Payments News Update – June 25, 2021
Legal and Regulatory Developments
SPOTLIGHT: Federal Reserve Board Extends Comment Period on Proposed Changes to Regulation II
Federal Reserve Board – June 22, 2021 (click here for the Board’s Federal Register notice)
The Federal Reserve Board announced on Tuesday that it will extend until August 11, 2021, the comment period for its proposed changes to Regulation II (Debit Card Interchange Fees and Routing) that would clarify that debit card issuers should enable, and allow merchants to choose from, at least two unaffiliated networks for card-not-present debit card transactions, such as online purchases.
The Board extended the comment period to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by July 12, 2021. . . .
House Passes Bill to Repeal OCC ‘True Lender’ Rule
The Hill – June 24, 2021
The House on Thursday passed a bill to repeal a rule meant to clarify who bears responsibility for loans issued through arrangements between banks and non-bank lenders. Lawmakers voted 218-210 to pass a Congressional Review Act (CRA) resolution revoking the Office of the Comptroller of the Currency’s (OCC) “true lender” rule with only one Republican voting with 217 Democrats.
The resolution passed the Senate in May and now heads to President Biden, who supports repealing the OCC rule. Once Biden signs the resolution, the agency will be banned from issuing another similar regulation. The OCC in October issued the true lender rule to govern partnerships between banks and third-party lenders that allow consumers to take loans with interest rates above the maximum rate set in that borrower’s state. . . .
Bipartisan Crypto Bills Pass Us House of Representatives – Again
Coindesk – June 23, 2021
The U.S. House of Representatives passed two crypto bills on Tuesday evening. The Consumer Safety Technology Act, sponsored by Rep. Jerry McNerny (D-Calif.), directs the Consumer Product Safety Commission to establish a pilot program to explore use cases for artificial intelligence in commerce. The two blockchain bills – the Blockchain Innovation Act and parts of the Digital Taxonomy Act – direct the Secretary of Commerce and the Federal Trade Commission (FTC) to study and report on the use of blockchain technology and digital tokens.
The Consumer Safety Technology Act was approved in a previous session of Congress, passing the House in September 2020, but was never approved by the Senate and died at the close of the session. . . .
Central Bank Digital Currencies Get Full BIS Backing
Reuters – June 23, 2021
The Bank for International Settlements has given its full backing to the development of central bank digital currencies (CBDCs), saying they are needed to modernise finance and ensure ‘Big Tech’ does not take control of money. Dubbed the central bank to the world’s central banks, the BIS, which is coordinating many of their discussions on digital currencies, set out recommendations on Wednesday on how a CBDC such as a digital dollar, euro, yen or yuan should look.
As part of its upcoming annual report it estimated that at least 56 central banks and monetary authorities, representing around a fifth of the world’s population, are now looking at digital currencies as commerce shifts online. . . .
Small Business Groups Lash RBA Over Debit Card Reform Roadmap
Banking Day – June 22, 2021
The Reserve Bank is facing a backlash from business groups over its plan to allow most Australian banks to issue single network debit cards tied to the Visa and Mastercard payments platforms.
A coalition of ten business peak bodies yesterday wrote an open letter to Treasurer Josh Frydenberg and other members of the government calling on them to support their campaign against an RBA proposal that would allow banks to issue debit cards without Eftpos functionality. Small business council chairman Mark McKenzie said business owners were worried that the growth of single network cards would constrain their ability to route contactless transactions to the cheapest processing network, which was usually Eftpos. . . .
Consumer Protection: Credit Card Companies Should Clearly Inform Consumers When They Risk Being Tricked Into Costly Monthly Subscriptions
PubAffairs Bruxelles – June 21, 2021
The European Commission and the network of national consumer authorities (CPC), led by the Danish Consumer Ombudsman, have written to three major credit card companies – Visa, Mastercard and American Express – to request changes to the way information is presented to consumers when they make a payment involving recurring subscription fees.
Recent research shows that as many as 1 in 12 EU consumers has ordered a cheap product or service online only to find out later they had been lured into a costly monthly subscription. Common cases involve mobile phones and beauty products sold by online sellers, who are concealing the actual costs in hidden or small print about recurring payments. . . .
OCC, States Declare Ceasefire in Fintech Charter Case. Will It Hold?
American Banker – June 18, 2021 (subscription required)
State regulators and the Office of the Comptroller of the Currency have agreed to a temporary truce in their court battle over a controversial charter application, but analysts caution that the underlying conflict over fintechs’ pursuit of banking powers is far from resolved. Judge Dabney L. Friedrich, of the U.S. District Court for the District of Columbia, approved a motion this week by the Conference of State Bank Supervisors outlining the group’s agreement with the OCC to pause for 90 days CSBS’s litigation over Figure Technologies’ specialized charter application.
The stay comes amid signs that the OCC under acting Comptroller Michael Hsu could pump the brakes on plans developed in prior administrations to offer fintechs a special-purpose national bank charter. Those plans have drawn sharp objections from state regulators. . . .
SPOTLIGHT: Visa to Buy Swedish Fintech Tink for $2.1 Billion After Abandoning Plaid Takeover
CNBC – June 24, 2021
Visa agreed Thursday to acquire Swedish financial technology start-up Tink for 1.8 billion euros ($2.1 billion), in a deal aimed at bolstering the payment giant’s digital ambitions. The deal comes after Visa’s bid to buy Plaid, an American rival to Tink, was torpedoed by U.S. regulators. Plaid has since opted to go it alone as an independent company, and was last privately valued by investors at $13.4 billion.
Plaid and Tink both operate in a nascent space known as open banking, which calls on lenders to provide third-party firms with access to coveted consumer banking data, provided they’ve got consent. Open banking has flourished in Britain and the EU thanks to new regulation. . . .
Walmart’s MoneyCard, issued by Green Dot Bank, is now being offered as a debit card linked to a demand deposit account (DDA) instead of being a prepaid card, per a Thursday (June 24) press release.
Walmart Vice President of Financial Services Julia Unger said that the move is intended to offer convenience to customers, with an improved method of managing finances. The new Walmart MoneyCard includes features such as overdraft protection and direct deposit as well as interest on savings. New and existing Walmart MoneyCard account holders can tap Green Dot’s online banking platform, which operates similar to a traditional bank account. Customers can manage their finances with Green Dot online or in person at more than 4,500 Walmart stores or at over 90,000 Green Dot locations. . . .
Eye on Crypto: Fiserv Enables Crypto Transactions at FIs, and a Crypto ATM Firm Eyes 6,000 Machines
Digital Transactions News – June 24, 2021