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Payments News Update – May 3, 2024

Posted  May 3, 2024

Legal and Regulatory Developments

SPOTLIGHT: Major US Retailers Blast Mastercard, Visa Card Fees Settlement
Reuters – April 29, 2024

Target, Walmart, and other retailers have urged a U.S. judge to reject a proposed class-action settlement with Visa and Mastercard over credit and debit card fees, saying the accord does not go far enough.

The companies opposed the settlement in a series of filings on Friday in Brooklyn, New York, federal court, where Visa and Mastercard have battled claims since 2005 that they artificially inflated some fees on merchants in transactions involving consumers’ credit or debit cards.

The settlement with merchants, announced in March, would cap rates for card fees for five years and give sellers more authority to offer discounts based on the use of certain cards. Under current rules, merchants cannot “steer” customers to use cards with lower fees. . . .

Potential Merchant Savings on Swipe Fees Is the Latest Payments Battleground
Digital Transactions News – May 1, 2024

The war over the proposed Credit Card Competition Act shows no signs of abating as combatants on both sides of the fence continue their efforts to sway legislators and public opinion on the matter of card-acceptance costs.

The latest battle centers on data from payments consultancy CMSPI that says merchants will save $16.4 billion annually in credit card acceptance fees from passage of the proposed legislation, up from an estimated $15 billion in 2023.

The increased savings come as the interchange fees merchants pay to accept credit cards surpassed $170 billion in 2023, costing the average family more than $1,100, according to estimates released by the Merchants Payments Coalition. The CCCA aims to cut acceptance costs by requiring issuers with $100 billion or more in assets to offer a choice of at least two networks for processing, with at least one network being other than Visa or Mastercard. . . .

CFPB Says Junk Fees ‘Impede Fair and Competitive Pricing’
PYMNTS – April 30, 2024

The more complex a pricing structure, the more likely consumers are to pay more for products like credit cards, bank accounts, mortgages and auto loans.

So said the Consumer Financial Protection Bureau (CFPB) in a Tuesday (April 30) press release announcing results from its new report, “Price Complexity in Laboratory Markets.”

“The research has implications for understanding how junk fees impede fair and competitive pricing in markets like auto loans or mortgages, where consumers have to evaluate extended warranties, add-ons, closing costs and a wide variety of other fees instead of an all-inclusive price,” the CFPB said in the release. . . .

Industry Developments

SPOTLIGHT: Real-Time Consumer Payments Need Standards to Rise
Payments Dive – April 30, 2024

The payments industry must jointly develop a common set of standards for using real-time payments if the new transaction type is to become a reality for consumers, top payments executives from JPMorgan Chase and Walmart said on a Payments Dive panel last week.

Collaboration will be key in building out consumer use cases for the Federal Reserve’s new faster payments system, FedNow, which launched last July, as well as the private rival RTP network, said panelists speaking at the April 24 Future of FedNow virtual event. Banks have gradually been adopting FedNow and RTP, though few consumer uses have emerged.

So far, real-time payments touch consumers mainly as push payments, such as providing disbursements like payroll payments, they noted. But to extend such instant payments for consumer uses, the industry will require a common framework for real-time functioning, said the panelists, also including executives from payments software provider ACI Worldwide and the U.S. Faster Payments Council. . . .

Visa Launches Open Banking With Tink in the US
Finextra – April 25, 2024

Visa has launched open banking in the US, using technology from recently acquired Swedish vendor Tink.

Visa completed the €1.8 billion acquisition of Tink in March 2022 and has now made it available for US users to connect accounts and provide trusted parties with access to their financial data.

In Europe, the Visa/Tink duopoly has already won deals with Adyen and Revolut. For the US launch, Visa has signed data access agreements with banks and fintechs on the merchant side, including Capital One, Fiserv, Jack Henry, Dwolla and Max rewards. . . .

Fed Seeks 8,000 Financial Institutions for FedNow
Payments Dive – April 25, 2024

The Federal Reserve plans to attract up to about 8,000 financial institutions to FedNow, its new instant payments network, and it has at least 1,000 in the pipeline to add, a Fed official said this week.

While there are nearly 10,000 financial institutions in the country, only about 9,200 of those banks and credit unions are actively using Fed services, so the central bank’s goal for FedNow isn’t necessarily to draw them all, FedNow Head of Payments Product Dan Baum said Wednesday.

So far, about 700 financial institutions have connected to the network since it was launched last July, and the central bank has been eager to lure more to the system in the interest of creating as much reach for the network as possible. The new system will allow consumers and banks to settle payments in seconds, as opposed to days, and provide services at all hours and on weekends. . . .