Payments News Update -- July 24, 2019
Legal and Regulatory Developments
SPOTLIGHT: US Reps, Senators Present Faster Payments Legislation
PYMNTS – July 24, 2019
To reinforce the Federal Reserve’s authority to create a real-time payments system and mandate that the Fed brings about its own process, two U.S. representatives and two U.S. senators have introduced the Payment Modernization Act of 2019. The legislation was brought forward by Congresswoman Ayanna Pressley (D-MA), Senators Chris Van Hollen (D-MD) and Elizabeth Warren (D-MA), and Congressman Jesús “Chuy” García (D-IL), according to an announcement.
Americans lose billions every year in overdraft fees, which causes consumers to turn to financial products that are more expensive “because of our inefficient payments system,” per a press release from Pressley’s office. Pressley, who is a House Financial Services Committee member, “held Federal Reserve Chairman Jerome Powell accountable for the Federal Reserve’s slow-walking implementation of a real time payments system.” The announcement said that “Pressley reaffirmed that a faster payments system is a public good, if not a right” during a line of questioning. . . .
US Senate to Hold Debate on Crypto, Blockchain Regulatory Frameworks
Cointelegraph – July 24, 2019
The United States Senate Banking Committee is set to hold a broader debate on crypto and blockchain regulatory frameworks next week.
An official committee announcement indicates the hearing — entitled “Examining Regulatory Frameworks for Digital Currencies and Blockchain” — will take place on July 30. . . .
Justice Department to Open Broad, New Antitrust Review of Big Tech Companies
Wall Street Journal – July 23, 2019 (subscription required)
The Justice Department is opening a broad antitrust review into whether dominant technology firms are unlawfully stifling competition, adding a new Washington threat for companies such as Facebook Inc., Google, Amazon.com Inc. and Apple Inc.
The review is geared toward examining the practices of online platforms that dominate internet search, social media and retail services, the department said, confirming the review shortly after The Wall Street Journal reported it. . . .
Senators Press Fed’s Powell on Real-Time Payments
PaymentsSource – July 23, 2019 (subscription required)
A bipartisan group of senators on the Banking Committee is pressing the Federal Reserve to detail its possible development of a real-time payments platform, questioning how a government-run system would work in tandem with privately run systems.
Sens. Mark Warner, D-Va., Thom Tillis, R-N.C., David Perdue, R-Ga., Jon Tester, D-Mont., and Tom Carper, D-Del., wrote to Fed Chairman Jerome Powell that while they are open to the Fed pursuing a competing real-time payment system, they are unclear how it would benefit consumers. . . .
Hearing Set on Massachusetts Bills That Would Repeal the State’s Cashless-Store Ban
Digital Transactions News – July 22, 2019
A hearing is set for today on two bills pending in the Massachusetts Legislature that would repeal the state’s decades-old ban on cashless stores.
If passed, the bipartisan legislation, which is drawing fire from the ATM industry, would put Massachusetts at odds with efforts this year in a number of cities and states that have banned or proposed bans on stores prohibiting cash payments. With the growth of Amazon.com Inc.’s Amazon Go stores and other cashless retailers and sports and entertainment venues, opponents fear such establishments discriminate against cash-dependent consumers who don’t have credit or debit cards or mobile-payment apps. . . .
UK: ATM Chief Suggests Cash Machines Will Only Remain in Areas Where Cash Isn’t in Decline
The Telegraph – July 22, 2019
Residents in areas of the country where cash is no longer king may find themselves without a cash machine, as an ATM chief suggested the machines will only be protected in areas where the use of cash is not in decline.
John Howells, chief executive of cash machine network Link, pledged to protect cash machines in areas where cash is still being used regularly. . . .
Despite Lawmakers’ Hostility, Patience Could Pay off for Facebook and Libra
Digital Transactions News – July 18, 2019
Facebook Inc. and its proposed Libra cryptocurrency took a beating this week on Capitol Hill, but the outlook for the new coin—and its Calibra wallet—may be more nuanced than that reception would seem to indicate.
The skepticism toward Libra was bipartisan, with Senators and Representatives of both major parties raking Calibra chief David Marcus over the coals in separate hearings Tuesday and Wednesday. Politicians in both hearings pointed to Facebook’s questionable record regarding privacy and security, while House Financial Services Committee chairwoman Maxine Waters and other Committee Democrats have already prepared legislation to stop Libra development until all questions are answered. . . .
DOJ Clears Fiserv’s $22B Acquisition Of First Data
Law360 – July 18, 2019 (subscription required)
After seeking additional information last April, the U.S. Department of Justice has cleared financial services companies Fiserv Inc. and First Data Inc. to push on with their proposed $22 billion tie-up.
The DOJ’s second request for information about the deal was filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which bars companies from completing acquisitions until federal regulators have determined they comply with antitrust laws. . . .
Industry Developments
SPOTLIGHT: Visa CEO: FY 3Q, Acquisitions Continue Drive To Be ‘Network Of Networks’
PYMNTS – July 24, 2019 (click here for Visa Earnings Call transcript)
Visa posted fiscal third quarter results that showed a rebound in cross border transactions, and continued gains in payments volumes overall.
