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Payments News Update - April 16, 2020

Posted  April 16, 2020

Legal and Regulatory Developments

SPOTLIGHT: Small Business Lending: Paypal, Intuit, Square to Facilitate SBA Paycheck Protection Loans
International Business Times – April 14, 2020

A number of fintech firms, including PayPal Holdings Inc., Square Inc. and Intuit Inc., have retooled their lending programs and begun facilitating Small Business Administration Paycheck Protection Program loans through major U.S. banks. The companies say they can grant faster approval than banks and eliminate obstacles that have stymied some small businesses. In addition to PayPal, Square and Intuit, Kabbage, FIS, Funding Circle, Stripe and OnDeck also are expected to participate.

But the move may have come too late. White House economic adviser Larry Kudlow said Tuesday at least $250 billion of the $349 billion available under the program already had been allocated, and there was little hope Congress would approve an infusion of $250 billion more soon. Funds were expected to run out this week. . . .

European Commission Published Consultations on Digital Finance and Retail Payments
National Law Review – April 10, 2020

On April 3, the European Commission (Commission) launched targeted consultations on digital finance (Digital Finance Consultation) and retail payments (Retail Payments Consultation) and together with the Digital Finance Consultation (the Consultations).

The Digital Finance Consultation seeks views on the possible measures required to further enable innovative digital financial services in the European Union (EU), which includes the consideration of open finance, technology neutrality and possible competition issues with BigTech companies. The outcomes and findings of the Digital Finance Consultation will feed into and inform the Commission’s new digital finance strategy for the next five years. The Commission is due to propose such strategy in Q3 2020. . . .

The $35B Airline Refund Tidal Wave Is Complicated by Credit Card Companies
Forbes – April 9, 2020

Airlines are pushing back on calls to refund customers up to $35 billion for tickets for canceled flights. While governments in the U.S. and EU have stated that consumers have a right to get their money back, it’s not a straightforward transaction. In fact, some airlines may not yet have received the cash they are required to refund from the credit card companies that process airline payments.

IATA was unable to tell this reporter what portion of the $35 billion in refund liability is held by credit card companies and yet to be paid to airlines. . . .

How the Digital Dollar Proposed for Coronavirus Recovery Could Transform Identity
PaymentsSource – April 8, 2020 (subscription required)

The coronavirus has accelerated a move toward a public option for digital wallets that would tie government authentication to payment transactions. If successful, this could be the catalyst for a national digital identity system.

“The whole notion of a central bank digital currency and digital ID are linked,” said David Treat, senior managing director and global blockchain lead at Accenture, which is participating as part of a non-profit organization to work with different stakeholders on central bank digital currencies. The group has worked with central bank digital currency projects for the European Central Bank, the Bank of Canada and Sweden’s Riksbank. . . .

Facebook’s Marketplace Facing EU Antitrust Scrutiny
PYMNTS – April 6, 2020

The European Union (EU) is targeting Facebook’s Marketplace as the next leg in its antitrust investigation, according to a Monday (April 6) report in the Financial Times (FT).

In an effort to see if Facebook has an unfair advantage in the classified advertising space, investigators are asking the social media giant’s competitors to fill out a 14-page survey. The questions are focused on Facebook’s impact on rival classified ads businesses, like the German media group Axel Springer and Norway’s Schibsted. Facebook Marketplace is a free service for its 2 billion users. . . .

EU Probing $3B Mastercard Deal On Referral From UK, Others
Law360 – April 6, 2020 (subscription required)

Even as it transitions out of the European Union, the U.K. continues to work with bloc antitrust enforcers, including participating in a referral from multiple member countries that the EU took up Monday to scrutinize Mastercard Inc.’s €2.9 billion (about $3.1 billion) deal for the corporate services business of payment processor Nets.

Denmark was the first country to refer the merger to the European Commission, followed by the U.K. as well as Austria, Finland, Norway and Sweden, the bloc’s antitrust enforcer said Monday in agreeing to review the deal’s potential impacts on the European Economic Area, especially for account-to-account central infrastructure services, or A2A CIS. . . .

Industry Developments

SPOTLIGHT: An Analysis of Planned Changes to Network Rates Yields a Deep Impact for U.S. Merchants
Digital Transactions – April 9, 2020 

Visa Inc. and Mastercard Inc. have postponed their planned U.S. interchange revisions until July, but when these changes do take effect the net impact on merchants will be deep, according to an analysis released by CMSPi, an Atlanta-based global merchant payments consultancy.

Indeed, the new pricing planned by the two big payment networks will yield “the first significant increase in rates in more than a decade” in a number of important merchant categories, says Calum Godwin, the firm’s chief economist.  “This is really important for the U.S. payments industry.” . . .

Contactless Payments Skyrocket Because No One Wants to Handle Cash
Bloomberg – April 16, 2020

As more people worry about catching coronavirus from touching cash and credit-card terminals, a onetime niche technology is roaring into the mainstream.

