Payments News Update -- August 21, 2019
Legal and Regulatory Developments
SPOTLIGHT: Visa Critical of India’s Move Toward No-Fee Debit Card Transactions
Reuters – August 19, 2019
Global card payments group Visa is critical of the Indian government’s decision to boost adoption of electronic payments by requiring banks and card payment networks to offer no-fee debit card transactions, a senior Visa executive said.
Last month, India’s Finance Minister Nirmala Sitharaman said that businesses with annual turnover of 500 million rupees will not have to pay a merchant discount rate on debit card and other digital modes of transactions, excluding credit cards. . . .
WhatsApp in Talks to Launch Mobile Payments in Indonesia: Sources
CNBC – August 20, 2019
Facebook Inc’s messaging service WhatsApp is in talks with multiple Indonesian digital payment firms to offer their mobile transaction services, in a bid to tap the nation’s fast growing e-commerce sector, people familiar with the matter said.
Indonesia could become the second country worldwide where WhatsApp introduces such services, as it awaits regulatory approval from India, its biggest market by users, that has been delayed due to local data storage rules. . . .
Payments Fraud Remains on the Table as PSD2 Delay Takes Hold
Mobile Payments Today – August 16, 2019
As the highly anticipated delay in the implementation of PSD2 takes hold in Europe, experts are warning that retailers, financial industry companies and consumers remain vulnerable to criminal fraud as the industry struggles to resolve a myriad of problems that put plans to implement Strong Customer Authentication on hold.
The U.K. Financial Conduct Authority earlier this week conceded to growing demands from the industry and recommendations of the European Banking Authority to provide an additional 18-month delay of the mid-September SCA deadline, which would have required increased security for e-commerce transactions throughout the continent. . . .
Boston Fed’s Montgomery to Lead FedNow Faster Payments Effort
Mobile Payments Today – August 15, 2019
The Federal Reserve announced that Kenneth Montgomery, first vice president at the Federal Reserve Bank of Boston, will head up the development of the new FedNow faster payments service that was announced earlier this month.
“Ken brings deep financial services insights and technical expertise to his new role,” Esther George, president and CEO of the Federal Reserve Bank of Kansas City, which is sponsoring the new faster payments program, said in the announcement. “He is a natural fit to lead FedNow given his success in previous Federal Reserve technology and business roles, and his leadership of our payments security efforts.” . . .
Merchants’ Ex-Atty Fights for Piece of $6B Swipe-Fee Deal
Law360 – August 15, 2019 (subscription required)
An attorney who was kicked off the merchants’ legal team in swipe-fee litigation against Visa, Mastercard and a handful of banks pressed a New York federal judge to let him back into the case Wednesday, as he insisted he’s owed a portion of the $6 billion settlement.
Gary B. Friedman and his firm, Friedman Law Group, were dismissed from the case four years ago when it came to light that Friedman had exchanged sensitive case information with a former Willkie Farr & Gallagher LLP partner on MasterCard’s defense team. The communications surfaced after the ex-Wilkie attorney was indicted for defrauding the card giant in a related action. . . .
Mauritius: Regulator Says Visa and Mastercard Interchange Fees Are Anticompetitive
Competition Policy International – August 15, 2019
The Competition Commission of Mauritius has ordered Visa and MasterCard to cap their interchange fees after finding the credit card issuers abused their dominance by setting unreasonably high rates.
Following an inquiry in 2009, the regulator launched an in-depth investigation. In 2013, they determined that a restrictive business practice was occurring with in the payments card market. In response, Visa has proposed to adopt a multifaceted approach with the collaboration of the Competition Commission to address the issue.
SPOTLIGHT: Big Banks Line Up Against Small Institutions in Faster Payments Wars
The Financial Brand – August 21, 2019
Both consumers and businesses want payments to be faster and simpler — witness on the consumer side the boom in the use of Zelle, Venmo and other services. The Federal Reserve has announced plans for its own faster payments initiative. The nation’s largest banks, hard at work on a faster payments scheme of their own, aren’t happy about the proposed FedNow.
The Fed’s timeframe — calling for a launch in 2023 or 2024 — is an eternity in the new world of technology in which banks and credit unions operate today, particularly considering that the Fed began its consideration of realtime payments back in 2013. The Fed also announced its intention to explore the expansion of the hours of the Fedwire Funds Service and National Settlement Service, up to 24x7x365, to provide support for private-sector faster payments and related efforts. . . .
Chase to Focus Chase Pay on Merchant Apps and Websites; Will Close Its Own Stand-Alone App
Business Wire – August 21, 2019
Chase customers will soon be able to use Chase Pay in more merchant apps including Grubhub and with many more merchant websites in the coming months, the bank announced today. The bank will close its stand-alone Chase Pay app in early 2020.
“We continue to focus on our customers and they are using the Chase Pay button on merchant websites and in merchant apps, and now their tap-to-pay Chase cards more than ever,” said Eric Connolly, Head of Chase Pay. “So, we’re shifting our focus to expand Chase Pay’s presence in more merchant apps and websites.” . . .
