Payments News Update - April 22, 2022
Legal and Regulatory Developments
SPOTLIGHT: Lawmakers Seek to Cancel Card Fee Increases
Payments Dive – April 21, 2022
A bipartisan group of four lawmakers implored Visa and Mastercard on Friday to cancel credit and debit card “swipe” fee increases planned for this month, warning them about practices that could raise antitrust concerns. In an April 15 letter to the CEOs of Visa and Mastercard, the Democrats Sen. Dick Durbin (IL) and Rep. Peter Welch (VT) locked arms with Republicans Sen. Roger Marshall (KS) and Rep. Beth Van Duyne (TX) to discourage the companies from raising their network interchange rates.
“We urge you to withdraw your plan to raise credit and debit card fees on American business owners and hard-working American families,” the letter said. “As Americans are dealing with the highest rate of inflation in decades, your profits are already high enough and any further fee increase is simply taking advantage of vulnerable Americans.” . . .
The CFPB and the ‘Junk Fee’ Investigation: 3 Challenges Ahead
PYMNTS – April 19, 2022
The Consumer Financial Protection Bureau (CFPB) closed its public consultation on junk fees April 11. Two days later, the agency published a blog post highlighting the $1 billion savings that consumers will soon obtain thanks to the elimination of non-sufficient fund (NSF) fees on their checking accounts.
The CFPB is engaging in advocacy efforts to encourage banks to reduce NSF and overdraft fees. However, the agency “is closely scrutinizing whether and when charging these fees may be unlawful,” suggesting that other legal actions are on the table. The next steps in the “junk fee” investigation aren’t clear yet, but both rulemaking and enforcement actions are distinct possibilities. However, the CFPB may face three challenges, given the nature of this investigation and the data available. . . .
Digital Wallets Raise Data Privacy Questions, CRS Says
Law360 – April 19, 2022 (subscription required)
Digital wallets — whether for cash or cryptocurrency — raise key questions around cybersecurity, data privacy and consumer protection, the Congressional Research Service said in a report.
The Congressional Research Service on Monday published an overview of digital wallet technology and its uses, as well as major policy issues. Digital wallets are software applications that can be used to facilitate payments. The technology spans transfers from consumers’ bank accounts to a merchant, peer-to-peer transactions and cryptocurrency transactions. . . .
As Regulators Close In, Experts Start to Fill In a ‘Legal Gray Space’ for BNPL
Digital Transactions News – April 18, 2022
Despite predictions that buy now, pay later loans will account for $680 billion in transactions by 2025, or about 12% of all e-commerce sales, the industry remains on a potential slippery slope when it comes to consumer protections, says a paper issued Monday by the Mossavar-Rahmani Center for Business and Government at The Harvard Kennedy School.
BNPL providers operate in a “legal gray space,” the paper says, due to weak regulatory oversight. This includes a lack of standards for the disclosure of fees, payments, data collection, and credit that can potentially harm consumers that make use of the loans. Subprime borrowers, who account for two-thirds of BNPL borrowers, are especially at risk, the paper argues. At the same time, the lack of oversight make it difficult to properly evaluate the risks of such matters as significant subprime borrowing and the total consumer debt burden. . . .
EU Banking Authority Payment Fraud Consult May Impact PSD2
PYMNTS – April 18, 2022
The European Banking Authority (EBA) on Tuesday, April 19 will close a public consultation launched in January to better understand certain trends of payment fraud in Europe, and to figure out the origins of some types of fraud by payment method.
The discussion paper released by the EBA in January analyzed payment fraud data provided by the national competent authorities (NCA) during 4 semesters, from H1 20219 to H2 2020, for credit card payments, credit transfers and cash withdrawals. While the data is reliable for most of the periods and payment methods, the EBA warned that as the NCA didn’t provide enough information for some segments, the report excluded data for certain countries and periods to avoid inconsistencies. . . .
Wawa Says Mastercard Wrongly Took $10.7M in Penalties
Law360 – April 18, 2022 (subscription required)
Convenience store chain Wawa Inc. on Monday accused Mastercard of hitting its bank with an “unlawful and invalid” $10.7 million penalty in the wake of a purported data security incident, a penalty that made its way down the chain to Wawa, according to a suit filed in New York federal court.
