Payments News Update -- May 1, 2019
Legal and Regulatory Developments
SPOTLIGHT: Factors Align for Widespread U.S. Contactless Payments Adoption, A Fed Study Suggests
Digital Transactions News – April 26, 2019
The conditions for the widespread adoption of contactless payments using chip cards are in place, asserts a new report from the Federal Reserve Bank of Boston. But when that will happen and what will trigger it are unknown in the Fed report, “Tap to Pay: Will Contactless Cards Pave the Way for NFC Mobile Payments in the U.S.?” released this week.
“The rest of the developed world is contactless,” says Marianne Crowe, vice president of payment strategies at the Boston Fed. “It’s becoming a need for us to become current with the rest of the world as well.” . . .
With a Hurdle Cleared, FIS Expects to Close $43 Billion Worldpay Deal in the Third Quarter
Digital Transactions News – April 30, 2019
Fidelity National Information Services Inc. (FIS) on Tuesday said it expects to close its colossal $43 billion acquisition of payment processor Worldpay Inc. in the third quarter following a Federal Trade Commission ruling.
The merger, announced in March, would create a processing colossus with payments services ranging from merchant processing, e-commerce, faster payments, and core processing for banks and credit unions. . . .
UK’s Infant Class Action Regime Gets Lift From Swipe Fee Suit
Law360 – April 29, 2019 (subscription required)
The Court of Appeal’s decision to revive a £14 billion ($18 billion) antitrust class action against Mastercard offers the first major precedent guiding lawyers and lower courts about how to apply the U.K.’s fledgling collective action regime, significantly lowering the bar for certification in the process.
The decision was a dramatic reversal for the four-year-old regime designed to make it easier for consumers and small businesses to recover damages in competition cases. . . .
Visa, MasterCard Finalize EU Card Probe With Fee Cut Pledge
Bloomberg – April 29, 2019 (subscription required)
Visa Inc. and MasterCard Inc. ended nearly two decades of European Union antitrust scrutiny with a pact that requires them to reduce fees for foreigners shopping in the region.
The EU dropped its final investigations months after fining MasterCard 570.6 million euros ($636 million) in another probe over payment rules. The April 29 settlement, which rubber-stamps a draft accord from December, sees the duo reduce levies for non-European card-holders charged on purchases in the 28-nation bloc. . . .
Industry Developments
Stronger Spending Powers Mastercard Profit, Revenue Beat; Shares Hit Record High
Reuters– April 30, 2019
Mastercard Inc on Tuesday beat quarterly profit and revenue estimates, as a strong U.S. job market, rising wages and surge in online shopping boosted transaction volumes, sending shares of the world’s second largest payments processor to an all-time high.
The company’s gross dollar volume – dollar value of total transactions processed – rose 5.4 percent in the first quarter, with growth across all geographies. Around 24 billion transactions were processed, up 18 percent from a year-ago quarter. The gain was led by an 8.4 percent rise in the United States and a 29 percent jump in Europe. . . .
Ringing Changes: UK’s First Till-Free Grocery Shop Opens in London
The Guardian– April 29, 2019
Sainsbury’s has launched the UK’s first till-free grocery store, at a central London branch, which allows shoppers to pay with their smartphone and walk out of the shop without going through a checkout.
Customers use the supermarket’s Smartshop app to scan groceries as they walk round the store, bag them and then pay in the app via Google Pay or Apple Pay, scanning a code to confirm payment. . . .
New Nationwide In-Car Payment Technology Is Launching In Massachusetts
Business Wire – April 29, 2019
A first-in-the-nation breakthrough payment solution that lets drivers purchase gas from their car without taking out cash, a credit card or a mobile app is launching in Westborough, MA today. PayByCar™ allows drivers to simplify and speed up non-toll transactions such as gas purchases.
Those with E-ZPass™ toll transponders who register for PayByCar™ on the PayByCar™ website (www.mypaybycar.com) will be able to easily pay for their fuel at the Route 9 Alltown Mobil located at 130 Turnpike Rd., which is on the Eastbound side of Route 9, using their transponders without ever pulling their wallet out of their pocket. . . .
Samsung Joins Corporate Giants Reportedly Eyeing Bespoke Crypto
Cointelegraph via Yahoo News – April 27, 2019
Samsung is another big-name company to consider issuing its own cryptocurrency. Similar stories have already emanated from the likes of Facebook and JPMorgan Chase, with analysts speculating on various use cases for these cryptocurrency tokens.
While not yet confirmed officially, a “Samsung Coin” could find application as a payment means on the company’s app store and traded on cryptocurrency exchanges. The company has revealed that its flagship Galaxy S10 smartphone will have a built-in cryptocurrency wallet. . . .
Paypal Makes a Big Marketplace Play With Its $500m Investment in Uber
TechCrunch – April 26, 2019
Uber’s announcement of its IPO pricing earlier today came with a $500 million belated Easter egg. The payments giant PayPal is making a half-billion-dollar investment in the company, paying $47 per share, which gives the company a valuation of $78.8 billion (in the middle of the range of Uber’s IPO pricing of $44-$50 per share).
Neither Uber nor PayPal gave much detail about the $500 investment. Uber’s S-1 and a short statement on LinkedIn from PayPal’s CEO Dan Schulman both used the same wording, noting the deal would help the two work on “future commercial payment collaborations, including the development of Uber’s digital wallet.” So what’s actually going on here? . . .
Visa’s Okay With Pending Mega-Mergers in the U.S. Payments Industry
Digital Transactions News – April 25, 2019
Visa’s not worried about the massive consolidation that’s sweeping the payments industry, seeing it as a force to extend payments innovation globally.
FIS has agreed to acquire WorldPay, and Fiserv has reached a deal to buy First Data, in just the past few months. The deals are worth billions — combining bank technology, which includes card issuance; and processing, which includes merchant acquiring. . . .
Are U.S. Merchants Ready for a Contactless Surge?
PaymentsSource – April 25, 2019 (subscription required)
The U.S. is already very late to the party when it comes to contactless payments. But even so, there are signs that many merchants still aren’t prepared for an influx of contactless cards.
A new Visa rule took effect April 13, requiring the phase-out of older contactless payment technology that reads magnetic stripe data (MSD) instead of EMV contactless chip data. Visa disclosed the new contactless chip acceptance requirements in October 2017 in an industry bulletin, noting there is no need to enable contactless acceptance in the U.S., but for those that do, terminals must meet the full EMV chip data requirements. . . .
The Smart Way for Banks to Partner With Big Tech
American Banker – April 25, 2019
Big tech companies have been a disruptive force in business since the internet became mainstream. With the recently announced Apple Card, banks should be asking what the ambitions of companies like Apple, Google, Facebook, Microsoft and Amazon in financial services means for them.
Survey data suggests that many banks are already working with big tech companies to some degree, and such collaboration will likely grow deeper and more common over time. As big tech’s platforms consolidate more users and influence over the digital world, they will grow more attractive as partners, thanks to their reach and the cost savings they can enable. . . .
PayPal Finally Reveals Venmo User Count, as Zelle Keeps Growing
PaymentsSource– April 24, 2019
Venmo has more than 40 million active users, PayPal has revealed for the first time. This finally gives the market a sense of how popular Venmo is, and sheds a little light on how it compares to the bank-run Zelle service.
Until Wednesday night, PayPal had never said how many people use its Venmo P2P service — the market only knew that it was a drain on PayPal’s profits. Zelle has reported volumes as well as the number of financial institutions on its network, and allowed individual banks to provide further detail. . . .