Payments News Update -- August 28, 2019
Legal and Regulatory Developments
As Brexit Nears, Uncertainty Swarms Cross-Border Payments
PaymentsSource – August 28, 2019 (subscription required)
Processors that rely on cross-border payments to reach new territories are feeling the economic squeeze of the looming Brexit deadline.
The problem with Brexit is less about politics and regulation, and more about how these factors will impact processing infrastructure. The lack of a deal ahead of the October 31 Brexit deadline makes it harder to forge a roadmap for payment processing and merchant service expansion. . . .
Swiss Regulator Releases AML, KYC Guidance for Blockchain Payments
Cointelegraph – August 26, 2019
Switzerland’s Financial Market Supervisory Authority (FINMA) has released guidance on regulatory requirements for payments on the blockchain under FINMA supervision.
The new guidance for virtual asset service providers, published on Aug. 26, applies to blockchain service providers including exchanges, wallet providers and trading platforms. . . .
Fees On Crypto Purchases Didn’t Breach Contract: Chase
Law360 – August 23, 2019 (subscription required)
Chase Bank outlined its affirmative defenses in an answer to a proposed class action in New York federal court brought by customers who say the bank ambushed them by billing their credit card cryptocurrency purchases as expensive cash advances without notice, arguing that damages suffered are “a result of their own conduct.”
The bank’s Thursday answer to the proposed class’ amended complaint comes after U.S. District Judge Katherine Polk Failla said at the beginning of the month the proposed class could proceed with claims for breach of contract and inadequate disclosure against Chase Bank USA NA, but trimmed other disclosure-related claims brought under federal law. . . .
Libra Getting Examined in Antitrust Probe by EU’s Executive Body
Cryptoslate – August 22, 2019
Facebook’s bold “new global currency,” Libra, was hit by an antitrust probe from regulators in the European Union because it could unfairly dominate the market, according to a document seen exclusively by Bloomberg.
The Executive Commission of the EU is studying Libra to see if it could breach anti-competition laws. Considering Facebook’s historic use of consumer data and how it exchanges information, scrutiny of Libra mirrors concerns recently voiced by top officials and financial institutions across Europe, said Bloomberg. . . .
Warren Presses Wells Fargo On Closed Account Fees Report
Law360 – August 22, 2019 (subscription required)
Sen. Elizabeth Warren, D-Mass., has called on Wells Fargo to explain itself after a recent report that the bank allowed ostensibly closed customer accounts to remain active and accrue overdraft fees from incoming charges, saying the allegations suggest the bank “is still fundamentally broken.”
In a letter released Wednesday, Warren submitted a host of questions to Wells Fargo & Co.’s interim CEO seeking more information about its purported issues with overdraft fees hitting accounts that were supposed to have been closed. Among other things, the Massachusetts lawmaker is requesting details on how long bank leaders have known about the alleged practice and how many customers have been affected by it. . . .
Industry Developments
SPOTLIGHT: Here’s An Area Of Digital Payments That’s Booming: P2P Payments
Forbes – August 23, 2019
The peer-to-peer payments market is booming, with consumers sending each other billions of dollars through digital apps.
One company that is capitalizing on the trend is Zelle, the digital payments company owned by Bank of America BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, Citibank, and Wells Fargo. Earlier this week, Bank of America said it has record-breaking P2P payments use with its activeZelle customers already completing more transactions this year than all of 2018. Bank of America said in under nine months, clients sent and received a total of 163 million transactions. That compares to 157 million transactions for all of last year. . . .
Not So Fast for Faster Payments, a Survey Finds
Digital Transactions News – August 27, 2019
Proponents of faster-payment services, which enable real-time or nearly real-time transfers, may need a bit of patience for larger-scale adoption of the technology. Fifty-six percent of attendees at the 2019 Nacha Payments conference in May said it will take at least a year, and possibly more, for their companies to implement real-time payments, finds TD Bank in a report released Tuesday. The survey canvassed 498 payments professionals. Only 22% said they will participate in real-time payments within the next year.
Among the options are same-day ACH credit and debit transactions via the Nacha network, real-time payments from The Clearing House Payments Co. LLC, and a variety of other services from the private sector. Looming, perhaps as soon as 2023, is FedNow, http://www.digitaltransactions.net/its-official-the-fed-is-jumping-into-real-time-payments-with-fednow/ a real-time payments service from the Federal Reserve. . . .
