Payments News Update – May 6, 2021

Legal and Regulatory Developments

SPOTLIGHT: Retail Organizations Sue Fed Over Debit Law Enforcement
Retail Dive – April 30, 2021

Two retail associations sued the Federal Reserve Board of Governors April 29 over what they claim is a failure by the federal agency to properly enforce a federal law that caps the fees that can be charged on debit transactions. The North Dakota Retail Association and the North Dakota Petroleum Marketers Association filed the lawsuit in the U.S. District Court in Bismarck, saying the Board has “failed to properly follow Congress’s instructions to ensure that debit-card processing fees are reasonable and proportional to the costs of debit-card transactions.”

Retailer trade groups have been at loggerheads with the major card companies, Visa and Mastercard, for years over the interchange, or “swipe,” fees they charge on credit and debit card transactions. They backed Sen. Dick Durbin when he successfully pushed through an amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that capped debit fees for card issuer banks with more than $10 billion in assets. . . .

Fed Considers Proposal to Allow FinTechs Access to Payment System
PYMNTS – May 5, 2021

The Federal Reserve Board has invited comment from the public on proposed guidelines to evaluate requests for accounts and payment services at Federal Reserve banks, a press release said Wednesday (May 5). In the past few years, new financial products and delivery mechanisms have been introduced that work with traditional banking services.

Many institutions, notably, have leveraged emerging technologies, including from institutions working with new types of bank charters designed to support such innovation. To make that happen, institutions have sometimes requested access to the payment system offered by Federal Reserve Banks. To help facilitate those requests along with considering ramifications of the broader system, the Federal Reserve Board wants to add new account access guidelines. . . .

Epic Games CEO Cites Apple’s ‘Total Control’ Over iPhones at First Day of Antitrust Trial
Reuters – May 4, 2021

The chief executive of “Fortnite” creator Epic Games testified on Monday that he knew he was breaking Apple Inc’s (AAPL.O) App Store rules by putting Epic’s own in-app payment system into the game last year but wanted to highlight Apple’s sway over the world’s iPhone users, which now total 1 billion. “I wanted the world to see that Apple exercises total control over all software on iOS, and it can use that control to deny users’ access to apps,” Tim Sweeney said from behind layers of plexiglass in a federal courthouse in Oakland, California, on the first day of an antitrust trial against Apple.

The trial, expected to run three weeks, brings to a head a lawsuit Epic brought last year in the U.S. District Court for the Northern District of California that centers on two Apple practices that have become cornerstones of its business. . . .

Plaid Wins Partial Toss of Privacy Suit Over Banking Data
Law360 – May 3, 2021 (subscription required)

A California federal magistrate judge has partially granted the dismissal of a putative class action accusing Plaid Inc. of accessing and selling the personal banking data of users of apps like Venmo and Stripe without their consent, leaving invasion of privacy and anti-phishing claims intact.

U.S. Magistrate Judge Donna M. Ryu said in Friday’s order that claims brought by a consolidated group of consumers for invasion of privacy, unjust enrichment and violation of California laws including the California Anti-Phishing Act of 2005 are sufficient enough to stand at this point in the case. But she opted to permanently dismiss claims under the Stored Communications Act, Computer Fraud and Abuse Act, and California’s Unfair Competition Law and Comprehensive Computer Data Access and Fraud Act. Judge Ryu also permanently dismissed a claim for declaratory judgment and injunctive relief. . . .

French Anti-Trust Watchdog Says Banks Could Be Marginalised by Big Tech Giants
Finextra – April 30, 2021

France’s competition watchdog has warned of the dangers posed by the encroachment of Big Tech firms into the payments sector. Following a year-long fintech-specific inquiry, the Autorité de la concurrence trains its guns on the looming threat posed by Big Tech giants to upset the competitive balance in financial services provision.

The anti-trust watchdog notes Big Tech companies have considerable advantages to assert: “They control ecosystems based on large communities of users, have access to large data sets and have the technical capacity to put them to good use. “In addition, by relying, for the realisation of the payment, on the traditional banking actors and the groups of bank cards, the large platforms have the capacity to draw significant profits, without being subjected to the regulatory constraints which weigh on banking players.” . . .

How EU Antitrust Investigation Could Pressure Apple’s Payment Rails
PaymentsSource – April 30, 2021 (subscription required)

Regulators in Europe appear to be widening anti-competition investigations into Apple, putting more pressure on how the App store optimizes fees through transactions. The EU’s preliminary decision follows an investigation into an antitrust complaint music-streaming service Spotify filed two years ago against Apple in Europe over Apple’s license agreements.

Apple has 12 weeks to respond to its preliminary conclusion, and at a Friday press conference the EU’s head of competition policy Margrethe Vestager said the EU is also looking into antitrust violation over electronic gaming distribution, suggesting the investigation has widened. The EU said its research shows people don’t usually switch from Apple to Google devices, underscoring the lack of negotiating power software developers have in setting fees paid to platforms. . . .

Industry Developments

SPOTLIGHT: European Payments Initiative Looking to Topple US Fintechs
PYMNTS – May 3, 2021

The European Payments Initiative (EPI) is looking to create a payments firm that can take on some of the biggest U.S. FinTechs and payments companies, Financial Times (FT) reported on Monday (May 3). “The idea is to build a European payment champion that can take on PayPal, Mastercard, Visa, Google and Apple,” Joachim Schmalzl, EPI chair, told FT. Some 30-plus banks and credit card processors in Europe are teaming up to topple what they see as an “oligopoly” dominated by the U.S.

Based in Brussels, the EPI comprises 40 payment experts — including Deutsche Bank, BNP Paribas, ING, UniCredit and Santander — and is working on developing a systematic plan for a pan-European payments service that can process payments online and at physical stores. The project is backed by the European Commission and financial regulators and has received more than €30 million from its backers, according to Schmalzl, per FT. Schmalzl is also a board member of the country’s biggest retail banking group, German Savings Banks Association.  . . .

Mobile Wallets: More Than Just a Credit Card Alternative
Forbes – May 4, 2021

In an increasingly digital world, smartphones are a convenience of everyday life, easily influencing consumer behaviors. As a result, brands have had to adapt to the mobile-centric consumer market and the movement towards mobile wallets. To better understand the rise in mobile wallets, I connected with Elias Guerra, Founder and CEO of Popwallet, a Mobile Wallet CX platform that delivers contactless customer experiences to people through mobile wallets like Apple Wallet and Google Pay.

The Popwallet platform enables easy mobile wallet card creation, direct customer engagement through card updates, messages, and notifications, and campaign automation. Together, we looked at data from Prosper Insights & Analytics studies on mobile payment trends. . . .

Global Payments Opens Its Wallet for More Deals as Its Amazon and Google Ties Develop
Digital Transactions News – May 4, 2021