Use of contactless mobile payments — services that once struggled to catch on in the U.S. — is surging as people come to see their phones as the safer way to pay. They’re also using mobile apps tied to payments, such as Amazon Prime Now, to place delivery or pickup orders for groceries. The Treasury Department may even let people who don’t have bank accounts receive their coronavirus relief checks via mobile-payment services like Venmo. . . .

Deep Dive: How COVID-19 Is Shining a Light on the Gig Economy’s Importance
PYMNTS – April 16, 2020

Full-time and gig workers alike have felt the COVID-19 pandemic’s impacts, even if just in the strain of moving their workspaces from office buildings to their homes. Others have seen more striking developments, with some employees facing furloughs as companies adjust their budgets and delivery drivers choosing between picking up shifts that might expose them to the virus or going without money to pay their bills.

The uncertainty of how stay-at-home and quarantine orders will impact freelancers has had a curious side effect: Regulators, companies and workers in multiple countries — including Germany and the U.S. — are now discussing how best to protect gig economy participants. Doing so has also increased awareness as to how large the economy has grown. One study predicts such workers will comprise half of the American workforce by 2028, for example, and the amount of money they earn grows every year. Other countries have seen similar jumps, with the value of the Chinese sharing economy reaching $470 billion in 2019, for example. . . .

Expect Lucrative Perks as Cobranded Travel Cards Try to Stem a Customer Exodus
Digital Transactions – April 10, 2020

The Covid-19 crisis is making cobranded travel credit cards less valuable. Demand for travel has taken a nosedive amid flight restrictions to international destinations, mandatory stay-at-home orders, and rising alarm over the coronavirus pandemic. Airlines have had to cancel flights and ground thousands of aircraft. Airline lounges and hotels have closed.

All this has made accumulating travel points, the centerpiece appeal of cobranded travel credit cards, decidedly out of style. Affluent customers who happily forked over up to $550 a year in annual fees to enjoy lucrative frequent-flyer points, access to airport travel lounges, complimentary flights and other travel perks, are now reassessing the value of their cobranded travel credit cards. Suddenly, cash-back and cobranded credit cards with retailers are looking a lot more attractive. . . .

Mastercard Advocates Higher Contactless Limits Across the Globe as PIN-Less Transactions Surge
Finextra– April 9, 2020

Mastercard’s unwavering commitment to making transactions more convenient, safe and seamless through tap-and-go card payments has taken on new urgency and importance as the spread of COVID-19 highlights the imperative for “contact-free” environments and experiences as much as possible.

As nations implement stricter containment measures to keep their citizens protected, Mastercard has taken a leadership role by actively consulting with governments and industry partners across the Asia Pacific region to ensure consumers have sufficiently high limits for contactless payments. . . .

Potential Delays Aside, Gas EMV Is Coming. And It’s Expensive.
PaymentsSource PayThink – April 9, 2020

With the EMV liability shift date for automated fuel dispensers (AFD) looming, subject to any last-minute changes, we are seeing major changes at fuel sites across the USA. With close to 150,000 active fuel sites in the US alone, there are a huge number of individual pumps that will need to be upgraded to accept chip and pin cards.

A recent article by VISA says that only a third of sites have so far upgraded, with only months remaining to do so, before liability shifts. . . .

Visa Teams With Startup Fold for Bitcoin Card Rewards
Bloomberg – April 9, 2020

The mainstream adoption of Bitcoin is getting a boost from credit card giant Visa Inc., which joined startup Fold to offer a card that earns rewards denominated in the cryptocurrency instead of airline miles or cash.

As much as 10% of cash purchases made with the co-branded debit card from San Francisco-based Fold and Visa will be credited to users in Bitcoin, Fold Chief Executive Officer Will Reeves said. He expects it can bring a wave of consumers to the world’s most-valuable digital asset. . . .

After Strong First-Quarter Growth, the Coronavirus Takes the Steam out of the ACH
Digital Transactions – April 9, 2020

Like other payment networks, the automated clearing house was going great guns until mid-March, but thanks to the Covid-19 pandemic it’s now in the midst of a slowdown.

ACH governing body Nacha reported Thursday that total volume rose 7.1% year-over-year in the first quarter to 6.4 billion transactions, up by 423 million payments. Same-day volume jumped a full 42% to 75 million transactions from 52.7 million in 2019’s first quarter. . . .

Fraud Is Down a Tick, but Still Very Near Its All-Time High, Says the Latest AFP Report
Digital Transactions – April 8, 2020 

The good news is that attempted and actual payments fraud declined last year. The bad news is it went down only a tick and remains very close to the all-time high, according to the latest report from the Association for Financial Professionals, a Bethesda, Md.-based trade group for companies across a wide range of industries.

The association, which has surveyed companies every year for 16 years, found that 81% had experienced attempted or actual fraud in 2019, down slightly from 2018’s 82%. The survey has found fraud rising steadily across a wide range of payment methods since 2013, when it registered at 60%. Now, “If anything, [fraud] is remaining stable,” says Tom Hunt, director of treasury services at the AFP. “I don’t take a lot from that.”. . .