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Payments News Update -- November 21, 2019

Posted  November 21, 2019

Legal and Regulatory Developments

SPOTLIGHT: Visa Confirms the FTC Is Probing Its Debit Transaction Routing Practices
Digital Transactions News – November 18, 2019

Confirming rumors that the Federal Trade Commission is looking into issues involving debit card transaction routing, Visa Inc. late last week reported the Federal Trade Commission has asked it to voluntarily provide information about its routing practices.

In a brief notice in its fiscal 2019 report to the Securities and Exchange Commission, Visa said the FTC’s Bureau of Competition on Nov. 4 “requested that Visa provide, on a voluntary basis, documents and information for an investigation as to whether Visa’s actions inhibited merchant choice in the selection of debit payments networks in potential violation of the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Visa is cooperating with the Bureau.” . . .

Fed Reserve Evaluating Digital Dollar But Benefits Still Unclear, Says Chairman
Coindesk – November 20, 2019

In a Nov. 19 letter responding to questions from lawmakers Rep. French Hill (R-Ark.) and Rep. Bill Foster (D-Ill.) in late September, Powell said the Fed has noted the efforts of other nations to explore a CBDC option, and that it continues to “carefully analyze the costs and benefits of pursuing such an initiative in the U.S.”

In their letter to Powell, Hill and Foster had expressed concerns over the potential risks to the dollar if another nation or private company creates a widely used cryptocurrency, and asked whether the central bank is look pursuing such an option. . . .

Regulators Approve Biggest Bank Marriage Since the 2008 Financial Crisis
CNN – November 20, 2019

The marriage of SunTrust and BB&T received the blessing of financial watchdogs on Tuesday, paving the way for the formation of America’s sixth-largest commercial bank.

The approval by the Federal Reserve and the FDIC removes the final obstacle facing the biggest bank merger since the 2008 financial crisis — a crisis that was worsened by the creation of mega banks. . . .

Card Schemes Face Fresh Trans-Pacific Regulatory Scrutiny
PaymentsCompliance – November 18, 2019 (subscription required)

Visa and Mastercard are under investigation by federal U.S. antitrust regulators for potential violations of laws giving retailers choice of debit network routing. Visa is also being investigated in Australia over interchange fees, the company has disclosed.

In a regulatory filing on Thursday, Visa said was asked by the U.S. Federal Trade Commission (FTC) on November 4 to voluntarily hand over “documents and information for an investigation as to whether Visa’s actions inhibited merchant choice in the selection of debit payments networks.” . . .

Could a Move in the German Parliament Break Apple’s Hammerlock on the NFC Chip?
Digital Transactions News – November 15, 2019

Ever since Apple Pay debuted in 2014, Apple Inc. has kept the near-field communication chip in its devices off-limits to payment apps from other companies. But now legislation has appeared in Germany that may force the computing giant to grant access to that all-important chip, which allows Apple phones and other devices to link to point-of-sale devices.

Apple is protesting the move, which would become law next year if approved by the Bundesrat, the upper house of Germany’s parliament, according to a Reuters report. If that happens, it could cut development costs for banks participating in third-party mobile wallets and have wide implications for a variety of payments functions offered by Apple rivals, experts say. . . .

Retailers Score a Win on Credit Card Processing Fees — Only to Face Another Battle
Toronto Star – November 14, 2019

Canadian small businesses are hailing a drop in credit card transaction fees flowing from a deal last year between Ottawa and the major credit card brands, but advocates warn that they have seen a rise in aggressive sales practices from companies selling credit card processing services that could threaten the gains.

Fees paid by merchants to the credit card issuing bank will fall in April to an average of 1.4 per cent of each transaction value from the current 1.5 per cent. . . .

Are China’s Overtures to Foreign Payment Companies a Real Policy Shift?
PaymentsSource – November 14, 2019 (subscription required)

For decades card networks and issuers outside of China have tried to enter the giant Chinese consumer payments markets, but mostly have run into walls because of shifting regulations.

Now China appears to have slightly cracked the door for some services from foreign companies like Visa, Mastercard, American Express, Discover Financial Services’ Diners Club, JCB, PayPal and Wirecard. . . .

Industry Developments

SPOTLIGHT: American Express Offers Sign-Up Bonuses to Lure New Merchants Into Accepting Its Cards
CNBC – November 19, 2019 

American Express is paying companies to start accepting its cards to keep up with the world’s largest payment processors Visa and Mastercard.

