billion antitrust settlement with US merchants in March. The settlement would lower swipe fees, or interchange fees, that a retailer must pay when a customer makes a purchase using their card.
The details of Tuesday’s ruling made by Judge Margo Brodie of the US District Court of the Eastern District of New York have not been made public. But a memo released by the court on Tuesday said that she was “not likely to grant final approval” to the preliminary settlement absent any changes. . . .
China Said to Ask Visa, Mastercard to Cut Transaction Fees
Bloomberg Law – June 21, 2024 (subscription may be required)
China is pushing for Visa Inc.and Mastercard Inc. to lower their bank card transaction fees in the country, a person familiar with the matter said, as part of an effort to facilitate payments for foreign visitors.
The Payment & Clearing Association of China is negotiating with global card issuers including Visa and Mastercard on lowering fees local merchants are charged on foreign card transactions. The association proposed trimming the fee to 1.5% from 2-3%, the person said. The person requested anonymity discussing private matters.
The negotiations are ongoing and the fee cut details could change. . . .
RBA to Consider Allowing Merchants to Pass on BNPL Surcharges to Customers
SmartCompany – June 19, 2024
The Reserve Bank of Australia (RBA) says it will “revisit” the issue of surcharging in the buy now, pay later (BNPL) sector, flagging a new review to assess if payment sector reforms are necessary.
Under proposed changes to the Payment Systems (Regulation) Act 1998 (PSRA), the definition of ‘payment system’ and ‘participant’ will be expanded, giving the RBA more power to regulate the conduct of BNPL providers, digital wallet participants, and other new competitors in the payments space.
Speaking to the Merchant Risk Council Conference in Melbourne on Tuesday, Ellis Connolly, the RBA’s head of payment policy, said the central bank will conduct a review of retail payments regulation once that legislation is in place. The review will focus on surcharging, Connolly said, given the rapid development of payment systems available to merchants and consumers. . . .
Industry Developments
SPOTLIGHT: After Coming ‘A Really Long Way,’ Paze Signs Sellers as It Executes a Staged Rollout
Digital Transactions News – June 24, 2024
Paze, the online checkout platform backed by some of the nation’s biggest banks, is barreling through a state-by-state rollout that could culminate in nationwide coverage by late summer or early fall, according to James Anderson, the platform’s general manager who has spearheaded the project since Early Warning Services LLC announced it early last year.
“We’ve come a really long way,” he says. “We’ve built the infrastructure. People are doing live transactions. It’s working.”
Next up, he says, is an ambitious advertising campaign to raise awareness of the Paze wallet, which operates online only and lets users check out with the bank cards they’ve loaded. The campaign, which Anderson calls “the next big boulder on deck,” will “ramp up later this year” and will “explain to consumers why they should use Paze.” The campaign will be crucial. “We’ve got to make a splash,” Anderson says. . . .
BNPL to Shift Toward Larger-Ticket Expenses: CEO
Payments Dive – June 25, 2024
Buy now, pay later payments have entered the U.S. mainstream thanks to a pandemic-era boom. Recent inflation woes have led consumers to use the short-term installment loans to cover daily expenses, raising concerns about how BNPL providers don’t report to credit agencies and attracting the attention of the Consumer Financial Protection Bureau. The federal agency recently said it plans to regulate the industry like credit cards.
With Gen Z gravitating to BNPL as a consumer financing tool, [Priority CEO Tom] Priore said he believes they will bring those digital payments expectations to business-to-business payments as they enter the workforce.
The economics of the BNPL business will eventually shift toward big-ticket items, leaving credit and debit cards as the winner for daily purchases, Priore also predicted . . . .
Ticketing and Soft POS Will Drive Contactless Payment Growth, a Forecast Says
Digital Transactions News – June 25, 2024
Contactless payments are forecasted to surge 113% in value by 2029, reaching $15.7 trillion by 2029, up from $7.4 trillion this year, predicts a new report from Juniper Research.
Ticketing and soft point-of-sale applications will be significant drivers of this growth, United Kingdom-based Juniper says. “As access becomes more widespread, users increasingly expect contactless payment, creating a virtuous cycle of increasing use,” Juniper says.
Contactless ticketing is forecasted to see a 460% increase in total transaction value between now and 2029, the report says, reaching $154 billion globally. . . .
Klarna to Offload Checkout Business in $520 Million Deal
Bloomberg – June 24, 2024 (subscription may be required)
Klarna Bank AB is looking to get out of the checkout business after the financial technology giant found the unit created a conflict of interest with peers like Adyen NV or Stripe Inc.
An investor consortium led by the serial entrepreneur Kamjar Hajabdolahi has agreed to acquire the Checkout business in a deal that values the unit at 5.4 billion kronor ($520 million), according to documents obtained by Bloomberg News.
Klarna has long offered merchants two ways of offering its payment options to their customers. With Checkout, a retailer could work directly with Klarna to make the company’s offerings available on their site. But merchants could also work with payment service providers, like Stripe or Adyen, to make Klarna’s offerings available. That’s meant that those players have been both friend and foe to Klarna. . . .