Payments News Update – May 27, 2021

Legal and Regulatory Developments

SPOTLIGHT: European Commission Plans to Hit Facebook With Official Antitrust Probe
PYMNTS – May 26, 2021

The European Commission (EC) is launching an official investigation into allegations that Facebook engaged in anti-competitive behaviors, the Financial Times reported on Wednesday (May 26). The EC is also doing a deep dive to get a sense of Facebook’s classified advertising tactics and will determine if it undermines competitors. Officials have so far hit the social media giant and its rivals with several rounds of questions regarding Facebook’s classified advertising division.

At issue is whether the social network manipulated its classified ad business by pitching its Marketplace services for free to its 2 billion users. Facebook’s fee-free Marketplace was rolled out in 2016 and gives users the ability to buy, sell and trade goods. . . .

What We Learned From the Epic Games v. Apple Lawsuit
CBS News – May 27, 2021

The future of Apple’s App Store is now in the hands of U.S. District Judge Yvonne Gonzalez Rogers.

The dramatic trial between the Fortnite video game developer and the iPhone maker came to a close this week. Developer Epic Games offered final arguments to bolster its case that the tech giant runs a monopoly that forces developers to use Apple’s in-app purchase system, which gives Apple a 30% cut of all sales. The company wants Apple to scrap mandatory in-app purchases and to permit App Store competitors to distribute iOS apps. . . .

Tech Giants Accused of ‘Gatekeeping’ Mobile Payments in Australia
ZDNet – May 26, 2021

Google and Apple are facing yet another probe of their anti-competitive practices in Australia, this time over the saturation of the market both players have in the mobile payments space.

The Parliamentary Joint Committee on Corporations and Financial Services recently opened an inquiry into mobile payment and digital wallet financial services, with particular reference to the nature of commercial relationships and business models, including any imbalance in bargaining power operating between providers of mobile payment digital wallet services and financial services, merchants and vendors, and consumers. . . .

DC Attorney General Sues Amazon on Antitrust Grounds, Alleges It Illegally Raises Prices
CNBC – May 25, 2021

Washington, D.C., Attorney General Karl Racine announced Tuesday he’s suing Amazon on antitrust grounds, alleging the company’s practices have unfairly raised prices for consumers and suppressed innovation.

Racine is seeking to end what he alleges is Amazon’s illegal use of price agreements to edge out competition; the lawsuit also asks for damages and penalties to deter similar conduct. The suit asks the court to stop what it calls Amazon’s ability to harm competition through a variety of remedies as needed, which could include structural relief, often referred to as a form of breakup. Shares of Amazon barely moved on the announcement, down 1% as of Tuesday afternoon. . . .

BofA Inks $6M Deal to Settle Credit Card Autopay Suit
Law360 – May 24, 2021 (subscription required)

A proposed class of roughly 100,000 consumers asked a New Jersey federal judge on Monday to preliminarily approve a $5.95 million settlement that would resolve claims that Bank of America tricked its credit card holders into choosing the highest interest option for their monthly payments, in violation of debt collection law.

The proposed deal would create a $5.95 million common fund financed by the North Carolina-based bank, in which class members would receive automatic checks proportional to the interest that they paid. The interest period runs from the time a consumer’s “Amount Due” payment option was available to when their “switch of payment options from ‘Amount Due’ to ‘Account Balance’ became effective,” according to the motion. . . .

European Central Bank Warns of Pricing Pressure from U.S. Payment Firms
American Banker – May 20, 2021 (subscription required)

The European Central Bank made a veiled threat to commercial banks that are extracting fees from real-time payments, stating the levies stand in the way of progress. The warning comes as more U.S. firms build out their own competitively priced faster-payment systems.

At a central bank forum this week in Finland, Fabio Panetta, a member of ECB’s board, praised the EU’s progress toward ensuring pan-European instant payments by the end of 2021 via the Target instant payments settlement service. “But we know the private sector, by contrast, has made far less progress on this front,” Panetta said in his address. . . .

FCA Extends SCA Deadline by a Further Six Months
Finextra – May 20, 2021

The UK’s Financial Conduct Authority is to delay the implementation of strong customer authentication rules by a further six months in an effort to minimise disruption to consumers and merchants. Initially scheduled for introduction on 14 September 2019, the rules – which demand a two-step verification process for all online purchases over EUR – have suffered a series of rolling setbacks amid mounting pressure from merchants and payments players.

In a statement, the FCA says: “This further 6-month extension is to ensure minimal disruption to merchants and consumers, and recognises ongoing challenges facing the industry to be ready by the previous 14 September 2021 deadline. The new 14 March 2022 deadline is the latest we expect full SCA compliance for e-commerce transactions. . . .

The Fed This Summer Will Take Another Step in Developing a Digital Currency
CNBC – May 20, 2021

The Federal Reserve is moving forward in its efforts to develop its own digital currency, announcing Thursday it will release a research paper this summer that explores the move further. Though the central bank did not set any specific plans on the currency, Chairman Jerome Powell cited the progress of payments technology and said the Fed has been “carefully monitoring and adapting” to those innovations.

“The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a daily basis,” Powell said in a video message accompanying the announcement. . . .

European Central Bank Castigates Banks Over Instant Payment Fees
Finextra – May 19, 2021

PayPal’s success is inviting regulators to launch more antitrust probes into payment processing giants to give fintech startups a fighting chance, according to market stakeholders and analysts.

The fintech behemoth, founded by the fabled so-called “PayPal Mafia” that included the tech tycoon Elon Musk and investor Peter Thiel in 1999, is riding high on a mounting wave of digital payments after Covid-19 caused online shopping and contactless payments to surge. The company has just had its best first quarter ever, with its revenue jumping by 31% to $6.03bn on the back of processing $285bn in transactions over the period, up 50% from 2020. . . .

Industry Developments

SPOTLIGHT: Square Preps Savings, Checking Account Offers for Consumers, SMBs
PYMNTS – May 24, 2021

Square is said to be getting ready to provide savings accounts and checking accounts to small- to medium-sized business (SMB) customers, Bloomberg reported Monday (May 24).

Signs of the plan show up in hidden programming language in a recent update to the company’s app for the Apple iPad and iPhone, according to Bloomberg. That code refers to savings accounts in addition to checking accounts and notes that the latter type of account will connect with the firm’s current business debit card. Moreover, the code hints that Square will set itself apart by avoiding monthly service fees and charges connected with overdrafts and minimum balances, Bloomberg reported. . . .

Apple Is Looking to Strike Deals With ‘Alternative Payments’ Providers
CNBC – May 26, 2021

Apple is looking for a lead negotiator to strike partnerships with “alternative payment” partners, according to a job listing posted on Tuesday. The role, according to the listing, would include screening potential partners, negotiating and signing deals, and launching new programs and features for Apple’s Wallets, Payments, and Commerce team. It will also work with Apple Pay teams.

“Lead the partnership program with key players in the Alternative Payments ecosystem, covering the complete process of partner identification, business case development and socialization, partnership negotiation, contract signing and execution, go to market launch and continued partnership value growth,” the job listing says. . . .

Big Banks Look For Post-Pandemic Rebound of Credit Card Revenue
Reuters – May 24, 2021