Payments News Update – November 8, 2024
Legal and Regulatory Developments
SPOTLIGHT: Is Visa a Debit Monopolist?
Digital Transactions Magazine – November 1, 2024
Lawsuits alleging anti-competitive practices are nothing new to Visa Inc. After all, the network, as well as MasterCard Inc., have been sued by the Department of Justice, merchants, and state attorneys general for decades over their pricing and business practices.
When the DoJ filed its lawsuit against Visa in September alleging anti-competitive practices in the debit market, the case was seen as a continuation of Justice’s ongoing scrutiny of Visa’s pricing and business practices.
Four years ago, the DoJ sued to block Visa’s proposed $5.3-billion acquisition of open-banking platform provider Plaid Inc., alleging the acquisition would stymie future competition. Visa opted to settle that suit by agreeing to drop its bid for Plaid, despite its statements that it would vigorously defend itself. . . .
EU Regulators Investigate if Visa, Mastercard Fees Harm Retailers, Document Shows
Reuters – November 6, 2024
EU antitrust regulators are investigating whether the fees charged by Visa and Mastercard have a negative impact on retailers, an EU document seen by Reuters showed.
The European Commission, which enforces EU competition rules, sent questionnaires about both Visa and Mastercard to retailers and payment service providers in September, giving them until October to respond.
Visa and Mastercard have long dominated the market for payment cards, prompting complaints from retailers about so-called scheme fees levied by the two firms in recent years, as well as what they say is a lack of transparency on them. . . .
Fed Aims to Make Instant Payments the Norm
Payments Dive – November 5, 2024
The Federal Reserve aims to make its instant payments system FedNow an everyday utility in the U.S. financial services sphere, offered by every bank, Financial Services’ chief payments executive, Mark Gould, told attendees at a major industry conference last week.
“It’s going to be up to us to move instant payments from being novel to being normal,” Gould said during a discussion on “the rise of instant payments” with Modern Treasury CEO Dimitri Dadiomov at the Money 20/20 conference on Oct. 27.
He likened the situation to telephone landlines being common ten years ago, but noted how today very few people in the audience probably have one at home. He said he didn’t know when real-time payments will be one of those types of commonplace services, but predicted they will be at some point. . . .
Lawmakers Lobby for One-Size-Fits-All Regulations for Banks and FinTechs
PYMNTS – November 1, 2024
Among the central debates of regulation, what we might term even the jurisdiction of the regulators — no matter the industry — might boil down to a stark question:
States versus federal — as in should the states be the mainstays in regulating banks and FinTechs as they continue to pair up and deliver digital products and services to their customers? Should the giant regulatory agencies take the lead with sweeping frameworks? Or should there be a joint dialogue?
The debate has been highlighted by news that Republican members of the House Financial Services Committee have said in a letter to regulators at the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corp. (FDIC) that “undue regulatory scrutiny” will stifle innovation that would be realized by bank-FinTech partnerships. . . .
Industry Developments
SPOTLIGHT: The 10 Most Pressing Issues in E-Payments
Digital Transactions Magazine – November 1, 2024
Each year in the fall, as the grass turns brown and the trees shed their leaves, the editors of Digital Transactions start their deliberations over an equally gray and shadowy subject: what’s cramping the style of payments players these days? What obstacles are they confronting, and how? Which ones are pressing harder than the others, and why?
If adversity breeds strength, as the old saying goes, then payments professionals these days may have plenty of opportunity to develop their strategic and tactical biceps. The industry no sooner recovered from all the ill effects of the pandemic than it found itself enmeshed in a slew of other issues, some old and familiar but some others quite surprisingly fresh.
Herewith our annual catalog of the problems we think are most alarming for payments professionals right now, ranked in order of their impact—or potential impact—on the industry. “Impact,” of course, can be a matter of degree. Some of the matters ranked below, however, may be no less pressing for being still more or less in their larval stage. . . .
Payment Platform Zelle to Shift Users Away From Standalone Mobile App
Reuters – October 31, 2024
Peer-to-peer payments platform Zelle is shifting users away from its stand-alone mobile app in favor of using the platform via banking apps, Zelle’s parent company said on Thursday.
Zelle, a payments network owned by seven banks including JPMorgan Chase and Bank of America, initially promoted its mobile app when it launched in 2017 to users whose financial institutions had not yet joined the network.
But now, with more than 2,200 banks and credit unions on the Zelle network, only 2% of Zelle transactions take place through the mobile app, according to Early Warning Services (EWS), the banks’ company that owns Zelle. . . .
AI Increases Fraud Risk, Fintechs Say
Payments Dive – October 31, 2024
Artificial intelligence is now sophisticated enough that bad actors can use it, after taking over a consumer’s account, in ways that simulate that person’s behavior, creating another point of frustration for payments companies battling fraud, fintech professionals said.
Advanced AI programs are now capable of mimicking the behavior of a real person, allowing the fraudsters to evade financial institutions monitoring for unusual activity, panelists said at the annual Money 20/20 conference in Las Vegas Monday.
“The ability to just spin up a model and create 10,000 people that look real has gotten much higher,” said Brian Dammeir, head of payments for the San Francisco-based financial services company Plaid. . . .