Wawa said that Mastercard slapped a “purported incident-related penalty” on Bank of America NA in violation of Mastercard’s agreement with Bank of America as well as the laws governing the contract. Bank of America has since assigned its claims against Mastercard to Wawa, per the complaint. . . .
UK Retailers Lost £130 Million in Sales in First Month of SCA Rules
Finextra – April 14, 2022
New data from Barclaycard Payments reveals UK retailers have so far lost out on £130m worth of sales as a result of not being fully compliant with new Strong Customer Authentication (SCA) rules which came in to effect last month.
In the biggest change to payments regulation since the roll out of Chip & Pin in 2006, all online transactions over £25 have been subject to two-factor authentication checks since 14th March, to help combat online fraud. Data from Barclaycard Payments, which processes £1 in every £3 spent on credit and debit cards in the UK, shows that over 22,000 transactions a day, worth £4.3m, have been declined in the month since SCA became mandatory. . . .
Industry Developments
SPOTLIGHT: Interchange Increases Will Exacerbate Inflation, a Growing List of Merchant Groups Contend
Digital Transactions News – April 18, 2022
One of the country’s biggest merchant associations on Monday joined a growing chorus of voices arguing fee increases planned by the major card networks for this month will exacerbate inflation.
“American consumers are struggling under the worst inflation in four decades, and these increases would only make the situation worse,” said Leon Buck, the National Retail Federation’s vice president for government relations, banking, and financial services, in a statement. “Swipe fees are a percentage of the transaction, so banks and card networks are already receiving an unearned windfall.” . . .
PayPal: BNPL Complements Store Cards, Drives Additional Purchases
PYMNTS – April 21, 2022
It’s not often that a survey comes back with a finding of zero. Even the moon’s crust contains 45% oxygen. On the debate over buy now, pay later (BNPL) siphoning sales from store-issued credit cards, however, the results are in, and the big takeaway stat to focus on is “zero.”
PYMNTS’ Karen Webster and PayPal Senior Director of Global Credit Risk Steve Mikulcik discussed key findings from “The Truth About BNPL and Store Cards,” a PYMNTS and PayPal collaboration that asked nearly 2,200 consumers if one takes from the other. . . .
Amazon Will Let Merchants Sell Goods With Prime Benefits on Their Own Sites
The Verge – April 21, 2022
Amazon has announced a new initiative named Buy With Prime that extends the purview of its Prime subscription service beyond the bounds of Amazon.com — a significant change to its business strategy that could help it compete with fast-growing rival Shopify.
Merchants who ship products using Amazon’s warehouse and delivery services (known as Fulfillment by Amazon) will be able to add Buy With Prime buttons to their sites. This will let Prime subscribers buy from these stores directly while retaining the benefits of Amazon’s subscription service. Namely: free shipping, next-day delivery, and free returns. . . .
PayPal and Venmo to Increase Instant Transfer Fees in the US
TechCrunch – April 21, 2022
PayPal and Venmo are increasing their instant transfer fees for both consumers and merchants in the United States in the coming weeks, PayPal announced on Thursday. Instant transfers allow customers to transfer their money instantly to a bank account or debit card for a fee.
For personal accounts on PayPal and consumer and business profiles on Venmo, users will pay 1.75% of the transfer amount, with a minimum fee of $0.25 and a maximum fee of $25. Prior to this change, the instant transfer pricing for personal accounts on PayPal and consumer and business profiles on Venmo was 1.5% of the transfer amount, with a minimum fee of $0.25 and a maximum fee of $15. . . .
Data: Amazon Pulls Ahead of Walmart in Share of US Retail Spending
PYMNTS – April 20, 2022
Amazon dethroned Walmart as the biggest winner of retail spend in the U.S. in 2021. In that year, 9.4% of consumers’ total retail spend went to Amazon, while 8.6% went to Walmart, according to “Amazon Versus Walmart Q4 2021,” a PYMNTS report.
Amazon has been steadily gaining on Walmart in the retail space since 2014. The eCommerce giant went from earning just 2.2% of consumers’ total retail spend in 2014 to earning more and more of consumers’ total retail spend with each passing year. . . .
Cutting-Edge Crypto Coins Tout Stability. Critics Call Them Dangerous
The Wall Street Journal – April 18, 2022 (subscription required)