The payment is to help businesses with the start-up costs required to begin accepting American Express, historically known for its high-end customers. Some of the sign-up bonuses have reached about a half-million dollars, according to the Wall Street Journal, which first reported the news. . . .

Galileo Teams With Mastercard to Offer Instant Debit Cards Across a Wide Range of Industries
Digital Transactions News – November 21, 2019

The trend toward faster payments involves several dimensions, one of which is faster card delivery to a wide array of sponsors and users who until now had little or no access to cards branded by a global network. Galileo Financial Technologies Inc. said Thursday its offering that capability with an instant-issuance service for Mastercard-branded debit cards.

The cards, aimed at a markets ranging from gig workers to merchants to businesses looking for better ways to manage payroll, are available as digital or plastic versions. The former can be put into users’ hands within minutes, the latter within a matter of a few days, says Clay Wilkes, chief executive of Salt Lake City. Utah-based Galileo. . . .

Amazon Is Planning to Open Cashierless Supermarkets Next Year
Bloomberg – November 20, 2019 Inc. is preparing to open Amazon Go supermarkets and pop-up stores, an expansion of the company’s cashierless ambitions that includes the possibility of licensing the technology to other retailers.

The new store formats and licensing initiative could launch as soon as the first quarter of 2020, according to a person familiar with the project. Amazon is testing a supermarket equipped with Go technology in a 10,400-square-foot retail space in Seattle’s Capitol Hill neighborhood. . . .

Wells Fargo’s Modjtabai to Exit as Scharf Shapes Leadership
Bloomberg – November 20, 2019

Avid Modjtabai, who runs Wells Fargo & Co.’s payments and technology innovation unit, is leaving the firm as new Chief Executive Officer Charlie Scharf continues to shake up top management.

She will retire in March after 26 years at the bank, Wells Fargo said in a statement Wednesday. Separately, JPMorgan Chase & Co. veteran Ray Fischer is joining to lead cards, retail and merchant services, adding to the ranks of that firm’s alums now at Wells Fargo. . . .

PayPal Sweetens Shopping Ecosystem With $4B Honey Buy
PYMNTS – November 20, 2019 

PayPal has announced that it’s going to acquire Honey Science Corporation, a shopping discount and rewards platform.

The acquisition will cost PayPal $4 billion, and Honey will “transform the shopping experience for PayPal’s consumers while increasing sales and customer engagement for its merchants.” . . .

China’s Ant Financial Has No Timetable for a Listing but Targets 2 Billion Users in a Decade
CNBC – November 19, 2019

Alibaba affiliate Ant Financial has no immediate plans to go public, according to a senior executive at the company.

Market-watchers and investors have speculated for years about a potential blockbuster listing for the online financial services giant Ant Financial, which has a reported valuation of around $150 billion. . . .

Why Google’s Deal With Citi Isn’t About Becoming A Bank (But Is Still A Big Deal)
PYMNTS – November 18, 2019

It was the gasp heard ‘round the world last week. Google confirmed that it will partner with Citi and Stanford Federal Credit Union to launch a checking account linked to Google Pay sometime next year.

Media outlets and pundits have chalked this up to Google doing what every other ecosystem player wants to do: finding new ways to keep consumers inside the Google ecosystem and monetize those interactions. I think it’s more than that. . . .

PayPal On Facebook Pay And The Power Of Consumer Choice
PYMNTS – November 18, 2019

With so many mobile wallets littering the landscape, it can be hard to keep up with everything that is already out there, let alone trying to keep track of all the newcomers. But some players are so large that their entrance into just about anything is going to be head-turning, no matter how crowded the field already is. Facebook — the owner of the eponymous social media site as well as Instagram and WhatsApp — with billions of users stretch across all corners of the globe, is one such player.

Which meant that its announcement last week of its second-biggest piece of payments news of 2019 (the first place award going to Libra and the opera that has followed its announcement) — the launch of Facebook Pay across all of its platforms captured an awful lot of interest from many corners. . . .

Elavon to Acquire Sage Pay, a Gateway That Competes With Stripe, Paypal and Adyen, for $300m
TechCrunch – November 18, 2019

E-commerce continues to gain momentum — a trend we’ll see played out in the next two months of holiday shopping — and with that comes more consolidation. Today, Elavon, the payments company that is a subsidiary of US Bancorp, announced that it will acquire Sage Pay, one of the bigger payment processors in the UK and Ireland serving small and medium businesses.

Sage Pay’s owner Sage Group said the deal is being done for £232 million in cash (or $300 million at today’s currency rates). . . .