Payments News Update -- June 5, 2019
Industry Developments
SPOTLIGHT: Is It Enough?
Digital Transactions Magazine – June 1, 2019
For Mastercard and Visa chargeback process changes to make the most impact on friendly fraud, merchants will have to take matters into their own hands. About a year ago, Visa Inc. rolled out a new initiative to update, modernize, and streamline chargeback procedures and the dispute-management process. Later in the year, Mastercard began to roll out its Mastercard Dispute Resolution (MDR) program. While the MDR rollout is ongoing, the goal is the same as with Visa: Simplify the chargeback process and bring Mastercard disputes into the 21st Century.
Why are these overhauls necessary, though, and do they achieve what the companies set out to do? . . .
‘A New Era in Commerce’: Amazon Pay VP Says Voice Payments Potential Is ‘Phenomenal’
CNBC – June 4, 2019
The vice president of Amazon Pay believes consumers paying for goods with the sound of their voice will revolutionize the commerce industry. Speaking to CNBC’s Elizabeth Schulze at the Money 20/20 conference in Amsterdam on Tuesday, Amazon Pay VP Patrick Gauthier said voice payments would represent a “new era in commerce.”
“It is akin to what happened with mobile maybe 10 years ago or even with e-commerce 20 years ago.” . . .
For Bitcoin, Tentative Signs Emerge of Rising Merchant Volume
Digital Transactions News – June 4, 2019
Most economic activity with Bitcoin remains on trading exchanges, but lately there is some evidence volume at merchants may be picking up. Bitcoin’s total merchant volume, in dollar terms, was $42.8 million in the week ended May 19, according to the latest figures from Chainalysis Inc., a New York City-based cryptocurrency research firm. That represented the second week in a row volume exceeded $40 million and registered a 50% increase over the first week of the year.
Chainalysis, which tracks merchant volume on both monthly and weekly bases, says the weekly tracking may be a better barometer of actual sentiment among Bitcoin holders and businesses that accept or are considering accepting the digital currency. “While merchant-services activity represents a small portion of Bitcoin economic activity overall, recent data suggests this activity may be rebounding following the 2018 price downturn,” a company spokesperson says in a comment sent to Digital Transactions News. . . .
PayPal Opens up Access to E-Commerce Platform That’s Already Used by Instagram and Facebook
CNBC – June 3, 2019
PayPal is rolling out a new e-commerce platform that gives small businesses the same access to the online shopping infrastructure as tech giants like Facebook.
The new platform brings together existing parts of PayPal’s payments business — letting merchants accept money online and shoppers to check out through PayPal. It also opens up back-end systems like fraud protection, compliance, and authenticating an account, which would be expensive and “almost impossible” for a small start-up to build on its own, PayPal COO Bill Ready said. . . .
UBS Leads New Blockchain Settlement Coin Consortia
PYMNTS – June 3, 2019
An emerging group of financial services firms led by UBS Group is looking to develop a crypto-based system to settle cross-border trades. Among the big banks included in the gang of 14 are, apart from UBS, Barclays PLC, Nasdaq Inc., Credit Suisse Group AG, Bank of New York Mellon Corp., Canadian Imperial Bank of Commerce, State Street Bank & Trust Co., Banco Santander SA, Commerzbank AG, ING Groep NV, KBC Group NV, Lloyds Banking Group PLC, Mitsubishi UFG Financial Group Inc. and Sumitomo Mitsui Banking Corp.
The crypto token they are developing will be called the utility settlement coin, or USC. Each firm has collectively invested £50 million ($63.2 million) in the company tasked with developing the coin and the settlement system, Fnality International. . . .
China UnionPay to Offer European Credit Cards
Finextra – June 3, 2019
The world’s biggest card issuer, China UnionPay, has stepped up its European ambitions after striking a deal with a UK back-office startup, Tribe Payments, that will see it offer debit and credit cards in Europe.
The deal makes Tribe one of the first issuer processors in Europe to havew the necessary certification to allow banks to issue UnionPay cards. . . .
