Payments News Update - June 10, 2022
Legal and Regulatory Developments
SPOTLIGHT: Lawmakers Seek to Push Antitrust, Privacy Bills as Big Tech Revamps Lobbying Efforts
PYMNTS – June 10, 2022
Google, Meta, Amazon and Apple have been living for the last years with the threat of new legislation in the U.S. that could limit their ability to operate their platforms, and especially during the last 18 months since President Joe Biden took office.
But the approach of the midterm elections in November and the unofficial kickoff of the midterm campaign season in August have encouraged lawmakers to seek a last push to some of the most notorious bills affecting Big Tech firms, namely, the American Choice and Innovation Online Act and most recently, the American Data Privacy and Protection Act. . . .
New York’s Financial Watchdog Issues Stablecoin Guidance, Calls for Reserve Requirements and Audits
CNBC – June 8, 2022
The New York State Department of Financial Services on Wednesday released new rules for licensed cryptocurrency firms that issue stablecoins, calling for reserve requirements and monthly independent audits.
The guidance affects current holders of the BitLicense, the business license for virtual currency firms operating in New York state, or limited purpose trust charterholders that issue stablecoins backed by a fiat currency. . . .
Key US Senators Introduce Crypto Bill Outlining Sweeping Plan for Future Rules
Coindesk – June 7, 2022
A wide-reaching, bipartisan crypto bill emerged Tuesday from U.S. Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), who are seeking to extend a comprehensive set of regulations across digital assets in the U.S. and have given industry lobbyists something meaty to debate.
Their bill would liberate small-scale purchases of goods and services from the mire of tax implications by making transactions of less than $200 tax-free – potentially clearing a path for a cryptocurrency that acts more like a currency. And, as expected, the legislation would grant new powers and a commanding presence to the Commodity Futures Trading Commission. . . .
Lawsuits Over Zelle Pile Up
Payments Dive – June 6, 2022
Bank of America was sued last month by a customer claiming that the bank failed to reimburse him for fraudulent losses incurred when he used its Zelle money transfer service, echoing the claims against Zelle in an April lawsuit brought against another bank, Wells Fargo. Both lawsuits seek class-action status.
In the latest case, plaintiff Mohammad Al-Ramahi alleges he was tricked into sending $4,950 through Zelle in April 2020 as part of a scam in which he thought he was sending the money in his role at a new job. When he discovered that wasn’t the case and that his money was gone, Bank of America refused to reimburse him for the loss, he alleges in his lawsuit filed on May 27 in U.S. District Court for the Northern District of California. He alleges further that the bank didn’t warn him about the risk of such losses when using the person-to-person payment app. . . .
EU Considers Adding Crypto, BNPL in Payment Directive
PYMNTS – June 2, 2022
The European Commission has launched a public consultation to gather information for its review of the second EU Payment Services Directive (PSD2). The Commission has published two papers on this issue, a questionnaire for the general public and one for industry experts.
The consultations started on May 10 and the deadlines for submissions are July 5 for the targeted consultation on technical matters and Aug. 2 for the general public. The general consultation is a simple questionnaire with basic questions about the success of the PSD2 for the last five years. Answers to these questions will hardly give the European Commission a sense of what worked or didn’t work with the PSD2. Essentially, the commission is asking for the method of payment used in physical stores and online, it also explained that the PSD2 introduced anti-fraud measures like the strong customer authentication (SCA) requirements, and the regulator takes the opportunity to request people´s opinion of new payment options offered by tech companies. . . .
Industry Developments
SPOTLIGHT: Apple’s Decision to Self-Finance Its BNPL Offering Raises Key Questions, Observers Say
Digital Transactions News – June 10, 2022
When Apple Inc. on Monday announced Apple Pay Later, its buy now, pay later program, the computing giant added an unexpected twist. The new program will not rely for financing on Goldman Sachs, Apple’s long-time partner for Apple Pay. Rather, Apple is setting up its own unit, to be called Apple Financing LLC. But as Apple’s product line consists of high-end computers, mobile devices, and other big-ticket gear, some observers are wondering about the risk the company may be taking on.
“There’s no question Apple has a lot of cash on hand,” observes Brian Riley, director of the credit advisory service at Marlborough, Mass.-based consultancy Mercator Advisory Group. “But a $1,200 phone will rack up a loan of $600 a month on pay in four. It will be a test of customers’ ability to repay.” Pay in four is the typical BNPL model in which users get immediate access to their merchandise and then repay the loan in four installments over a six-week period. . . .
Credit Card Balances Spike to $841 Billion After Stimulus Checks Helped Reduce Debt
CNBC – June 9, 2022
For many Americans, the pandemic-induced slowdown offered a rare opportunity to better their financial standing.Government stimulus checks and fewer opportunities for spending drove the personal savings rate to a level not seen since World War II, with many consumers using the extra cash to pay down debt — primarily their credit card balances, which have the highest interest rates, averaging more than 16%.
Altogether, consumers paid off a record $83 billion in credit card debt during the pandemic, but the recent spike in prices for gas, groceries and housing, among other necessities, is causing people to return to running up high balances on their cards. . . .
Visa Sees Long Runway With Cash-To-Card Transition
Payments Dive – June 9, 2022
Despite increased use of credit and debit cards and consumer cash use clocking in below 2019 levels, “this idea that the pandemic in some ways has reduced the future opportunity is very flawed,” Prabhu asserted at the Bernstein conference on June 2. “You’re talking about an ocean of cash,” and not just in emerging markets, he added.
He reiterated that perspective this week at another conference. “A little bit of the water has come out of the ocean, but you now have a machine that can take more water out every year,” he said when discussing the topic Tuesday at the Bank of America Global Technology Conference in San Francisco. . . .
PayPal Opens Door to Outside Crypto Wallets
PYMNTS – June 7, 2022
PayPal is an island in crypto no more. The company announced on Tuesday (June 7) that people who hold cryptocurrencies in their PayPal account wallets will now to able to send and receive digital assets via external wallets and exchanges.
Until now, PayPal had been a closed system, with customers only able to buy and sell crypto from PayPal itself and spend it only within PayPal’s 32 million-strong Merchant Network. . . .
Mastercard Debuts Open Banking Feature ‘Pay By Link’
PYMNTS – June 7, 2022
Mastercard debuted its Pay by Link payments feature at Money 20/20 Europe, leaning on European open banking platform Aiia to allow businesses to send their customers a link so they can pay instantly from anywhere, according to a Monday (June 6) company press release.
The new payments feature “ties directly into Mastercard’s open banking vision of ushering in a new era of choice, simplicity and personalization in a safe and secure manner,” the press release said . . .
Economic Pressures Stress Payment Fintechs
Payments Dive – June 2, 2022