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Payments News Update -- August 14, 2019

Posted  August 14, 2019

Legal and Regulatory Developments

SPOTLIGHT: UK’s Financial Conduct Authority to Delay PSD2’s SCA, FT Reports
The Paypers – August 8, 2019

The UK’s Financial Conduct Authority is set to delay enforcement of PSD2’s SCA by more than 18 months, after warnings that the rules would threat online sales.

Strong customer authentication (SCA) rules, which are due to be introduced in September 14, 2019, require most online payments to go through an extra level of verification to reduce fraud. In June 2019, the European Banking Authority rejected calls for a continent-wide grace period, arguing that companies had more than three years to prepare. . . .

New Zealand Just Became the First Country to Legalize Salary Payments in Cryptocurrencies
Business Insider – August 13, 2019

New Zealand has become the first country to legalize cryptocurrency salaries, according to a report Monday from the Financial Times.

The country’s tax agency ruled salaries and wages may be paid in cryptocurrencies so long as the preferred digital coin is pegged to at least one standard, or fiat, currency. New Zealand also requires that the crypto of choice be directly convertible into a standard form of payment. . . .

Individual Claim Survives In Suit Over BofA Stop-Payment Fee
Law360 – August 13, 2019 (subscription required)

Bank of America escaped a proposed class action accusing it of illegally charging a fee to stop recurring electronic payments from checking accounts after a California federal judge whittled the suit down to one claim made by a lead plaintiff in an individual capacity Tuesday.

Customers James Foreman and Alvin Moody had alleged that BofA violated the Electronic Fund Transfer Act and California’s Unfair Competition Law by charging a $30 stop-payment fee, but U.S. District Judge Beth Labson Freeman found that while the plaintiffs had standing to bring their claims, the EFTA doesn’t bar such fees. . . .

PSD2 and Instant Payments: Catapulting B2B Payments Into Real-Time
The Paypers – August 13, 2019

The last few years have been transformative for the payments industry. While financial services businesses are no strangers to regulation, the increasing complexity of legislative change and the accelerating pace of technology development are bringing about a new era in the ecosystem’s evolution – albeit one which is currently difficult to fully envision.

One thing is certain though – the next logical step in the advancement of the payments landscape is to look for further ways to speed up the movement of money between parties in the chain while decreasing costs, by taking advantage of the incoming infrastructure and market opportunities. . . .

Will The Fed’s Real-Time Payments Plan Be Tested In Court?
Law360 – August 9, 2019 (subscription required)

It’s now official that the Federal Reserve plans to move forward with a real-time payments system of its own, but with opposition coming from powerful big-bank interests, is there scope for a legal challenge that could thwart the central bank’s ambitions?

This past week, the Federal Reserve announced its intent to build the “FedNow Service,” a real-time, round-the-clock interbank payment and settlement system that would facilitate lightning-quick transfers of money between U.S. consumers and businesses. . . .

Congress Wants Capital One and Amazon to Explain Data Breach
CBS News – August 1, 2019

Leaders of House and Senate committees want Capital One and Amazon to explain to Congress how a hacker accessed personal information from more than 100 million Capital One credit card customers and applicants. The incident was the latest massive data breach at a large company.

Ohio Rep. Jim Jordan, the top Republican on the House Oversight and Reform Committee, asked for a staff-level briefing by Aug. 15 on the breach that was reported late Monday. . . .

Why Walmart’s Cryptocoin Is Getting a Warmer Welcome Than Facebook’s
PaymentsSource – August 8, 2019 (subscription required)

There are subtle differences in Walmart’s virtual currency project compared to Facebook’s Libra, but these may be enough to avoid the regulatory firing squad that Facebook has endured.

Walmart’s foray into crypto is still limited to a patent application, and remains secondary to Walmart’s increasing thirst for retail technology and expanding investment budget to counter Amazon. But this strategy makes a virtual currency a natural fit. . . .

Industry Developments

SPOTLIGHT: Mobile Contactless Payments Will Account For Less Than 2% Of U.S. Retail Sales This Year
Forbes – August 8, 2019 

The push for mobile contactless payment adoption in the US has been a decade-long journey entailing a multibillion-dollar investment in wallet development, POS hardware and consumer marketing. To date, the results have been underwhelming, with payment methods like Apple Pay and Google Pay forecasted to account for just 1.6% ($78.6bn) of US brick-and-mortar retail sales this year, according to 451 Research’s Global Unified Commerce Forecast. Consumer payment habits die hard, and without a measurably better value proposition, habitual behaviors like reaching for a card from a leather wallet will beat out mobile alternatives every time. . . .

Venmo’s Latest Instant-Transfer Gambit Leverages Faster Payments As It Digs for Revenue
Digital Transactions News – August 13, 2019

With real-time payments in the headlines these days, it’s not surprising payments companies are jumping on the faster-payments bandwagon. But some, like PayPal Holdings Inc., are finding ways to use speedier funds to bolster revenue. PayPal on Monday announced its latest instant-transfer service, this one allowing Venmo users to move funds in minutes to their bank accounts.

