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Payments News Update – May 31, 2024

Posted  May 31, 2024

Legal and Regulatory Developments

SPOTLIGHT: The MPC Fires Back at Claims Merchants Won’t Pass Along CCCA Savings to Consumers
Digital Transactions News – May 24, 2024

Claims by banks that merchants won’t pass along savings from the Credit Card Competition Act to consumers are grossly misleading and do not reflect the economic realities merchants face, argues the Merchants Payments Coalition, a lobbying group representing sellers on payments-acceptance matters.

Passing along cost savings or at least holding the line on pricing in the wake of rampant inflation is central to a merchant’s business because retail is highly price competitive, says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores.

To support his claim, Kantor points to the narrow margins that merchants earn, generally between 2% and 3%. That range does not fluctuate upward when merchants’ cost of goods and services decrease, he adds. . . .

Visa, Mastercard Reach $198 Million Deal in ATM Antitrust Case
Bloomberg Law – May 29, 2024 (subscription may be required)

Visa Inc. and Mastercard Inc. agreed to pay $197.5 million in a preliminary settlement with ATM customers who accused the card processors of fixing the price of fees at automated teller machines.

The settlement, which was filed by plaintiffs on Wednesday and is subject to court approval, marks the end of litigation stretching back more than a decade. The accord follows a separate $66.7 million deal agreed to by JPMorgan & Chase Co., Wells Fargo & Co., and Bank of America Corp. in 2021 over similar allegations of fixing ATM prices.

“The proposed Settlement, if finally approved, will resolve all of Plaintiffs’ claims against the Network Defendants and will bring this longstanding and hard-fought case to a close,” the plaintiffs said in court filings on Wednesday. . . .

The New Hospitality? Customers Can Sue Restaurants Over Pricing.
The New York Times – May 24, 2024 (subscription may be required)

The Southern California restaurateur Kwini Reed has spent years tying herself — and her business model — in knots trying to meet the competing needs of her customers and her staff.

Sometimes it seems like everything from state law to inflation is conspiring to force her to charge $35 for a hamburger, which Ms. Reed says she won’t do, even if it means she and her husband, the chef Michael Reed, take a financial hit.

The only fee at their Los Angeles restaurant, Poppy and Rose, is a 20 percent automatic gratuity for large parties, which helps ensure her servers are fairly compensated for tables that demand more skill and time. Now, a new state law in California, which goes into effect July 1, makes those charges illegal. If Ms. Reed continues the practice, a customer could sue her. . . .

House Passes Bill to Block Fed-Issued Digital Dollar
Law360 – May 23, 2024 (subscription required)

The U.S. House of Representatives on Thursday passed a bill that would prohibit the Federal Reserve from issuing a digital dollar in a vote that fell starkly along party lines, with Democrats decrying the bill as fearmongering over privacy concerns and a departure from the previous day’s bipartisan passage of a regulatory framework for digital assets.

The CBDC Anti-Surveillance Act would bar the Fed from issuing a so-called central bank digital currency, a state-issued dollar on the blockchain, as well as any products, services or accounts for individuals.

The bill passed on the back of the House’s Republican majority, with 213 GOP votes for the bill and only Jared Golden, D-Maine, Mary Peltola, D-Alaska, and Marie Perez, D-Wash., joining them from the Democrats’ side. . . .

Industry Developments

SPOTLIGHT: Visa Preps for US Pay-By-Bank Services
Payments Dive – May 28, 2024

Card network giant Visa is preparing to offer pay-by-bank services in the U.S. following its extension of such services in Europe by way of its 2022 acquisition of the open banking firm Tink, which enables banks, merchants and fintechs to move money.

Visa has refined the Tink service, initially rolled out in Europe, and it’s gearing up to launch in the U.S. now with some pilot customers, Visa Chief Product and Strategy Officer Jack Forestell said at an investor conference last week.

“We’ve been working behind the scenes to create the foundations for deploying it here,” Forestell said at JPMorgan Chase’s global technology, media and communications conference on May 21. . . .

How Visa and Mastercard Are Bolstering Non-Card Payments
American Banker – May 28, 2024 (subscription required)

Account-to-account payments are a double-edged sword for Visa and Mastercard. The product could easily cut into card volume, but if they play their hand right, it could also provide the networks with a way to lock in client relationships.

In one example, Visa and Dwolla teamed up to incorporate the card network’s open banking capabilities and account verification service with Dwolla’s account-to-account product. That enables verification of account ownership and an ability to review balances in real-time. The collaboration uses open banking to help connect parties in a payment.

A2A payments, or “pay by bank” transactions, don’t require credit or debit cards. The option has gotten more attention over the past two years . . . .

Paze Targets Nationwide Coverage By Year-End Shopping Season
Payments Dive – May 28, 2024

Early Warning Services has launched its Paze digital wallet in Texas, and is in the process of rolling it out across six New England states, EWS Managing Director James Anderson said in an interview last Thursday.

Paze is now available to all eligible customers in Arizona, South Carolina and Texas after previously being available only to EWS employees plus their friends and family earlier this year, Anderson confirmed.

“About 80,000” merchants are signed up to accept payments via the digital wallet, according to Anderson, though he acknowledged many of them are small businesses. “I like to say it’s the dog walker in Seattle,” he said. . . .

Nearly One-Third of US Credit Card Holders Say Their Next Card Will Be Co-Branded
PYMNTS – May 23, 2024

About 1 in 4 consumers in the United States own at least one co-branded or store-specific credit card. However, their popularity doesn’t come close to that of general-use credit cards, which are owned by 68% of consumers.

These are key data points in the PYMNTS Intelligence study “The Role of Strategic Partnerships in Consumer Credit Cards,” which examined the unique role co-branded and store cards play in the average consumer’s shopping habits.

Additional PYMNTS Intelligence data not included in the released report suggested that the appeal of co-branded and store cards appears to be inching upward, perhaps to a degree that may start turning the tide. . . .