JPMorgan Weighs Sale of $1 Billion AARP Credit-Card Portfolio
Bloomberg – August 27, 2019
JPMorgan Chase & Co. is considering selling the credit-card portfolio it built through an almost three-decade partnership with the AARP, the nonprofit representing 38 million people, according to people with knowledge of the matter.
The sale would include roughly $1 billion in credit-card receivables, the people said, asking not to be identified because the discussions are private. Alliance Data Systems Corp. is among those interested in the portfolio, one of the people said. . . .
Why Mobile Payments Don’t Deliver for Merchants
Digital Transactions News – August 26, 2019
Mobile payments so far account for a mere 2% or less of U.S. general-purpose card payments, according to some estimates, and that’s no surprise to some executives who believe mobile payments haven’t delivered for many merchants.
“I don’t think anyone in the market is solving problems for the retailers,” Laura Townsend, senior vice president of operations at the Minneapolis-based Merchant Advisory Group, said Monday. Townsend was a panelist at a session about “merchant-centric” mobile payments and loyalty programs at this week’s Mobile Payments Conference in Chicago. . . .
Commentary: Visa Next Only Solves Part of the Problem
Digital Transctions News – August 26, 2019
Following Klarna’s recent raise of $460 million looking to expand its payments presence in the United States, and Mastercard Inc.’s recent acquisition of Vyze, the consumer-finance space is heating up with the big players of the finance world entering the arena. It is a further indication of the importance of easily available consumer finance.
Visa Inc. has become the latest payment network to offer its own set of tools complementing point-of-sale programs for consumer finance, and Visa is to be congratulated for addressing the needs of retailers and shoppers in this new financial climate. . . .
Worldpay Charges, Disclosed in Fine Print, Anger Small U.S. Merchants
Reuters – August 23, 2019
Mark VenHuizen, the comptroller of a family business which sells parts for boat engines in Florida, says he has complained three times to Worldpay Inc since 2016 for tacking on extra fees to process his customers’ credit and debit card payments without clearly telling him about it.
The first two times when he complained after noticing larger costs on his billing statement, the additional fees disappeared for a few months. Last August, he discovered Worldpay had added a 0.3% charge on top of an initial fee of 0.2% on many transactions, boosting his bill by hundreds of dollars. . . .
9 Defunct Mobile Wallets — and Why They Failed
PaymentsSource – August 23, 2019
The success of the mobile wallet market was never guaranteed, especially in the U.S., where the concept took on many forms in recent years.
Amid success stories like Apple Pay, Google Pay and the Starbucks app, there are many wallet apps that failed to gain traction — or squandered it when they did. But there is a lot to learn from their experiences. . . .
Facebook’s Libra Backers Look to Distance Themselves From Project
Financial Times – August 23, 2019 (subscription required)
Intensifying regulatory scrutiny of Facebook’s Libra digital currency has spooked some of the project’s early backers, with at least three privately discussing how to distance themselves from the venture. The 28 members of the Libra Association, which include Visa, Mastercard, Uber, Spotify and the Facebook subsidiary Calibra, made a non-binding pledge to invest at least $10m in the project, which Facebook unveiled in June, with the aim of shaking up the global payments market.
However, the proposed currency has prompted a fierce backlash from global watchdogs and politicians, including an official investigation by EU antitrust officials. Two of the project’s founding backers told the FT they were concerned about the regulatory spotlight and were considering cutting ties. Another backer said they were worried about publicly supporting Libra for fear of attracting the attention of agencies who oversee their own businesses. . . .
Data Breaches Are on a Record-Setting Pace in 2019, Researcher Says
Digital Transactions News – August 21, 2019
The year 2019 is shaping up to be the worst year yet for data breaches, according to a recent report from Risk Based Security Inc. Through the year’s first half, 3,813 breaches were reported, up 54% from a year earlier. Those breaches exposed more than 4.1 billion consumer records, up 52% from 2018.
Long-term data confirm 2019 is on a record-setting pace, according to Risk Based Security, a Richmond, Va.-based analytics and consulting firm specializing in data protection. Through June, the number of breaches is about 50% higher than for the same period in each of the last four years. . . .