Payments News Update – April 7, 2022

Legal and Regulatory Developments

SPOTLIGHT: Debit Card Antitrust Case Against Visa Revived, With New Judge
Reuters – April 5, 2022

A U.S. appeals court on Tuesday revived an antitrust case against Visa Inc over debit card services and reassigned the dispute to a different Texas federal court, after criticizing the slow pace of the litigation and questioning whether the trial judge was biased against the plaintiff.

The 5th U.S. Circuit Court of Appeals panel in New Orleans ruled unanimously 3-0 for plaintiff Pulse Network LLC, a subsidiary of Discover Financial Services, which sued Visa in 2014 over claims it was using its dominance to reduce competition in the market for debit card services. . . .

Top US Lawmaker Proposes Sweeping Stablecoin Regulation Framework
CoinDesk – April 6, 2022

A leading member of the Senate Banking Committee introduced a bill Wednesday to create a three-pronged regulatory framework for stablecoin issuers in the U.S.

Sen. Patrick Toomey (R-Pa.), the ranking member of the committee, announced the “Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022,” dubbed the Stablecoin TRUST Act for short, as part of an effort to specify how the U.S.’s different regulatory agencies could approach companies issuing cryptocurrencies whose prices are pegged to the U.S. dollar or other assets. . . .

21 Attorneys General Urged CFPB to Regulate BNPL
PYMNTS – April 6, 2022

On March 25, the Consumer Financial Protection Bureau (CFPB) closed its request for comments regarding the inquiry on buy now, pay later (BNPL) that it launched in December. PYMNTS assessed the 44 public comments available on the government website, and the vast majority of them urged the CFPB to increase transparency and information disclosure requirements from BNPL firms.

The public comments available include a wide range of stakeholders, from individuals to consumer associations or trade associations. . . .

Shopify Sued by Crypto Holders Over 2020 Data Breach
Law360 – April 4, 2022 (subscription required)

Cryptocurrency users in four states have sued e-commerce venture Shopify Inc. and outsourcing company TaskUs Inc. in Delaware federal court, saying in a class suit that a 2020 security breach exposed users of the company’s Ledger “hardware wallets” to hacking and crypto theft.

According to the putative class suit, Shopify customers in Arizona, Kentucky, North Carolina and Florida accused the business of failure to promptly report that an employee of Shopify vendor TaskUs had worked with a hacker to obtain personally identifiable information on 272,000 customers who bought Ledger SAS hardware wallets through Shopify. . . .

Sen. Cruz Seeks to Restrict Fed Role for CBDC
Payments Dive – April 1, 2022

Sen. Ted Cruz introduced legislation this week that would prohibit the Federal Reserve from issuing a central bank digital currency directly to consumers, a companion bill to legislation introduced in the House earlier this year.

In a press release Wednesday, the Texas Republican argued that a retail CBDC would be used as a “financial surveillance tool” by the federal government which would hold digital money accounts at the Federal Reserve as if it were a retail bank. . . .

The Never-Ending War
Digital Transactions Magazine – April 1, 2022

With rate increases expected this month, it’s time for the annual confrontation over interchange. Can this issuer-retailer argument ever be resolved? In the payments business, nothing gets the attention of the entire industry as effectively as the topic of fees. And no fee wins that attention as much as the interchange fee—the cost acquiring entities pay issuers each time a cardholder taps (slides, waves) his card.

“Tens of billions of dollars are at stake. Lots of parties have an interest in this,” says Eric Grover, principal at the payments consulting firm Intrepid Ventures. . . .

Industry Developments

SPOTLIGHT: Meta Plans ‘Zuck Bucks’ Virtual Coins for Facebook and Instagram Users
The Guardian – April 7, 2022

Mark Zuckerberg is looking to develop virtual coins, nicknamed “Zuck bucks” by staff, for users of Facebook and Instagram as part of a suite of products designed to reduce his platforms’ dependence on advertising in the future metaverse.

Facebook’s parent group, Meta, is looking to develop a range of virtual products – including digital tokens and “creator coins” – to diversify income and revitalise its user base, which is increasingly turning to newer rivals such as TikTok. . . .

Big Banks’ Interest in Launching Zelle Into Retail Payments Puzzles Some Observers
Digital Transactions News – April 7, 2022

A serious expansion of the Zelle peer-to-peer payments network or just saber rattling to get a better deal from the card networks? That’s one question raised by payments-industry experts after The Wall Street Journal reported Wednesday that Bank of America Corp. and Wells Fargo & Co.—two of the seven big financial institutions that own Early Warning Services LLC, operator of the Zelle network—are lobbying to expand the service to retail payments.

At issue is whether the financial institutions can leverage the expansion of Zelle to retail payments to avoid restrictions on debit card fees imposed on big banks by the 11-year-old Durbin Amendment, payments industry experts speculate. . . .

Who Deserves to Know About Bank Cyberthreats?
American Banker – April 6, 2022

As banks prepare for new rules governing when cybersecurity attacks must be reported to federal regulators, a new survey shows customers and the general public are still left in the dark about many threats.

Out of 95 global banks that responded to a Moody’s Investors Service survey, about two-thirds said they notified their boards of directors about a cyber event during the 12-month period that ended in April 2021. About 60% of the banks surveyed said they reported at least one such event to regulators. But only 33% of the banks said they had reported a cyber incident to their customers, and just 14% said they had issued a public notice. . . .

Fraud Is Trending Down Overall, But Businesses Must Remain Vigilant In The Fight Against It, AFP Says
Digital Transactions News – April 6, 2022

Payment fraud continued to decline in 2021 with 71% of organizations reporting they have been victims of payments fraud activity, compared to 74% in 2020 and 81% in 2019, according to the Association for Financial Professionals’ annual fraud report. The 2021 results are the lowest since 2014. The Bethesda, Md.-based association, which surveyed more than 550 treasury and finance professionals, has surveyed companies across myriad industries annually for 18 years.

Organizations with annual revenue of at least $1 billion are frequent targets of fraudsters with 75% reporting fraud activity the past year. In comparison, among organizations with annual revenue of less than $1 billion, 66% reported fraud activity. . . .

The One Big Thing Apple’s Project Breakout Needs but Doesn’t Have
PYMNTS – April 4, 2022

Project Breakout is said to be Apple’s now-not-so-secret plan to turn itself into a full-fledged payments and financial services company by building its own acquiring, payments processing, risk management, fraud and credit underwriting capabilities. As reported last week by Bloomberg, this move is intended to reduce Apple’s reliance on FinTechs and other third parties — card networks, acquirers and banks, to name but a few — and bring all of those capabilities in-house.

It was reported that the stock prices of Apple partners, including Apple’s bank partner Goldman Sachs, dropped on the news. That said, I’m pretty sure that everyone whose core business is payments and financial services had a good chuckle when they heard it. Payments only looks easy — Apple should know this better than most, given its disappointing performance with Apple Pay in the seven years since its launch. . . .

Google Play Crackdown Makes Amazon, Barnes & Noble Pull Digital Purchases
Ars Technica – April 4, 2022