Apple Card Launches Today for All US Customers
News Release – August 20, 2019
Apple Card, a new kind of credit card created by Apple and designed to help customers lead a healthier financial life, is available1 in the US starting today. Customers can apply for Apple Card through the Wallet app on iPhone in minutes and start using it right away2 with Apple Pay in stores, in apps and on websites. Built on simplicity, transparency and privacy, Apple Card has no fees,3 encourages customers to pay less interest, offers an easy-to-understand view of spending and provides a new level of privacy and security. This launch follows the Apple Card preview earlier this month, during which a limited number of customers were invited to apply early. . . .
JCB Partners With EVO to Boost Merchant Acceptance in the UK and Ireland
Mobile Payments Today – August 19, 2019
JCB International Co., a Japanese payments company, entered a partnership with EVO Payments Inc. to allow merchants in the U.K. and Ireland to accept payments from JCB, according to a press release.
The partnership will help increase JCB acceptance by small-to-medium sized merchants, according to JCB, particularly those utilizing integrated payments. The agreement also grants JCB additional access to independent software vendor providers that are active in the U.K. and Ireland. . . .
Credit Unions Team up on Payment Tech Strategy
PaymentsSource – August 19, 2019 (subscription required)
Banks are under competitive and regulatory pressure to either compete or partner with fintechs that support services such as mobile payments, and credit unions are in the same boat — though with a very different challenge at the start.
“It’s going to take partnerships with the next generation of payments and financial tech to stay relevant. And credit unions are challenged to compete on technology,” said John Carew, chief strategy officer of Georgia’s Own Credit Union. “And it’s pretty simple. The existing technology to do this in the credit union space is not adequate.” . . .
Credit and Debit Cards Gain Ground on Cash for Small Purchases
Digital Transactions News – August 19, 2019
Cash may still be king among consumers for purchases of $10 or less, but its market share is steadily being eroded by credit and debit cards, says an annual survey from CreditCards.com.
The most recent edition of the survey, released late last week, reveals that 43% of respondents with rewards credit cards prefer to pay for small purchases in cash, down from 45% a year earlier. At the same time, 26% prefer to use their credit card for small purchases, up from 23% in 2018. Additionally, 31% of rewards cardholders say they will use a debit card for a small purchase, up from 30% in 2018. . . .
EMVCo Proposes Spec Changes To Accommodate Longer Issuer IDs
Digital Transactions News – August 15, 2019
Payment card standards body EMVCo on Thursday disclosed proposed specifications changes to accommodate the coming of longer numbers on credit and debit cards for identifying the card issuer, changes that could affect merchants using card numbers to identity their loyalty program members in addition to processing protocols.
The changes stem from a revised standard adopted in 2017 by the International Organization for Standardization (ISO) and the International Electrotechnical Commission that supports an eight-digit issuer identification number (IIN) in addition to the traditional six. The IIN is the first part of the primary account number (PAN) on a card, which can vary from eight to 19 digits. The two standards bodies, both based in Geneva, Switzerland, added two IIN digits to accommodate the growth of card issuers globally and prevent a possible shortage of card numbers. . . .
Checkout-Free Developers Pursue Troves of Shopper Data
PaymentsSource – August 14, 2019 (subscription required)
Checkout-free technology is very limited in availability and very much a work in progress, but developers and investors are relying on its promise to accelerate payments’ broader evolution from streamlining execution to determining intent.
“I started at Procter & Gamble, and we wanted to know how the consumers’ decisions were being made,” said Janet Bannister, a partner at Real Ventures, a Toronto technology investor. “Autonomous checkout provides that.” . . .
After a Quarter Century, E-Commerce Heads Into New Territory
Digital Transactions News – August 14, 2019
Hard to believe, but e-commerce is a quarter-century old. Along the way, e-commerce radically changed retailing and payments, and now it’s heading into a future with more growth certain but where payments are more in the background.
Visa Inc. this week reported in a blog post that the first e-commerce payment was made on Aug. 11, 1994, on its network. The transaction was a purchase of Sting’s “Ten Summoner’s Tales” album, a spokesperson for Visa says by email. The amount of the purchase was not available. . . .
MTA’s New Fare System OMNY Hits Millionth Tap
AM New York – August 13, 2019
While extremely limited both in features and locations the number of commuters tapping through the MTA’s new fare system, known as OMNY, has far exceeded the transit authority’s expectations. At 9:05 p.m. on Aug. 8, the MTA recorded its one millionth OMNY tap at Fulton Center — roughly four times faster than it had planned.
“I think the fact that we’ve gotten to the millionth tap so quickly affirms the acceptance by our customers who find it unbelievably convenient,” said MTA chairman Pat Foye in Fulton Center Tuesday, where the authority basked in the news. “It shows something we already know, which is that New Yorkers are tech savvy and willing to try new technology.” . . .