Management also said on the post earnings conference call Tuesday (July 23) that recent acquisitions to spur cross border transactions are slated on track to close or contribute to results by the end of year and tap to pay activity continues to see widespread adoption. . . .
Blow To Bitcoin As Top Accountants Make Serious Facebook Warning
Forbes – July 23, 2019
Bitcoin and cryptocurrencies have been largely ignored by the world’s regulators over the last ten years, with only some small attempts to protect investors from wild bitcoin price swings and dodgy crypto exchanges.
The bitcoin price, up some 200% so far this year, has somewhat recovered after a terrible 2018 largely due to interest in bitcoin and cryptocurrencies from some of the world’s biggest tech companies, including social media giant Facebook which unveiled its planned libra cryptocurrency project last month and is scheduled for release some time in 2020—if the sandal-hit company can convince regulators of its merits. . . .
Digital Restaurant Payment Platform Announces Starbucks Integration
PYMNTS – July 23, 2019
Brightloom, formerly eatsa, has rebranded itself as an integrated digital platform for restaurants. The company is offering a complete end-to-end, cloud-based software-as-a-service platform, allowing any restaurant to provide its own mobile engagement, loyalty and omnichannel digital ordering offerings to its guests.
Along with the rebrand announcement, Starbucks revealed that it is granting Brightloom a software license to select components of Starbucks proprietary digital flywheel software; Brightloom will combine its existing technology assets with software licensed from Starbucks’ industry-leading digital flywheel. As part of the deal, Starbucks will take an equity stake in Brightloom — as well as a seat on the company’s board of directors. . . .
The Battle Waged over Prime Day Payments
PaymentsSource – July 22, 2019 (subscription required)
When Amazon was busy driving traffic to its site — and the likes of Walmart and Best Buy were aggressively trying to pull shoppers away — it also invited several issuers to compete to be the top-of-wallet card for Prime Day spending.
Issuers such as Synchrony, Discover, Chase and American Express tried something unconventional with their rewards on Prime Day, with the hope that they would benefit from the massive surge in spending. While most cards offer consistent rewards that don’t vary from month to month, these issuers chose to add new perks that lasted only during Amazon’s two-day sale. . . .
Apple Card: Are the Limited Rewards Worth It for the Privacy?
Fortune – July 21, 2019
In March, Apple revealed its first credit card: Apple Card, a thin slab of titanium that would provide shoppers with 3% cash back at Apple stores, 2% at anywhere Apple Pay is available, and 1% everywhere else.
Many observers quickly pointed out Apple Card’s limited earning potential for customers. Citi’s Double Cash card, for example, provides shoppers with 2% back everywhere, not just at stores with Apple Pay. Meanwhile, the Chase Freedom and Discover It card offer 5% cash back for shopping in categories that rotate quarterly. . . .
AmEx Posts a 6% Jump in Global Discount Revenue As Overall Revenue Rises 8%
Digital Transactions News – July 19, 2019
American Express Co. on Friday reported worldwide discount revenue of $6.58 billion for the quarter ended June 30, up 6% year-over-year. Discount revenue accounted for fully 61% of total revenue net of interest expense, which came to $10.84 billion, up 8%, the New York City-based card network reported.
AmEx’s worldwide discount rate was 2.37% for the quarter, level with the year-ago rate and the rate posted for the year’s first quarter. The company does not break out its discount revenue or rate by region. . . .
Food Merchants Can Turn to Bank-Style Security to Battle Fraud
PaymentsSource PayThink – July 17, 2019
When one sees a sudden spike in fraud, the instinctive response is to do whatever’s necessary to make it go away. It’s not as simple as a change or two at the merchant level. Contending with fraud calls for broad industry solutions.
Predictive analytics, for example, are a vital component to more adept fraud identification. Issuers and card schemes should embrace wider use of predictive analytics to better pick up on trends in fraudulent activity. Artificial intelligence software could even be used to analyze and score credit transactions as is done for banking transactions. . . .
Eye On the Point of Sale: Visa Agrees to Buy Payworks; ACI Signs up Worldpay
Digital Transactions News – July 17, 2019
Visa Inc. said Wednesday it has acquired Payworks GmbH, a Munich-based developer of cloud-based point-of-sale payment-gateway software. Visa intends to integrate Payworks’ technology with that of another Visa property, CyberSource, and offer the combined product to merchants and acquirers. Terms of the acquisition were not disclosed.
The combined offering will support in-store, online, and in-app transactions and will offer a single integration to allow Visa clients to accept POS payments through a range of terminal types, according to Visa. The payment network had first invested in Payworks in February 2018. . . .
As LG Pay Makes Its (Belated) U.S. Debut, Observers Question Its Likely Impact
Digital Transactions News – July 17, 2019
Add LG Pay to the multitude of U.S. mobile-payment options. LG Electronics USA announced Tuesday the mobile-payment service is available on select LG smart phones. The move comes a year later than LG initially said it would. LG Electronics Inc., the parent company of LG Electronics USA, introduced LG Pay three years ago in Korea.
LG Pay is not much different from its Apple Pay, Android Pay, and Samsung Pay competitors. Consumers can store their card data in the payment app and make payments at the point of sale using near-field communication connectivity. . . .