Payments News Update – October 18, 2024
Legal and Regulatory Developments
SPOTLIGHT: Australia’s Pesky Fee for Debit Card Purchases May Be About to Disappear. What Happens Next?
The Guardian – October 15, 2024
It might be chump change when it comes to buying a coffee, but the surcharge on debit purchases adds up to billions of dollars a year – and it could be about to disappear.
Australia’s payments sector could be overhauled amid a government pledge to reform a system of fee charges that is deeply unpopular with consumers already grappling with punishing living costs.
While the Albanese government has flagged its intention to ban debit card surcharges, it will also consider wider measures flowing out of a Reserve Bank review of the sector that started on Tuesday. . . .
Apple Says Support for Redeeming Rewards Coming to Apple Pay
TechCrunch – October 17, 2024
On Thursday, Apple celebrated 10 years with Apple Pay and announced how the service will evolve in the future, including features like redeeming rewards and expanding installment loan options. In addition to Apple Pay’s newly added support for loan options from Affirm in the U.S., and Monzo Flex in the U.K., the iPhone maker shared that starting today, support for Klarna will go live in the two countries including both at checkout online and in-app with Apple Pay.
Further down the road, the company says it will expand access to installment loan options to include those from eligible credit or debit cards, including those from Citi and Synchrony in the U.S. and other participating issuers with Fiserv. Outside the U.S., these options will also include ANZ in Australia, DBS in Singapore, CaixaBank in Spain, and, in the U.K., HSBC, NewDay, and Zilch — some of which had been announced previously. . . .
Mastercard, Visa Warning Over RBA Push to Change Card Fees: ‘No Such Thing as a Free Lunch’
Yahoo! Finance AU – October 16, 2024
Mastercard and Visa have warned of the “unintended consequences” if the Reserve Bank of Australia (RBA) makes changes to card fees. The RBA is conducting a large-scale investigation into the card system, how they affect people across the country, and whether they’re still fit for purpose more than 20 years after they were introduced.
In the central bank’s Issues Paper, published earlier this week, it noted that scheme fees, which have no “direct” regulations on how high they can be in Australia, have “risen over time” and have put “upward pressure on card payment costs” for merchants. Scheme fees are paid to the likes of Visa and Mastercard to use their global network.
But the two major card providers have explained that those fees help fund protections for customers . . . .
Banking Groups File Motion to Intervene in Retailer Lawsuit Over Debit Interchange Fees
ABA Banking Journal – October 16, 2024
The Bank Policy Institute and The Clearing House filed a motion to intervene in a retailer lawsuit seeking to invalidate Regulation II’s standard for setting debit interchange fees at levels higher than federal statute permits. It’s the latest turn in a case that made its way to the U.S. Supreme Court earlier this year.
A group of North Dakota retailer associations and truck stop Corner Post sued the Federal Reserve in 2021 on the grounds that Reg II allows for higher interchange fees as long as such fees are “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.”
A district court dismissed the lawsuit because the six-year statute of limitations for challenging the regulation had passed, as the regulation went into effect in 2011. However, the Supreme Court ruled that the statute of limitations does not accrue until the plaintiff is injured by final agency action, allowing the case to move forward in district court. . . .
FTC Unveils Final ‘Click-to-Cancel’ Rule for Consumers
Payments Dive – October 16, 2024
The Federal Trade Commission issued a final “click-to-cancel” rule on Wednesday to make it as easy for consumers to cancel recurring payments for products and services as it was for them to sign up. The amendment to the 1973 Negative Option Rule includes civil penalties designed to combat business practices that make it structurally difficult or unclear for consumers to end their participation in automatic renewal programs.
The commission said it receives an average of 70 complaints per day, up from 42 daily in 2021. The agency said it collected 16,000 comments, from consumers, trade associations and state and federal agencies, since proposing the rule in March 2023. “Too often, businesses make people jump through endless hoops just to cancel a subscription,” Chair Lina Khan said Wednesday in a press release. “Nobody should be stuck paying for a service they no longer want.” . . .
