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Payments News Update - April 23, 2020

Posted  April 23, 2020

Legal and Regulatory Developments

SPOTLIGHT: AAI Says It’s Time to Cancel Amex: Sabre-Farelogix Opinion Makes a Mockery of Market Definition
American Antitrust Institute – April 21, 2020 (click here for the AAI commentary)

In a new commentary addressing the Department of Justice’s recent defeat in attempting to block the merger of Sabre and Farelogix, AAI Vice President of Legal Advocacy Randy Stutz argues that the district court’s opinion betrays fundamental failings in the Supreme Court’s analytical approach to “two-sided” markets as adopted in the 2018 Ohio v. American Express (“Amex”) case. The commentary, “We’ve Seen Enough: It Is Time to Abandon Amex and Start Over on Two-Sided Markets,” argues that the Sabre court’s application of Amex is clearly incorrect and should be easily reversed on appeal, because it ignores that mergers between two-sided and one-sided firms can harm competition in one-sided markets. But regardless, the case shows why the Amex approach to two-sided markets is unworkable and incoherent.

Amex involved a government challenge to anti-steering rules that American Express imposes on merchants to prevent them from encouraging customers to use cheaper payment alternatives. The Court in Amex held that the government failed to define a proper relevant market. Rather than focusing on harm to competition on the merchant side of the two-sided credit card market, the Court held that the government should have defined a market for credit card “transactions” that analyzes the merchant and cardholder sides together, as component parts of a single, jointly consumed product. . . .

Paywave Fees Waived, but for How Long?
Newsroom – April 22, 2020

New Zealand banks have slashed debit contactless merchant fees to zero, amid the Covid-19 crisis. The move late last month is commendable; banks are putting health before profits, at least in the short term.

But what happens when we “return to normal”? Will the banks extend, repeal or modify the current fee-free arrangements? Their rapid response and willingness to make a loss on contactless debit card transactions suggests room to reduce merchant fees more widely. . . .

Vestager Fears Libra’s “Closed Financial System”
Competition Policy International – April 21, 2020

Margrethe Vestager, the European Commissioner for Competition, is asking robust questions of Facebook over its proposed leap into cryptocurrency. The questions embrace whether or not Libra shall be an open platform for commerce, what currencies shall be accepted, and whether or not organizations or people who use the foreign money will get “a particular benefit.”

The feedback was made in an interview with Denmark’s Finansforbundet, picked up by Bloomberg. “It’s a brand new factor that we’ve begun to ask questions on one thing that doesn’t but exist,” Vestager mentioned. . . .

Is ‘Libra 2.0’ Any More Appealing to Regulators Than the Original?
Finance Magnates – April 21, 2020

When Facebook unveiled its Libra project last June, the whole world shook.

Indeed, a project that the company seemed to expect would move along without any major problems caused a legislative earthquake–governments the world over fired back at Facebook, holding conferences, hearings, and creating new legislation aimed at halting the project in its tracks. . . .

Why Smart Regulation Leads to Fintech Innovation
Forbes – April 17, 2020

Silicon Valley’s ethos has traditionally aligned with the motto “move fast and break things.” Companies would churn out innovative products and services with impressive speed, with compliance and regulation often a secondary concern.

Transportation, music and television, travel and hospitality — think companies like HomeAway and Airbnb — all these markets (and many more) were turned on their heads by tech innovation and bold visions. . . .

Big Four Banks Under Pressure to Drop Digital Debit Fees
IT News – April 16, 2020

Australia’s Big Four banks may have paused payment terminal rental fees for businesses shuttered by COVID-19, but a fresh battle has broken out over how regular digital transactions are routinely force-trunked via more expensive rails.

Local stalwart eftpos has revealed it has started pushing banks and regulators to quickly open-up access to billions of dollars a year in card-on-file transactions, so that businesses can get a choice over whether they pay higher or lower fees based on how digital payments are routed. . . .

Meeting the New Challenge of Rolling out PSD2 and SCA
PYMNTS – April 16, 2020

Long before anyone had ever heard of the coronavirus or social distancing, eCommerce was slowly and steadily making progress and eating into the physical retail share of the shopping landscape.

As of the end of 2019, eCommerce was about 15 percent of total commerce, Ekata Vice President of Strategy and Operations Arjun Kakkar told PYMNTS in a recent conversation. Had 2020 been a normal year, it might have risen to about 17 percent by the time we were ringing in the New Year on Dec. 31. . . .

Industry Developments

SPOTLIGHT: Leaked Pics Reveal Google Smart Debit Card to Rival Apple’s
TechCrunch – April 17, 2020

Would you pay with a “Google Card?” TechCrunch has obtained imagery that shows Google is developing its own physical and virtual debit cards. The Google card and associated checking account will allow users to buy things with a card, mobile phone or online. It connects to a Google app with new features that let users easily monitor purchases, check their balance or lock their account. The card will be co-branded with different bank partners, including CITI and Stanford Federal Credit Union.