UnionPay’s European Expansion Threatens Chinese Rivals, Not the West
PaymentsSource – June 3, 2019 (subscription required)
China UnionPay is assembling the relationships it needs to directly issue cards in Europe, but local saturation suggests UnionPay’s best bet is to use European merchant relationships to counter its own domestic rivals in China rather than disrupting Visa and Mastercard.
UnionPay has reached a deal with Tribe Payments, a U.K. startup that has the certification to allow banks to issue UnionPay cards. The partnership in theory allows UnionPay to approach local banks to issue credit and debit cards as a competitive play against Visa and Mastercard, though that’s unlikely to have a huge near-term impact. There’s not much incentive for local issuers and European consumers to switch card relationships. . . .
MagicCube Looks to NTT to Help Bring PIN-on-Glass to Merchants in Japan
Digital Transactions News – June 3, 2019
For decades, PIN entry has been restricted to specialized hardware devices, such as PIN pads on ATMs and at the point of sale. On Monday, a Santa Clara, Calif.-based software company headed by a former Visa Inc. executive said it will start offering to retailers in Japan its technology for PIN entry on ordinary, off-the-shelf mobile devices. MagicCube Inc. said it will work with NTT Data Corp., a Tokyo-based information-technology firm. No information was immediately available regarding how soon the partnership will begin operating.
Last week, MagicCube announced its app, which is based on a virtual trusted execution environment, or vTEE, has been certified by EMVCo, the international payments standards body controlled by six global payment card networks, including Visa and Mastercard Inc. This move followed a new standard for the method issued in January 2018 by the PCI Security Standards Council, the Wakefield, Mass.-based organization that establishes rules for payment card security. . . .
Where Are the Mobile Incentives?
Digital Transactions Magazine – June 1, 2019
For years now, the payments business has predicted a mass uptake of mobile wallets, and for years the pundits have been disappointed. Activity via services like Apple Pay, Google Pay, and Samsung Pay has been notably non-overwhelming, despite backing from these tech giants.
Now, another question mark has appeared for mobile payments, this time having to do with the connection between the new dip-and-tap EMV cards, on the one hand, and mobile payments, on the other. . . .
State Farm and USAA Working Together to Test a Blockchain Solution
Press Release – May 30, 2019
State Farm and USAA know how important it is to invest, innovate and build for the future. During the 2019 Dig In Conference, the two insurance companies announced a joint subrogation solution, and are now using real claims data to test how blockchain technology can improve the speed of the auto claims subrogation process.
Subrogation is typically the last phase of an insurance claims process, when one insurance company recovers claim costs it paid to its customer for damages from the at-fault party’s insurance company, which includes its customer’s deductible. . . .
Walmart Built an Amazon Go-Style ‘Fast Lane’ That Allows Customers to Skip the Checkout Register — Here’s How It Works
Business Insider – May 30, 2019
Walmart Canada has debuted a new checkout system called “fast lane” that lets customers avoid cashiers and registers.
“Skip the checkout and skip on home,” reads an ad for the fast lane, which is designed for users of the company’s mobile app My Walmart. . . .
Visa’s Kelly Takes a Dark View of Faster Payments, Just Not Visa’s Faster Payments
Digital Transactions News – May 30, 2019
Visa Inc.’s chief executive this week questioned the drive for real-time payments by U.S. banks and merchants, but also argued Visa’s recent acquisition of business-to-business payments processor Earthport plc will help the company expand real-time payment capability beyond cardholders.
Visa closed on London-based Earthport last month after winning a bidding war with rival Mastercard Inc. The deal, which cost the card network $320.4 million, was well worth it, Alfred Kelly told the audience at an investor conference in New York City on Wednesday. Earthport will connect Visa to automated clearing house and real-time networks in 88 countries, which means “we have the ability now to move money to people we don’t have a card relationship with,” Kelly said. . . .
Tokenization Buzz Gets More Attention Than Fundamentals
PaymentsSource PayThink – May 30, 2019
We’re putting the cart before the horse when it comes to tokenization. All these sayings apply to the current state of tokenization. If you follow industry discussions on the topic, you’ll have undoubtedly noticed scores of stories about implementing tokenization and blockchain for everything from real estate to pieces of high-value art to financial assets and commodities.