Motions Fly in the Battle Over the Illinois Interchange Case Ahead of an Oct. 30 Hearing
Digital Transactions News – October 14, 2024
Plaintiffs in the lawsuit seeking to overturn the Illinois Interchange Fee Prohibition Act filed a motion late Friday requesting the court deny a request from several merchant organizations to join the Illinois Attorney General as defendants in the suit.
At the heart of the plaintiffs’ argument is that the Illinois Attorney General is not only “actively defending” the Illinois Interchange Fee Prohibition Act (IIFPA), but also that the retail associations “do not propose to add anything to the merits of the case because their legal arguments mirror those of the Attorney General.”
The plaintiff’s motion is the latest in a series of motions filed by friends of the defendant, the defendant, the plaintiffs, and friends of the plaintiffs ahead of Oct. 30, on request for a preliminary injunction to prevent the law from taking effect July 1, 2025. . . .
Apple Pushes to Duck DOJ’s Antitrust Suit
Law360 – October 11, 2024 (subscription required)
Apple Inc. continued to cast the Justice Department’s monopolization lawsuit as an attempt to control how the technology giant deals with iPhone app developers, telling a New Jersey federal judge that the government’s case against app access restrictions is “one and the same” as deciding who it does business with and thus warrants dismissal.
In a reply brief Thursday continuing its push to dismiss the antitrust claims from the U.S. Department of Justice and state attorneys general, Apple maintained that the case amounts to a refusal-to-deal lawsuit disfavored under U.S. antitrust law that generally assumes companies can decide with whom they do business. . . .
Industry Developments
SPOTLIGHT: Credit Cards Don’t Require Signatures. So Why Do We Still Sign?
The Wall Street Journal – October 14, 2024 (subscription may be required)
The big financial moments in life used to be marked with a flourish of a pen. Buying a house. A car. Breakfast.
Not anymore. Visa, Mastercard, Discover and American Express dropped the requirement to sign for charges like restaurant checks in 2018. They don’t look at our scribbles to verify identity or stop fraud. Taps, clicks and electronic signatures took over the heavy lifting for many everyday purchases—and many contracts, loan applications and even Social Security forms. . . .
But signatures didn’t die. We continue to be asked to sign with ink on paper or using fingers on touch screens at many restaurants, bars and other businesses. And people keep signing card receipts out of habit—even when there is no blank space for it—because it feels weird not to, payment networks and retail groups say. . . .
Payments Players Tap M&A to Build Tech Stacks
Payments Dive – October 16, 2024
When Mastercard agreed to acquire cybersecurity firm Recorded Future in September for $2.65 billion, the credit card company made its intentions clear: It said it’s seeking to defend the “global digital economy.”
As the payments industry players become increasingly digital and tech savvy, they’re building up their software arsenal and technology capabilities to compete in an increasingly digital marketplace.
Less than a month later, Mastercard made another acquisition, this time a tech company called Minna Technologies, which manages subscriptions through bank apps. . . .
Mastercard Debuts New Tool for Verifying Cardholders’ ID
PYMNTS – October 14, 2024
Mastercard has a new way for issuers to confirm cardholders’ identifying information.
Dennis Gamiello, the company’s executive vice president for identity products and innovation, wrote in a blog post on Monday (Oct. 14) that it’s all thanks to a combination of new industry standards and Mastercard’s Identity Attribute Verification service.
The solutions use the technology behind a payment card to allow Mastercard partners to verify that a consumer meets the criteria for certain goods and services while protecting their privacy. It eliminates what can often be a cumbersome job: uploading documents like photo ID, proof of residency or passport. . . .
Stripe Says Stablecoins Payments Made in More Than 70 Countries After Relaunch
Bloomberg – October 10, 2024 (subscription may be required)
Stripe Inc. said individuals from more than 70 countries have used stablecoins for online transactions during the first 24 hours after allowing merchants using its platform to accept crypto payments again.
Stripe merchants in the US were authorized as of Oct. 9 to receive the Circle-issued stablecoin USDC through their online checkout pages.
The payments firm was among the first to enable Bitcoin payments in 2014, but disabled the feature four years later, explaining that slow processing times were leading to failed transactions. . . .