Payments News Update – December 3, 2021
Legal and Regulatory Developments
SPOTLIGHT: 6 Ways the EU’s Digital Markets Act Will Change Big Tech
PYMNTS – November 29, 2021
The European Union’s Digital Markets Act is coming, and Big Tech will never be the same. In theory. The rules will be voted on by the EU parliament this week, but are widely expected to pass. It’s important to remember that these rules apply to companies with a market cap of $90.7 billion, meaning Alphabet (Google), Meta (Facebook), Amazon, Apple, and a few others like Alibaba and Booking.com. So, the ban isn’t on using data profiling in ads targeting children, for example, but on the biggest tech companies doing it.
Here are some of the biggest ways Big Tech will have to change: 1. Big Tech firms will be a lot more cautious — at least until the ways the rules are enforced becomes clear — as the fines are enormous: up to 20% of global revenue. With Facebook’s 2020 revenue coming in at $86 billion, that’s a potential $17.2 billion fine. That’s hard to explain to shareholders. . . .
Powell, Yellen Clash Over Stablecoin Regulation at Senate Hearing
PYMNTS – December 1, 2021
Sitting next to Treasury Secretary Janet Yellen in a Senate hearing on Tuesday (Nov. 30), Federal Reserve Chairman Jerome Powell challenged her on stablecoin regulation, calling the Treasury Department’s recent recommendation that only federally insured banks be allowed to issue them “perplexing.” Powell, an appointee of former President Donald Trump, took the side of several other Republicans in this regard, notably Sen. Pat Toomey (R-PA) and Sen. Cynthia Lummis (R-WY).
Sen. Lummis called a Nov. 1 recommendation by the President’s Working Group on Financial Markets that stablecoins be issued only by insured depository institutions — banks and savings associations — “misguided and wrong.” The Yellen-chaired Working Group’s report called on congress to pass legislation to “ensure that payment stablecoins are subject to appropriate federal prudential oversight on a consistent and comprehensive basis.” . . .
Mastercard Hit With Allegations That It Violated Several States’ Privacy Laws
Law.com – December 1, 2021 (subscription required)
Mastercard was slapped with privacy class action lawsuits on Tuesday in New York Southern District Court. The actions, filed by Hedin Hall and Scott + Scott, accuse Mastercard of selling subscriber mailing list information to third parties, which allegedly violates privacy laws in California, Illinois, Ohio, Puerto Rico and. South Dakota. Counsel have not yet appeared for the defendant.
The cases are: 7:21-cv-10182, Sanborn v. Mastercard Inc.; 7:21-cv-10179, Anderson v. Mastercard Inc.; 7:21-cv-10178, Diedling v. Mastercard Inc.; 7:21-cv-10180, Kenter v. Mastercard Inc.; 7:21-cv-10181, Rivera v. Mastercard Inc. . . .
App Makers Join Epic’s Bid to Enforce ‘Vital’ App Store Order
Law360 – November 30, 2021 (subscription required)
PNC Merchant Services Co. LP has agreed to pay up to $14.5 million to more than 200,000 merchants who allege it overbilled them through credit card processing fees, according to a proposed settlement filed Monday in New York federal court. The merchants said in the motion for preliminary approval of the deal that PNC has also agreed to “important practice changes” that include allowing customers to switch from pricing plans that require annual fees, giving customers notice before charging that sort of fee and getting written consent from customers before charging fees on customers that request paper statements.
On top of that, PNC will cover settlement notice and administration costs, attorney fees and expenses and service awards, the merchants said. “After four years of hard-fought litigation, the parties have agreed to settle these cases on a class-wide basis,” they said. “If approved, the settlement will provide critical monetary and non-monetary benefits to customers.” . . .
Biden Considering Cordray for Top Fed Bank Regulator Role: Report
The Hill – November 30, 2021
President Biden is reportedly considering nominating former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray as the Federal Reserve’s top banking regulator. The Wall Street Journal, citing people familiar with the matter, reported on Tuesday that Biden is mulling tapping Cordray to serve as the vice chairman of banking supervision at the Federal Reserve, which would make him the most powerful person watching over the U.S. banking system.
He would succeed Randal Quarles, who served in the post for four years before his term ended last month. Biden appointed Cordray to serve as chief operating officer of federal student aid in May, giving him oversight over the Education Department’s $1.6 trillion loan portfolio. . . .
Fed’s Powell Says New Innovation Hub Will Help Central Bank Improve Payments
American Banker – November 29, 2021 (subscription required)
The New York Federal Reserve launched a new innovation center on Monday that will support the central bank as it explores the possibility of a digital currency, assesses the financial risks associated with climate change and tackles other issues such as financial market infrastructure and regulation. The center, in partnership with the Bank for International Settlements (BIS) Innovation Hub, will help the central bank improve the current payments system, Fed Chair Jerome Powell said in remarks prepared for a virtual event on Monday.
“In particular, the partnership will support our analysis of digital currencies—including central bank digital currencies,” said Powell, adding that the center would focus on making cross-border payments faster and less expensive and provide new tools to help supervise financial firms. Powell did not comment on his outlook for the economy or monetary policy in his remarks. . . .
Exclusive: Visa Complains to U.S. Govt About India Backing for Local Rival Rupay
Reuters – November 28, 2021
Visa Inc (V.N) has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters show. In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.
But U.S. government memos show Visa raised concerns about a “level playing field” in India during an Aug. 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly. Mastercard Inc (MA.N) has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest with the USTR that Modi was using nationalism to promote the local network. . . .
Industry Developments
SPOTLIGHT: Apple Threatens Commissions on In-App Purchases Made Outside Its App Store
C-Net – November 2, 2021
Apple said it may expand its App Store commission structure as it approaches a legal deadline to change how developers charge customers for items in apps for its iPhones and iPads. Next week, the tech giant must begin implementing a federal court’s injunction from a legal battle with Fortnite maker Epic Games. The order, dated Sept. 10, says Apple must allow developers to include buttons or links in their apps that give people the chance to purchase digital items outside its App Store within 90 days.
In a legal filing to the US Court of Appeals on Tuesday, Apple said it’s facing “substantial engineering” challenges to allowing developers to circumvent its in-app purchase system while still providing “layers of protection” it currently offers, like parental controls as well as purchase authorization and tracking. . . .
Square Is Changing Its Name to ‘Block’
CNN Business – December 1, 2021
Days after Jack Dorsey resigned as CEO of Twitter, his other company is changing its name.
Square, the digital payments company Dorsey co-founded and remains at the helm of, announced on Wednesday that it is rebranding as “Block.” Block will represent the corporate parent of Square (SQ), which will remain the name of the business that provides software and services to sellers.
“We built the Square brand for our Seller business, which is where it belongs,” Dorsey said in a statement. “Block is a new name, but our purpose of economic empowerment remains the same.” The company’s ticker symbol on the New York Stock Exchange will remain “SQ” for now, it said, though its legal name will change from “Square, Inc.” to “Block, Inc.” around December 10. . . .
More Merchants Ready to Explore Cryptocurrency as ‘Digital Payment of the Future’
PYMNTS – December 1, 2021