Payments News Update – September 27, 2024
Legal and Regulatory Developments
SPOTLIGHT: U.S. Accuses Visa of Monopoly in Debit Cards
The New York Times – September 24, 2024 (subscription may be required)
The Justice Department filed an antitrust lawsuit against Visa on Tuesday, accusing the financial giant of unfairly stifling competition in debit cards, the latest in a string of cases aimed at deterring monopolistic behavior by big companies.
For more than a decade, the government claims in its complaint, Visa has entered into de facto exclusive agreements with merchants and banks, encouraging them to route the bulk of their transactions through Visa’s payment network. The company has maintained a monopoly in large part by imposing or threatening to impose higher fees on merchants that also use other payment networks to process debit transactions, according to the Justice Department.
The lawsuit stems from a sweeping investigation dating back years. It is part of a series of efforts made by enforcers under the Biden administration to target corporate middlemen, which it says needlessly increase fees, and take aim at power wielded by companies spanning technology to agriculture. President Biden in 2021 rolled out an executive order that made aggressive antitrust enforcement a pillar of his economic policy. . . .
Consumers Strongly Support Illinois Interchange Law, Proponents Say
Digital Transactions News – September 26, 2024
The Illinois Retail Merchants Association released a survey late Wednesday showing that voters in the state support the Illinois Interchange Fee Prohibition Act passed earlier this year.
The survey comes hard on the heels of a lawsuit filed last month by several organizations representing banks and credit unions challenging the law.
Some 74% of voters say they support the law, which will prohibit banks and credit card companies from levying interchange fees on the tax and tip portion of a credit or debit card transaction. In exchange, the state of Illinois will cap what merchants in the state earn for collecting sales tax at $1,000 per month. Prior to passage of the law in June, Illinois merchants were allowed to keep 1.75% of the sales tax collected per month as compensation for acting as agents of the state. The deal was reportedly one of the most generous sales-tax discount programs for local merchants in the country. . . .
Combatants Take Up Their Positions in Reaction to the DOJ’s Antitrust Suit Against Visa
Digital Transactions News – September 25, 2024
Reaction from the payments industry to the Justice Department’s announcement Tuesday that it is suing Visa Inc. over antitrust issues involving its debit card business was swift and pointed.
As expected, representatives of the payments industry denounced the lawsuit as baseless, while representatives of the merchant community and legislators friendly to merchants hailed the lawsuit as a significant step by the Justice Department to curtail Visa’s unbridled power in the debit card market.
For its part, Visa came out of the gate swinging, issuing a statement that it is one of many competitors bringing innovation in the debit card space. . . .
Credit Card Competition Bill Backers Keep Pressure On
Payments Dive – September 19, 2024
Sen. Roger Marshall (R-Kansas) gave a new plug for passage of the Credit Card Competition Act last week with an ad that ran during former Fox News host Tucker Carlson’s podcast.
While the bill largely languished during the usual August slump in Washington, and the presidential election is distracting from legislation now, he showed he’s not giving up.
If the bill is passed it “would help [end] the grip Visa and Mastercard have,” Marshall says in the Sept. 12 transcript for the ad, which was paid for by the trade group, the Merchant Payments Coalition. “Every time you use your credit card, they charge you a hidden fee, a swipe fee, and they’ve been raising it without even telling you.”. . .
Industry Developments
SPOTLIGHT: A Top Visa Official Outlines Four Big Trends Impacting Acquirers
Digital Transactions News – September 20, 2024
Acquirers and independent sales organizations wanting to improve their standing among merchants should take note of four trends affecting payments today, according to Bill Dobbins, head of acquiring and enablement at Visa Inc.
Dobbins, speaking at the Western States Acquirers Association conference in Las Vegas this week, outlined why the consumer experience, small-business expectations, fraud shifting to online channels, and government regulation stand out for the impact they’re having on the merchant-sales industry.
“I’ve been in the payments industry for over 30 years now, the last 27 with Visa, and I can confidently say that the amount of change that our industry is going through now is more significant than any time in my career,” Dobbins said. . . .
PayPal to Allow Cryptocurrency Buying, Holding and Selling for US Merchants
Reuters – September 25, 2024
PayPal Holdings announced on Wednesday it is enabling U.S. merchants to buy, hold and sell cryptocurrency from their business accounts.
Cryptocurrency has moved from being a nascent asset class towards greater market acceptance after bitcoin exchange traded funds were approved for listing by the U.S. SEC earlier in the year.
“Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers,” said Jose Fernandez da Ponte, Senior Vice President of Blockchain, Cryptocurrency, and Digital Currencies at PayPal. . . .
Merchants Are Key as Zelle’s Sibling Paze Seeks Growth
American Banker – September 23, 2024 (subscription required)
Early Warning Services has gained some traction in the months since it has launched Paze — the bank wallet it hopes will someday take hold as widely as Zelle and serve as an alternative to mobile wallets from Apple and Google. But payment experts say attracting merchants will be key, and that will take time.
Paze began in 2023 as a pilot for customers of the seven large banks that own EWS and has since expanded to include about 1,000 smaller financial institutions for whom Elan Financial Services is a processor, according to a Paze spokesperson.
In addition, Paze has signed about 20 merchants and is partnering with technology providers that support the merchant payment ecosystem, including Cybersource, Aurus and Spreedly, to build additional relationships, the spokesperson said. . . .
Walmart, Fiserv Team to Offer Real-Time Payments
Payments Dive – September 20, 2024
Retail behemoth Walmart said it’s locking arms with mega payments processor Fiserv to let consumers make real-time payments directly from their bank accounts to pay for online purchases, potentially disintermediating credit card use.
“We expect this new option for real-time consumer payments will further help provide shoppers with even greater choice in paying online,” a Walmart spokesperson said by email, noting that the company is “pleased to bring the option of real-time payments forward in retail.”
The new service, expected to launch next year, may tap the two U.S. real-time payment systems to make the instant payments happen, including the Federal Reserve’s FedNow offering as well as The Clearing House’s RTP network, according to an earlier report Thursday from the media outlet Bloomberg. . . .