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Payments News Update – May 24, 2024

Posted  May 24, 2024

Legal and Regulatory Developments

SPOTLIGHT: Britain Seeks to Rein in Mastercard and Visa Fees on Retailers
Reuters – May 21, 2024

There is little evidence that big fee hikes imposed by U.S. duo Visa and Mastercard on retailers have led to a major improvement in service, Britain’s Payment Systems Regulator said on Tuesday, flagging concerns competition was not working.

Visa and Mastercard have long dominated the market for payment cards, spurring UK lawmakers to call for closer scrutiny from the PSR, given that consumers end up paying the fees through higher prices for products and services bought.

Attempts in Europe to create home-grown rivals have floundered as banks balk at the investment cost. A report commissioned by Britain’s government last year said the UK needs a “digital alternative” to the two U.S. payment processing networks. . . .

Cryptocurrency Bill Passes US House Despite SEC Opposition
PYMNTS – May 22, 2024

A bill said to provide consumer protections and regulatory certainty around digital assets was passed by the U.S. House of Representatives on Wednesday (May 22).

The Financial Innovation and Technology for the 21st Century (FIT21) Act (H.R. 4763) was approved with broad, bipartisan support, the House Financial Services Committee (HFSC) said in a Wednesday press release.

The bill passed by a vote of 279 to 136, with 208 Republicans and 71 Democrats voting to approve it, according to the website of the Clerk of the House. . . .

Big Banks Face Intensifying Political Pressure Over Zelle Fraud
American Banker – May 22, 2024 (subscription required)

Executives from JPMorgan Chase, Bank of America and Wells Fargo are expected to testify this summer before a U.S. Senate panel that has spent much of the last year examining fraud on the Zelle payments network.

At the upcoming hearing, the big banks are likely to face one key question: To what extent, if at all, should banks be financially responsible in situations where consumers authorize Zelle payments to fraudsters?

Hundreds of millions of dollars are at stake. In 2022, customers of JPMorgan, BofA and Wells submitted claims reflecting a combined total of $456 million lost to scams and fraud on Zelle, according to Sen. Richard Blumenthal, D-Conn., who chairs the Senate Permanent Subcommittee on Investigations. . . .

CFPB to Treat BNPL Loans Like Credit Cards
Payments Dive – May 22, 2024

The Consumer Financial Protection Bureau issued a new rule Wednesday saying that buy now, pay later companies are credit card providers, and must provide similar consumer protections as credit cards, according to an agency press release.

The government agency’s interpretive rule would require BNPL lenders to investigate when consumers dispute a transaction; issue refunds when consumers return a product or cancel a service; and provide billing statements similar to those provided by credit cards, the release said.

“Whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations,” CFPB Director Rohit Chopra said in the press release. . . .

A Bill That Would Cut the Number of Banks Covered by Durbin Advances Out of Committee
Digital Transactions News – May 17, 2024

A bill containing a provision that would raise the asset threshold for debit card issuers covered by the Durbin Amendment narrowly passed in a vote late Thursday by the House Financial Services Committee.

The committee voted 24-22 in favor of advancing the bill, called the Bank Resilience and Regulatory Improvement Act. The bill, which would raise $50 billion in assets from $10 billion the threshold at which the Durbin Amendment would apply, is sponsored by Financial Institutions and Monetary Policy subcommittee Chairman Rep. Andy Barr (R-Ky.). The legislation can now advance for a vote by the House of Representatives.

The vote comes as the Federal Reserve earlier this week closed the comment period on its proposal to adjust downward the maximum allowable interchange rate on debit card transactions. . . .

Industry Developments

SPOTLIGHT: Google Pay Adds Card Reward Details to Checkout
Payments Dive – May 22, 2024

Tech giant Google has given users of its Google Pay service the ability to see what credit card rewards they can earn when making online purchases, according to a Wednesday blog post.

The new feature is available today to U.S. customers paying with an American Express or Capital One card on Google’s Chrome web browser on desktop computers. During checkout, customers will see card benefits listed next to the cards, enabling them to choose which card to pay with based on the benefits they’d receive for that purchase.

Gaining insight into card rewards was “the number one thing” Google Pay users asked Mountain View, California-based Google to provide, Google Pay Vice President and General Manager Ben Volk said in a Tuesday interview. The company’s goal is to expand the program to all card issuers, he said. . . .

How Mastercard’s Using Gen AI to Combat Payment Disputes
American Banker – May 17, 2024 (subscription required)

The card networks are making customer service a major part of their generative AI strategies, using the technology to manage the pressure that can come from mistakes or fraud in transactions.

Mastercard this week entered a partnership with Salesforce, integrating Salesforce’s financial services cloud with Mastercard’s dispute resolution service. Mastercard’s new Salesforce collaboration follows a February upgrade at the card network to add more gen AI technology to dispute resolution. Its rival Visa introduced a gen AI dispute resolution tool of its own, also in February. . . .