In my judgment, we’re collectively focusing on the wrong goal posts. Those are innovative uses cases to be sure, but how many of them actually solve a real problem, as opposed to just feeding the hype cycle and keeping our most brilliant technical, business and entrepreneurial minds from addressing issues that the financial services and retail industries have grappled with for years? . . .
6 Takeaways From the Global Payments-TSYS Merger
PaymentsSource – May 28, 2019
Global Payments’ purchase of TSYS is the latest merger of large payment technology companies — and by no means the last.
Payment processing as a standalone industry is already gone, as the FIS-Worldpay and Fiserv-First Data deals attest. While these companies are quick to tout massive scale, they still have holes that keep them from serving their markets. . . .
Legal and Regulatory Developments
SPOTLIGHT: Chase Bank Hit With Credit Card Interest Class Action
Law360 – June 3, 2019 (subscription required)
Holders of Chase Bank USA NA credit cards slapped the financial institution with a potential class action Monday in Delaware federal court, alleging that the company improperly charges interest on purchases that are paid in full in breach of its cardholder agreements.
In the suit, named plaintiff Kira Young claims that because Chase Bank uses deceptive and confusing language in its cardholder agreement, credit card users incur interest on purchases during the contractual grace period when they pay off their card balance before the monthly due date. . . .
Fed Official Hits Back at Criticism of Central Bank’s Payments Role
PaymentsSource – June 3, 2019 (subscription required)
A Federal Reserve official helping lead the central bank’s faster payments initiative is rejecting criticism of the Fed’s potential development of a real-time payments system.
Esther George, president of the Federal Reserve Bank of Kansas City, defended the Fed system’s record as a provider of payment services in an interview with American Banker, saying the central bank’s participation in the market has benefited the public. . . .
Inside The Legal Battle For The Future Of Fintech
Law360 – June 3, 2019 (subscription required)
A simmering turf battle between New York state and the Office of the Comptroller of the Currency has left many fintech companies in a frustrating holding pattern as they wait for the courts to decide how they will ultimately be regulated.
The OCC said last July it was ready to begin accepting applications for a special purpose national bank charter for fintech companies, providing a simplified avenue to engage in banking activities on a national scale. The New York Department of Financial Services promptly challenged the federal agency in court, saying it was reaching beyond its congressional mandate by redefining the business of banking. . . .
Ecommerce Groups Sound Alarm Over EU Security Rules
Financial Times – June 3, 2019 (subscription required)
Retailers and payment processors including Amazon, Worldpay and Stripe are warning that billions of dollars of online purchases are at risk because of a lack of industry preparedness for new EU-wide security regulations.
New rules requiring an extra level of verification for most online payments above €30, known as Strong Customer Authentication, are set to come into force in September. . . .
Facebook in Talks With US Regulator Over Digital Currency
Financial Times – June 2, 2019 (subscription required)
Facebook has begun talks with the top US derivatives regulator over its plans for a digital currency, in a sign of how the world’s largest social media platform is laying the groundwork for an ambitious push in to payments.
Christopher Giancarlo, head of the Commodity Futures Trading Commission, said the commission was in “very early stages of conversations” with Facebook in an effort to understand whether the company’s plans for a digital coin would fall under the regulator’s auspices. . . .
US and UK Forge Fintech Collaboration Pact
Finextra – May 29, 2019
The Partnership between the U.S. Department of the Treasury and the UK’s HM Treasury will build on and deepen bilateral engagement on emerging trends in financial services innovation. This will include encouraging collaboration in the private sector, sharing information and expertise about regulatory practices, and promoting growth and innovation.
Heath Tarbert, Acting Under Secretary for International Affairs at the U.S. Department of the Treasury, said: Technology is the future of financial services, and innovation drives growth. By jointly fostering entrepreneurial breakthroughs, we will write a new chapter in the longstanding friendship between America and Britain. . . .