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Payments News Update – June 18, 2021

Posted  June 18, 2021

Legal and Regulatory Developments

SPOTLIGHT: Lina Khan, Prominent Big Tech Critic, Will Lead the FTC
NPR – June 15, 2021

President Joe Biden has named Lina Khan as the chairwoman of the Federal Trade Commission, giving the regulatory authority’s top spot to one of Silicon Valley’s most prominent critics. The surprise move elevating Khan to one of the most powerful regulatory positions in Washington was announced by Sen. Amy Klobuchar, D-Minn., at the start of a hearing on Tuesday. It came shortly after the Senate confirmed Khan as a commissioner in a 69-28 vote.

Democrats will now have a majority on the five-member commission, which Khan likely will steer toward more aggressive examination of tech companies’ alleged abuse of monopoly power. Elizabeth Warren, D-Mass., said Khan leading the FTC is “tremendous news,” saying in a statement that “giant tech companies like Google, Apple, Facebook and Amazon deserve the growing scrutiny they are facing and consolidation is choking off competition across American industries.” . . .

Visa, Mastercard Accused of Being Cartel in Square Fees Suit
Law360 – June 16, 2021 (subscription required)

A proposed class of small businesses that use the Square e-commerce payment platform for transactions launched an antitrust suit against Visa and Mastercard on Wednesday, saying the credit card companies acted as a cartel by using their vast market share to keep fees associated with credit and debit card transactions high.

In a 55-page complaint filed in New York federal court, the businesses claim that Visa and Mastercard extracted “monopoly rents from customers” in setting interchange fees. These types of fees, also referred to as swipe fees, are the charges banks hit merchants with to process their transactions. The small businesses, which include New York-based 803 Kava LLC and Shen Shu Acupuncture, Wisconsin-based Camp Grounds Coffee LLC, and an independent Michigan hairdresser, accuse Visa and Mastercard of structural conspiracies to keep these fees high. . . .

UK’s CMA Opens Market Study Into Apple, Google’s Mobile ‘Duopoly’
TechCrunch – June 15, 2021

The U.K.’s competition watchdog will take a deep dive look into Apple and Google’s dominance of the mobile ecosystem, it said today — announcing a market study which will examine the pair’s respective smartphone platforms (iOS and Android); their app stores (App Store and Play Store); and web browsers (Safari and Chrome).

The Competition and Markets Authority (CMA) is concerned that the mobile platform giants’ “effective duopoly” in those areas  might be harming consumers, it added. The study will be wide ranging, with the watchdog concerns about the nested gateways that are created as a result of the pair’s dominance of mobile ecosystem — intermediating how consumers can access a variety of products, content and services (such as music, TV and video streaming; fitness tracking, shopping and banking, to cite some of the examples provided by the CMA). . . .

UK Regulator to Probe NCR Corp.’s $2.5 Bln Cardtronics Acquisition
MarketWatch– June 15, 2021

The U.K. Competition and Markets Authority said Tuesday that it has started an investigation into NCR Corp.’s $2.5 billion acquisition of ATM operator Cardtronics PLC to see if the deal will lead to a “substantial lessening” of competition.

The regulator has set a deadline of Aug. 10 to complete its review. NCR agreed to buy Cardtronics in January for $39 a share. . . .

Digital Wallets Such As Apple Pay Lack Transparency: RBA
Sydney Morning Herald – June 14, 2021

The Reserve Bank has underlined the lack of transparency in the fees and rules imposed by digital wallets such as Apple Pay, amid concerns about technology giants’ growing power in the payments market. Digital wallets — apps that allow people to use their phones or wearable devices for tap-and-go payments or online purchases — have surged in popularity during the COVID-19 pandemic.

The Commonwealth Bank says that in the year to March, digital wallet transactions soared by 90 per cent, and based on current trends it is likely to become the most popular form of contactless payment by the end of this year. But while consumers benefit from the convenience and better security of digital wallets, the trend is also raising concerns over Apple and Google’s market power. . . .

Debate Sharpens in US Over CBDC
PYMNTS – June 13, 2021

The debate over central bank digital currencies sharpened a bit this past week in the marbled halls of the U.S. Congress. At a Senate Banking subcommittee hearing on Wednesday (June 9), as noted, U.S. Sen. Elizabeth  Warren, D-Massachusetts, said that in general,  cryptocurrencies “are a lousy way to buy and sell things. Unlike the dollar, their value fluctuates wildly depending on the whims of speculative day traders.”

But a CBDC, she said, stands in contrast to that volatility and added that “Legitimate digital public money could help drive out bogus digital private money, it can help improve financial inclusion, efficiency and the safety of our financial system — if that digital public money is well-designed and efficiently executed, which are two very big ‘if’s,’ ” said Warren. But as the site noted, Sen. Patrick Toomey, R-Pennsylvania, said that the private sector should develop its own digital currencies. . . .

China’s New Power Play: More Control of Tech Companies’ Troves of Data
The Wall Street Journal – June 12, 2021 (subscription required)

Shortly after rising to power in late 2012, Xi Jinping made his first company visit in his new job as China’s Communist Party chief, to Tencent Holdings Ltd. There, he raised a topic that has become both an opportunity and a challenge for his rule: the vast troves of personal data being gathered by the country’s technology companies.

Mr. Xi complimented Tencent’s founder, Pony Ma, on the way the company was accumulating information from millions of users, and harnessing that data to drive innovation. He also suggested that data would be useful to Beijing. “You have the most sufficient data, then you can make the most objective and accurate analysis,” he told Mr. Ma, according to state media accounts. “The suggestions to the government in this regard are very valuable.” . . .

Industry Developments

SPOTLIGHT: AmEx Opens First Business Banking Accounts
Finextra – June 15, 2021

American Express is pushing deeper into traditional banking territory with the launch of its first checking account, leveraging technology developed by small business lender Kabbage. American Express acquired Kabbage in August last year as part of a strategy to roll out a range of cash flows services to businesses.

Kabbage Checking, is a no-fee digital account that pays 1.1% interest on up to $100,000 in balances. It includes mobile check deposits, a debit card, bill pay and targeted savings features as well as access to a network of ATMs and retail locations for cash transactions. Small business owners can apply online for an account in minutes, regardless of their business’s age or revenue. “Small businesses should not have to sacrifice the features they expect from a bank in order to experience the benefits of an affordable business checking account,” says Gina Taylor Cotter, SVP of strategy and business operations at Kabbage. . . .

Overdraft Fees: Will Big Banks Ditch Them for Good?
The Financial Brand – June 17, 2021

Despite the senatorial spanking given megabanks over the billions in overdraft fees they collect, there’s been more movement among regional banks to address the issue. The big question is whether now is the moment to look like ‘good guys’ before Washington imposes strict rules. New technology makes such changes more practical.

Was this the first line of an obituary? “Ally Bank, the largest digital bank in the U.S…., eliminated overdraft fees on all accounts today. Every Ally Bank customer is eligible, and there are no requirements or restrictions.” Some think that overdraft fees — and traditional overdraft policies — are dying, and good riddance. Ally’s announcement came in the wake of Senate Banking Committee hearings in which Sen. Elizabeth Warren roasted major banks over their pandemic period overdraft charges. . . .

Indonesia Central Bank Among Latest to Ban Crypto as Payment
PYMNTS – June 17, 2021