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Payments News Update – February 18, 2021

Posted  February 18, 2021

Legal and Regulatory Developments

SPOTLIGHT: Feds Probing American Express’ Business, Consumer Card Sales Practices
The Hill – February 12, 2021

American Express disclosed on Friday that several federal agencies are probing its sales practices for its small business credit cards and consumer cards. The company said in a regulatory filing that it received a grand jury subpoena in January from the U.S. Attorney’s Office for the Eastern District of New York over its sales practices for its small business credit cards. It also received a Civil Investigative Demand from the Consumer Financial Protection Bureau (CFPB) seeking information on sales practices relating to consumers, according to the filing.

The company also said it began responding to a regulatory review led by the Office of the Comptroller of Currency (OCC) and Department of Justice (DOJ) in May over “historical sales practices relating to certain small business card sales.” The company said it is “cooperating with all of these inquiries and have continued to enhance our controls related to our sales practices.” “We do not believe this matter will have a material adverse impact on our business or results of operations,” it added. . . .

Retail Sales Surge on Stimulus
PYMNTS – February 17, 2021

Retail sales rose in January by 5.3 percent on the wings of long-delayed action on the part of Congress, which OK’d a $900 billion COVID-19 stimulus package. As part of that, COVID stimulus checks went out to millions of Americans. The increase in retail sales from December followed three consecutive months of declining sales during the 2020 holiday shopping season. For example, December’s drop in sales of 0.7 percent had been affected by a dramatic spike of COVID cases as well as protracted stimulus negotiations.

Month over month figures showed spending up in every major category. The comparison to one year earlier was more mixed, however. Sales in the furniture and home furnishings category rose 9.3 percent in January from a year ago, non-adjusted. Sales in the building materials and gardening equipment category rose 13.7 percent. Sales in the sporting goods, hobby, musical instruments and bookstores category rose a whopping 22 percent. The increase came as shoppers went for what they were allowed to do — use their new gear and go outside. . . .

Google Strikes Deal With News Corp Amid Pressure on Regulation
International Business Times – February 17, 2021

Google has agreed to make “significant payments” to Rupert Murdoch’s News Corp. for content, the companies said Wednesday as tech firms face growing pressure to pay for news from an Australian-led initiative. A joint statement called the deal a “historic multiyear partnership” that would see Google feature news from the media giant as part of the Google News Showcase. The three-year agreement also includes the development of a subscription platform, the sharing of ad revenue and “meaningful investments in innovative video journalism” by Google’s video-sharing site YouTube.

The move comes with Australia poised to adopt legislation that would force digital companies to pay for news content, something that would create a global precedent and, according to Facebook and Google, wreck the way the internet works. The outlets joining Google News Showcase will be News Corp-owned Wall Street Journal, Barron’s, MarketWatch and the New York Post in the United States; British-based The Times and The Sunday Times, and The Sun as well as a number of Australian media outlets including The Australian. News Corp. chief executive Robert Thomson said that the deal would have “a positive impact on journalism around the globe as we have firmly established that there should be a premium for premium journalism.” . . .

Citi Loses Bid to Recoup Massive Mistake in Surprise Ruling
Bloomberg Law – February 16, 2021

Citigroup Inc. unexpectedly lost a legal battle to recover half a billion dollars it sent Revlon Inc. lenders, after the embarrassing blunder forced it to answer to regulators and tighten its internal controls. U.S. District Judge Jesse Furman on Tuesday ruled that 10 asset managers for the lenders — which include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management — don’t have to return $504 million that Citibank said it mistakenly transferred in August while trying to make an interest payment. He said they shouldn’t have been expected to know that the transfer, which totaled more than $900 million before some lenders returned their share, was an error.

“To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion would have been borderline irrational,” wrote Furman, who presides in Manhattan. The decision is the latest blow to Citigroup, which is in the midst of a yearslong effort to update its underlying controls and technology after regulators slapped it with a $400 million fine for deficiencies in both areas last year. The New York-based company is also undergoing a leadership change, with incoming Chief Executive Officer Jane Fraser set to take the reins on March 1. . . .

Mastercard Faces Swiss Probe Linked to ATM Scheme
Yahoo! News – February 16, 2021

Mastercard (MA) is being investigated by Swiss authorities for the possible obstruction of Switzerland’s National Cash Scheme. COMCO, Switzerland’s competition watchdog, said in a statement on Tuesday it had opened an investigation into Mastercard. The probe is linked to Switzerland’s National Cash Scheme, which allows people to use their bank cards at any ATM operated by Swiss banks rather than being limited to those run by their issuing bank. The National Cash Scheme is a new initiative from SIX, the company that operates Switzerland’s national stock exchange and other financial infrastructure in the country. SIX complained last year that Mastercard was potentially obstructing the rollout of the National Cash Scheme by refusing to link its cards to the new system.

COMCO is investigating whether Mastercard is abusing its dominant position in the market. As a precautionary measure, it has ordered banks that work with Mastercard to prepare for the possibility of bringing Mastercard cards onto the National Cash Scheme. A COMCO spokesperson declined to comment beyond Tuesday’s press release. No guidance was given on the timing of the Investigation. Investigations of this nature can take years. . . .

Industry Developments

SPOTLIGHT: Google’s Link to Passport Is Part of a Broader Plan to Extend Google Pay to Parking and Transit
Digital Transactions News – February 17, 2021

Passport Labs Inc., a provider of transportation software, announced Wednesday it is expanding its integration with Alphabet Inc.’s Google to enable payment for parking within Google Maps in more than 400 cities, including Boston, Cincinnati, Portland, Me., Norfolk, Va., Cheyenne, Wy., Westminster, Colo., and Green Bay, Wis. The integration of Google Maps and Google Pay into Passport’s operating system enables consumers using Google Maps on their smart phones to navigate to a destination and call up Google Pay through Google Maps to pay as they approach a parking lot. Consumers do not need to download an additional app to make use of the service.

Passport began piloting its integration with Google Maps and last fall in Austin, Texas. Since launching the Passport program, Austin officials say the city has seen several improvements in parking, including increased consumer convenience, compliance with paying for parking, and recovered revenues. Overall, Passport has more than 1,000 client cities, including Chicago, Toronto, Los Angeles, and Miami, as well as universities and agencies. Charlotte, N.C.-based Passport’s expansion of its integration with Google Maps is part of a broader strategy by Google to expand the ability to pay for parking and transit fares from Google Maps using Google Pay. Google is also teaming with ParkMobile LLC  to enable payment for parking via Google Maps, according to a Google blog post on Wednesday. . . .

Mastercard and Island Pay Launch First Digital Currency Card
FinTech Magazine – February 18, 2021