A source provided TechCrunch with the images seen here, as well as proof that they came from Google. Another source confirmed that Google has recently worked on a payments card that its team hopes will become the foundation of its Google Pay app — and help it rival Apple Pay and the Apple Card. Currently, Google Pay only allows online and peer-to-peer payments by connecting a traditionally issued payment card. A “Google Pay Card” would vastly expand the app’s use cases, and Google’s potential as a fintech giant. . . .

Visa Beefs up Its Security Systems to Make Online Payments More Robust
Tech Radar – April 21, 2020

Visa has introduced Visa Secure (previously known as Verified by Visa), an updated program to help make online payments more secure.

Available across central and eastern Europe, the Middle East and Africa (CEMEA) regions, Visa Secure provides rules and policies that merchants and issuing banks have to follow to authenticate eCommerce transactions and verify cardholder identity before a transaction can be authorized. . . .

An Introduction to Mobile Commerce in China
Mobile Payments Today – April 21, 2020

Everything in China is on a different scale. With more than 1.3 billion people, it’s the most populous country on earth, with 50 million more people than India. The migration from rural to urban areas and the growth of the middle class is significant. Demand for consumer goods is high. And digitalisation is happening at lightspeed.

It’s not news that China represents a huge opportunity for e-commerce merchants who want to expand into new markets. But collecting payments in the region is incredibly complex, and often this forms a barrier for doing business across borders. . . .

Google Dangles Free Listings for Merchants on Its Google Shopping Tab
Digital Transactions News – April 21, 2020

Alphabet Inc.’s chief subsidiary Google revealed Tuesday that merchants can soon have free listings on its Google Shopping tab.

No-cost listings will become available in the United States next week and elsewhere before the end of 2020, Bill Ready, president of commerce at Mountain View, Calif.-based Google, said in a blog post. Ready, formerly chief operating officer at PayPal Holdings Inc., portrayed the development as another counter-measure for merchants hit hard by the new coronavirus, or Covid-19 pandemic, especially those with brick-and-mortar operations that are now closed. . . .

As Coronavirus-Induced Chargebacks Soar, Mastercard Attempts Triage
PaymentsSource – April 17, 2020

Credit card chargebacks were rising in certain categories prior to the coronavirus outbreak, but the pandemic is causing a spike in all types of payment card disputes, according to Mastercard.

Few categories are higher than airline tickets, where chargebacks have risen from an average of .5% to 20% as consumers try to get back money spent on canceled flights, said Johan Gerber, Mastercard’s executive vice president of cyber and innovations. Friendly fraud — in which consumers dispute a legitimate transaction — is also spiking. . . .

In the Wake of COVID-19, QR Codes Are Taking Over the World. Will Visa and Mastercard Survive?
Finextra – April 17, 2020

The coronavirus pandemic has taught people to use QR codes in new and broader ways. This presents a great opportunity to shake up international payment systems with their wildly expensive commissions – and move to something better.

QR codes are one of humankind’s brilliant inventions, and yet, they are still underestimated. In developed countries, they are mainly used as graphical hyperlinks leading to sites or other information. However, with QR codes, you can also create a cashless payment infrastructure – quickly and inexpensively. This opportunity is now actively used by countries with developing economies, including China, India and Brazil. It also appears the coronavirus crisis could well spread this practice around the world, moving the QR code-based fintech industry towards a definitive breakthrough. . . .

Stripe, Prepaid Card Providers Try to Capitalize on Pandemic-Spawned Opportunities
Digital Transactions – April 16, 2020

Like other payment networks, the automated clearing house was going great guns until mid-March, but thanks to the Covid-19 pandemic it’s now in the midst of a slowdown.

ACH governing body Nacha reported Thursday that total volume rose 7.1% year-over-year in the first quarter to 6.4 billion transactions, up by 423 million payments. Same-day volume jumped a full 42% to 75 million transactions from 52.7 million in 2019’s first quarter. . . .

Facebook Revamps Libra, Plans Multiple Single-Currency Coins
PaymentsSource – April 16, 2020

Facebook Inc. and its partners said their Libra cryptocurrency project will now support multiple versions of the digital coins, the majority of which will be backed by individual fiat currencies like the U.S. dollar, as part of changes made to appease skeptical regulators worldwide.

The Libra Association, the governing body overseeing the proposed project, redesigned the currency and made other changes responding to financial regulators concerned the effort could undermine the power and control of central banks. The group said Thursday it plans to support multiple Libra stablecoins, with each working like a digital version of a country’s existing currency. . . .

US Nonstore Retail Sales Grow 12.1% in March and Total Sales Rise 4.4%
Digital Commerce 360 – April 15, 2020 (click here for Listrak analysis)

Grocery sales through all channels jumped nearly 26% in March, the highest rate in at least 25 years, as consumers race to stock their fridges and pantries while staring down indefinite stay-at-home orders. But other non-essential categories saw big declines.

In the first full month of the coronavirus impact, shoppers stayed away from physical stores and purchased on the web in larger numbers, new U.S. Department of Commerce data shows. . . .