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Payments News Update – November 12, 2021

Posted  November 12, 2021

Legal and Regulatory Developments

SPOTLIGHT: If You Use Venmo, PayPal or Other Payment Apps This Tax Rule Change May Affect You
CNN – November 9, 2021

If you’re among the millions of people who use payment apps like PayPal, Venmo, Square, and other third-party electronic payment networks, you could be affected by a tax reporting change that goes into effect in January. Payment app providers will have to start reporting to the IRS a user’s business transactions if, in aggregate, they total $600 or more for the year. A business transaction is defined as payment for a good or service.

Prior to this change, app providers only had to send the IRS a Form 1099-K if an individual account had at least 200 business transactions in a year and if those transactions combined resulted in gross payments of at least $20,000. The expansion of the reporting rule is the result of a provision in the American Rescue Plan, which was signed into law earlier this year. The ultimate aim of the provision is to clamp down on unreported, taxable income. . . .

Exclusive: Amazon Seeking to Settle EU Antitrust Investigations, Sources Say
Reuters – November 9, 2021

Amazon is seeking to settle two EU antitrust investigations to stave off potential hefty fines and orders to change its business practices, people familiar with the matter said. The European Commission in November last year charged the world’s biggest online retailer with using its size, power and data to push its own products and gain an unfair advantage over rival merchants that sell on its online platform.

It also opened an investigation into Amazon’s possible preferential treatment of its own retail offers and those of marketplace sellers that use its logistics and delivery services. Amazon is engaged in preliminary discussions with the EU competition enforcer and has offered concessions to address their concerns, the people said. Settlement talks can take months to wrap up, with no guarantee that both sides will reach an agreement. . . .

China to Marry Digital Yuan, Mobile Payment Apps
PYMNTS – November 9, 2021

The People’s Bank of China says it will make an effort to further link the digital yuan to the country’s popular mobile payment apps. As Bloomberg News reported Tuesday (Nov. 9), the bank wants to upgrade the digital currency’s “interoperability with existing payment tools” and “improve the e-CNY ecosystem,” PBOC Governor Yi Gang said at a panel run by the Bank of Finland Institute for Emerging Economies. E-CNY is the official name for the digital yuan.

Yi said the bank will create a management model for the e-CNY modeled after how cash and bank accounts are managed, while also improving on its privacy protections, anti-counterfeiting measures and efficiency. The PBOC will also test the digital yuan’s impact on financial markets and monetary policy. The bank has been testing the digital currency throughout the country since last year, allowing citizens to use the e-CNY to purchase goods and services and pay for utilities and other bills. . . .

PNC Inks $14.5m Deal With Merchants in Overbilling Spat
Law360 – November 8, 2021 (subscription required)

PNC Merchant Services Co. LP has agreed to pay up to $14.5 million to more than 200,000 merchants who allege it overbilled them through credit card processing fees, according to a proposed settlement filed Monday in New York federal court. The merchants said in the motion for preliminary approval of the deal that PNC has also agreed to “important practice changes” that include allowing customers to switch from pricing plans that require annual fees, giving customers notice before charging that sort of fee and getting written consent from customers before charging fees on customers that request paper statements.

On top of that, PNC will cover settlement notice and administration costs, attorney fees and expenses and service awards, the merchants said. “After four years of hard-fought litigation, the parties have agreed to settle these cases on a class-wide basis,” they said. “If approved, the settlement will provide critical monetary and non-monetary benefits to customers.” . . .

New York Mayor-Elect Adams Says He Will Take His First Three Paychecks in Bitcoin
Reuters – November 4, 2021

New York Mayor-elect Eric Adams said on Thursday he would take his first three paychecks in bitcoin and signaled his intention to make his city the “center of the cryptocurrency industry” after he takes office in January. “In New York we always go big, so I’m going to take my first THREE paychecks in bitcoin when I become mayor,” Adams wrote in a Twitter post. “NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait!”

The mayor-elect’s tweet came in response to Miami Mayor Francis Suarez, who wrote in a Twitter message of his own that he would take his first paycheck in bitcoin, the world’s largest cryptocurrency. Suarez, who won re-election on Tuesday, has been a cryptocurrency champion, setting his sights on building Miami into a hub for cryptocurrency innovation. . . .

Banks, Credit Unions Oppose ‘Impractical’ Wisconsin Interchange Bill
American Banker – November 4, 2021 (subscription required)

Credit unions and banks don’t often see eye to eye, but the two industries have come together in Wisconsin to oppose legislation they say will hurt the state’s financial institutions. At issue is pending legislation that would prohibit interchange on the sales tax portion of electronic payments. This would require card issuers, which typically see only the full transaction price, to implement new systems to separate or itemize every taxable sale.

A hearing on the proposal, known as Assembly Bill 587, occurred on Oct. 21 before the Wisconsin Assembly Committee on Financial Institutions. The legislation remains in committee and is not currently scheduled for a vote. Opponents say the proposal would harm consumers and small businesses because it would lead to additional administrative costs and burdens for retailers, which would be passed along in the form of higher prices. . . .

Industry Developments

SPOTLIGHT: Klarna Launches a New App That Brings BNPL Capability to Any Online Store
Digital Transactions News – November 3, 2021

Two trends have buoyed the payments business since the onset of the pandemic—online shopping and buy now, pay later capability—and on Wednesday Klarna AB launched a new app that exploits both trends by letting consumers use Klarna’s BNPL service regardless of whether the store is a Klarna merchant.

The new app features so-called one-time cards that enable transactions at any online store, Klarna says. With this feature, users press a “pay with K” button on the app to invoke the one-time card at the value of the purchase. They then tick off the pay later option, review the terms, and copy and paste the one-time card into the checkout to complete the transaction. Terms can vary among BNPL providers and stores, but typical terms are four equal payments at no interest over a six-week period. Other features of the app, which is available for both iOS and Android phones, include so-called curated content keyed to the user’s favorite products and stores, notices of price reductions and what Klarna calls “exclusive deals,” spending reports for monthly budgeting, and delivery tracking. . . .

A Fast-Growing Affirm Looks to Supercharge Its Expansion With an Exclusive Amazon Deal
Digital Transactions News – November 10, 2021

Buy now, pay later powerhouse Affirm Inc. will be the exclusive provider of BNPL services for until the end of January, 2023, under a deal Affirm announced Wednesday. Affirm will also be included as an option in Amazon’s wallet, Amazon Pay, according to the agreement.

The agreement represents a big step in Affirm’s relationship with the e-ecommerce giant just since late summer, when the BNPL company indicated it was testing a service for Amazon “day and night” after adding the merchant as a client in August. Affirm also provides BNPL services for another major online marketplace, Shopify Inc. The Amazon test was clearly successful, but Affirm chief executive Max Levchin told equity analysts Wednesday afternoon the inclusion in Amazon Pay is a new, and perhaps equally important, development as e-commerce continues to expand. “Placing in wallets is the next step,” he said. “It’s important for us to be in wallets.” . . .

‘Reverse Robin Hood’ Is Real
The Hill – November 8, 2021