The new service relies on PayPal’s connections through JPMorgan Chase & Co. to the Real Time Payment (RTP) service offered by The Clearing House Payments Co., a processing platform owned by 25 of the nation’s largest banks, including Chase. TCH launched RTP in November 2017 and has brought 16 institutions live so far. Earlier this month, the Federal Reserve said it will launch a real-time payments service called FedNow by 2024. . . .

Crypto Markets Braced As China’s Long-Awaited Bitcoin Rival ‘Almost’ Here
Forbes – August 13, 2019

Bitcoin’s release a little over ten yeas ago was a relatively small event that’s had huge ramifications, with some of the world’s biggest companies and countries getting into cryptocurrencies.

The bitcoin price has soared over the last decade, climbing to highs of almost $20,000 per bitcoin in late 2017 before falling back sharply—but not before its massive bull run had caught the attention of many banks, retailers and tech companies. . . .

WeChat Pay and Alipay Partner QFPay Raises $20 Million to Develop New Digital Payment Solutions
TechCrunch – August 13 2019

Digital payments startup QFPay announced today that it has raised $20 million in new funding led by returning investors Sequoia Capital China and Matrix Partners. MDI Ventures (the investment arm of state-owned Indonesian telecom Telkom Indonesia), Rakuten Capital and VentureSouq also participated as new strategic investors.

According to Crunchbase, this brings QFPay’s total raised so far to $36.5 million. The funding will be used to develop new digital payment products. . . .

Payments Companies Like Square, Skrill And Circle Now Driving The Bitcoin Revolution
Forbes – August 13, 2019

While Bitcoin flutters between being viewed as a store of value or a digital currency, veterans of the FinTech space, payments companies like Square, Skrill, PayPal and Circle are firmly honing in on driving the Bitcoin revolution.

We have seen this before though. Payments companies have followed the way of thinking that banks had when it came to Bitcoin; and to unashamedly quote Mahatma Gandhi, ‘First they ignore you, then they laugh at you, then they fight you, then you win.’ . . .

A Rising Tide of Digital Payments Will Bring New Fraud Threats, Says Forrester
Digital Transactions News – August 12, 2019

As payment companies expand ways for consumers to make digital payments, 62% of North American merchants, bankers, and fintech providers expect more such payments within the next two years, says Forrester Research Inc. in its “Understanding the Evolving Payments Landscape” report released Monday.

Commissioned by Visa Inc., the report also found that 46% expect ways to make payments via the Web or on a mobile device will increase. This won’t be just for large merchants either. Forty-seven percent say more small businesses will rely on a mix of credit and debit cards and digital payments. . . .

‘Flabbergasted’: Chase Bank Forgives All Credit Card Debt for Canadian Customers
USA Today – August 9, 2019

Canadians who had credit cards with Chase Bank can breathe a sigh of relief as the company says it will “forgive” all outstanding debt.

Chase Bank, part of the New York based JPMorgan Chase & Co., closed all credit card accounts in the country in March 2018, the company said. Originally, customers were told to continue paying their debt, Reuters reported, but the company confirmed Friday to USA TODAY the debt was now cancelled. . . .

Visa Checkout Will Be Shutting Down Sometime in 2020, Google Pay Removing Support
9 to 5 Google – August 9, 2019

Since 2013, Visa has run their Visa Checkout online payment service, competing with the likes of PayPal. We’ve now learned that Visa Checkout will apparently be shutting down sometime in 2020.

In 2017, it became possible to connect your Visa Checkout account to Google Pay (Android Pay, at the time), allowing you to use Visa cards associated with your Google Pay account when purchasing something via Visa Checkout. Similar support for MasterPass from MasterCard was also announced to be in development, though this never surfaced. . . .

How Apple Pay Buttons Can Make Websites Less Safe
WIRED – August 8, 2019

Apple Pay has a slew of protective features that make it a secure method of online credit card transactions. And since 2016, third-party merchants and services have been able to embed Apple Pay into their websites and offer it as a payment option. But at the Black Hat security conference in Las Vegas on Thursday, one researcher is presenting findings that this integration inadvertently introduces vulnerabilities that could expose the host website to attack.

To be clear, this isn’t a flaw in Apple Pay itself, or its payment network. But the findings illustrate the unintended issues that can emerge from web interconnections and third-party integrations. Joshua Maddux, a security researcher at the analysis firm PKC Security, first noticed the issue last fall when he was implementing Apple Pay support for a client. . . .

Visa’s Market Value Surpasses All the Banks That Used to Own It
Bloomberg – August 7, 2019

The biggest U.S. banks used to own Visa Inc. Now if only they could keep up with it.

The payments network rose to a market value of $348 billion on Wednesday, surpassing that of JPMorgan Chase & Co. for the first time. That makes Visa the world’s most highly-valued financial firm outside of Berkshire Hathaway Inc. . . .