Payments News Update - June 2, 2023
Legal and Regulatory Developments
SPOTLIGHT: More Than 80% Of Central Banks Are Investigating CBDC
Central Banking – June 2, 2023
Eighty-three per cent of central banks are working on projects investigating central bank digital currency (CBDC) for retail payments purposes, data from the Payments Benchmark 2023 shows.
Eighteen central banks said they were in the research phase of CBDC development. Another three said they were in the proof-of-concept phase while one was in the pilot phase, and two said they were in rollout. . . .
CFPB Finds That Billions of Dollars Stored on Popular Payment Apps May Lack Federal Insurance
Consumer Financial Protection Bureau – June 1, 2023
The Consumer Financial Protection Bureau (CFPB) published an issue spotlight on digital payment apps heavily used by consumers and businesses. The analysis finds that funds stored on these apps may not be safe in the event of financial distress, since the funds may not be held in accounts with federal deposit insurance coverage.
The CFPB also issued a consumer advisory for customers holding funds in these apps and how they can make sure their funds remain safe. . . .
FTC Order Forces Mastercard to Stop Blocking Use of Competing Payment Networks
Convenience Store News & Petroleum – May 31, 2023
A Federal Trade Commission order adopted Tuesday compels Mastercard to provide customer information to competing networks and to stop blocking merchants from using the alternative networks to process debit-card payments, the commission said Wednesday.
By allowing choice in the marketplace, the FTC order is expected to lead to more competition in payment networks and lower swipe fees over a period of time. . . .
PayPal Renews Challenge to CFPB Fee Disclosure Rule
Law360 – May 30, 2023 (subscription required)
PayPal Inc. has renewed its Washington, D.C., federal court challenge to an allegedly unlawful and unconstitutional Consumer Financial Protection Bureau rule requiring certain digital wallet providers to include fee disclosures similar to prepaid debit cards, while the bureau has launched a bid to keep in place what it claims is a reasonable regulation.
The online payments giant and the CFPB filed dueling motions for summary judgment late Friday, asking a D.C. federal judge to settle a dispute over the bureau’s “prepaid rule.” . . .
RBA Warns Banks Over Default Routing, Mulls Debit Card Regulation
Dynamic Business – May 29, 2023
The Reserve Bank of Australia (RBA) has strongly warned banks about affordable debit card transaction fees for merchants. Expressing concerns about limited choice in transaction routing, the RBA has indicated its intention to introduce regulations that would ban default routing on dual-network debit cards.
In Australia, dual-network debit cards allow consumers to choose between various payment networks, such as eftpos, Visa, or MasterCard, when making transactions. . . .
Debit Network Players Gear Up for July
Payments Dive – May 26, 2023
Card network executives are watching closely to see how their businesses will be affected by the Federal Reserve’s debit rule clarification, they said this week during an investor conference.
During appearances at a JPMorgan Chase investor conference this week, executives at Visa and Mastercard said they expect the capabilities of their debit networks will give them an edge amid a more competitive landscape. . . .
Mastercard Loses Bid to Appeal to Trim £10B Swipe Fee Suit
Law360 – May 26, 2023 (subscription required)
A competition tribunal has declined to grant Mastercard permission to appeal its finding that the card giant could not trim a £14 billion ($17.3 billion) class action over its swipe fees, arguing it was bound by a European Commission decision that banned the charges.
The Competition Appeal Tribunal has rejected Mastercard’s argument that it could have set lower card-interchange fees that still restricted competition but would have qualified for an exemption to the bloc’s antitrust rules, publishing its decision on Thursday. . . .
Industry Developments
SPOTLIGHT: Friendly Fraud Is on a Sharp Rise, Chargebacks911 Finds
Digital Transactions News – May 30, 2023
So-called friendly fraud is a growing problem for many merchants. A report from chargeback-management firm Chargebacks911 reveals that nearly three quarters of the 300 merchants surveyed have seen a 19% increase in illegitimate chargebacks on average so far in 2023 compared to the same period last year.
At the same time, more than half of merchants say friendly fraud is a significant or moderate concern for their business. Chargebacks911 surveyed merchants ranging in size from small to enterprise retailers. . . .
Google Aims to Bulk up Wallet
Payments Dive – June 1, 2023
Google is upgrading its digital wallet to add capabilities that create more use cases for consumers to dig into it, including letting them use the smartphone app to hold health insurance card information, the company said in a blog post Thursday. The tech giant is teaming with U.S. healthcare insurer Humana to develop that feature.
The upgraded wallet is also adding state identification options, with Maryland allowing that function as of Thursday and Georgia, Arizona and Colorado following in its footsteps in the “coming months,” Google said. . . .
Breaking Down the Various Fleet Cards in the Market
PaymentsJournal – May 31, 2023
Fleet cards play a crucial role in the day-to-day operations of fleet managers by offering a centralized payment system, which allows them to streamline fuel and maintenance expenses, track transactions, and monitor driver spending.
With these capabilities, fleet cards empower managers to effectively manage costs, enhance operational efficiency, and maintain better control over their fleet. . . .
Affirm Expands Its Global Reach Through a Partnership With FIS’s Worldpay
Digital Transactions News – May 31, 2023
BNPL provider Affirm Holdings Inc. has struck a multi-year partnership with payment processor Worldpay to make its Adaptive Checkout solution available to Worldpay merchants.
The deal will enable Worldpay merchants to offer consumers bi-weekly and monthly payment options. Worldpay is a unit of the big processor FIS Inc. . . .
Overdraft Fees Plummet as Banks, Fintechs Find Value in Monetizing ‘Alerts’
PYMNTS – May 31, 2023
Overdraft fees have been a hot button issue in financial services. But they’re less of a revenue source for banks — significantly less — than they were not all that long ago.
To that end, as reported last week by the Consumer Financial Protection Bureau (CFPB), bank overdraft revenue fell by roughly 48% as measured in the fourth quarter of 2022 compared to the same period before the pandemic. For the full year, the CFPB said banks reported around $7.7 billion in overdraft and nonsufficient-funds fees, a 35% drop from 2019. . . .
Consumers, Businesses Gravitate to Faster, Mobile Payments
Payments Dive – May 26, 2023