Payments News Update -- May 15, 2019
Legal and Regulatory Developments
SPOTLIGHT: Supreme Court Says Apple Will Have to Face App Store Monopoly LawsuitDebit Dynamics
The Verge – May 13, 2019 (click here for the Court’s opinion)
The Supreme Court is letting an antitrust lawsuit against Apple proceed, and it’s rejected Apple’s argument that iOS App Store users aren’t really its customers. The Supreme Court upheld the Ninth Circuit Court of Appeals’ decision in Apple v. Pepper, agreeing in a 5-4 decision that Apple app buyers could sue the company for allegedly driving up prices. “Apple’s line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits,” wrote Justice Brett Kavanaugh.
Apple had claimed that iOS users were technically buying apps from developers, while developers themselves were Apple’s App Store customers. According to an earlier legal doctrine known as Illinois Brick, “indirect purchasers” of a product don’t have the standing to file antitrust cases. But in today’s decision, the Supreme Court determined that this logic doesn’t apply to Apple. . . .
CFPB Details Plan to Reconsider and Potentially Eliminate Existing Rules
HousingWire – May 13, 2019
The Consumer Financial Protection Bureau is already in the midst of enacting changes to some of its rules, namely the requirements for the data collection and reporting stipulated by the Home Mortgage Disclosure Act and its enforcement practices, but those may not be the only rule changes coming from the CFPB.
The CFPB announced Monday that it plans to “periodically” review its regulations and may amend or even abolish existing rules. . . .
Mastercard, Visa face UK lawsuits from De Vere, Euronet 360 Finance
MLex – May 10, 2019 (subscription required)
Mastercard and Visa have drawn new UK lawsuits from luxury hotel operator De Vere and electronic payment provider Euronet 360 Finance. The card networks have faced growing damage claims over alleged overcharging due to payment-card fees.
The companies saw litigation started today in the competition and commercial divisions of the High Court. . . .
US Congress Launches Fintech and AI Task Forces
Finextra – May 10, 2019
Set up by the House Committee on Financial Services, the fintech task force will look at domestic and international regulation of the nascent sector as well as the infrastructure and legal and regulatory framework for efficient payments. Other areas of interest for the team of legislators include fintech and lending, specifically the use of alternative data for loan underwriting, and the use of big data and its implications for privacy.
Meanwhile, the committee is setting up a separate task force for AI, looking into its applications in financial services and regulation, its use in digital identification and combating fraud, and how automation could impact jobs in financial services and the overall economy. . . .
Account-Validation Requirement Coming to ACH Internet Payments
Digital Transactions News – May 8, 2019
An automated clearing house network rule tightening security around Internet purchases, one of the ACH’s fastest-growing transaction categories, is set to take effect Jan. 1.
The rule change, technically an amendment, affects so-called WEB debits, which cover a wide variety of ACH-funded Internet payments. It will require merchants as ACH transaction originators to validate the customer account used for WEB debit transactions. . . .
Wells Fargo Creates Unit to Satisfy Regulatory Demands
American Banker – May 8, 2019
Wells Fargo has created an operations unit designed to focus exclusively on meeting demands of regulators who have expressed dissatisfaction with the bank’s progress after a series of scandals.
Derek Flowers, the bank’s chief credit and market risk officer, will lead the newly formed strategic execution and operations group, acting CEO C. Allen Parker said in an internal memo issued Wednesday. Flowers, a 21-year veteran of Wells Fargo, currently oversees all credit risk throughout the bank’s lending activities and provides oversight of all company and line-of-business credit policies. . . .
Republicans Move to Abolish CFPB
HousingWire – May 7, 2019
If a handful of Republicans in the Senate have their way, the Consumer Financial Protection Bureau will not exist for much longer, as for at least the third time in the last few years, Republicans are trying to kill the CFPB.
And just like the two previous times it’s been attempted, Sen. Ted Cruz, R-Texas, is leading the way. . . .
Industry Developments
SPOTLIGHT: Network Chargeback Changes Are a Good Start, but More Work Is Needed
PaymentsSource PayThink – May 10, 2019
Card schemes are responding to a demand for change in how we handle chargebacks.
Visa introduced its Visa Claims Resolution initiative last April, and Mastercard followed suit not long after. The Mastercard Dispute Resolution update is now undergoing a phased rollout scheduled to be complete in 2020. . . .
Visa Tightens Fraud Caps as Merchants Face New Digital Scams
PaymentsSource – May 14, 2019 (subscription required)
Restaurants, electronics sellers and digital-goods merchants are seeing sharp spikes in fraud as criminals find creative new ways to interfere in online and mobile commerce.
Through account takeovers and stolen payment details, criminals are intercepting and reselling merchandise — and ordering food for themselves — as they use restaurants to test bogus payment credentials, experts say. . . .
Visa: 80 Of 100 US Merchants Offer Contactless Checkout
PYMNTS – May 13, 2019
Globally, tapping to pay with contactless cards has taken off remarkably, and the U.S., after years of lagging behind, is starting to catch up, according to a new blog post from Visa.
“We’re excited to share that tapping to pay is becoming a reality across the U.S., and continues to gain momentum globally,” Dan Sanford, global head of contactless payments, Visa wrote in the May 13 post. . . .
You Can Now ‘Spedn’ Bitcoin at GameStop, Barnes & Noble and More
CoinDesk – May 13, 2019
On Monday, the payment processing startup Flexa announced the release of its new custodial crypto wallet SPEDN, which allows users to spend bitcoin, ethereum, bitcoin cash or GUSD at a variety of brick-and-mortar retailers.
Although the merchants receive fiat in the end, the partnership enables new possibilities for people looking to spend crypto as easily as they might use Apple Pay. . . .
Bank of America Considers Scrapping First Data Payments Partnership
Wall Street Journal – May 9, 2019 (subscription required)
Bank of America Corp. is considering dissolving the huge payment-processing joint venture it has with First Data Corp. and developing its own business to move money between consumers and merchants, according to people familiar with the matter.
Like its rivals, Bank of America is rushing to meet demand from consumers and businesses for modern money-moving technology, which promises a steady stream of fees with each transfer or swipe. Leaving the joint-venture would give the bank more control of its business that focuses on moving money for merchants. . . .
Facebook’s Crypto Would Be a Payments and Ad Machine
PaymentsSource PayThink – May 9, 2019
The world’s largest social media platform, Facebook, appears to be on the brink of launching a new payment system. It won’t be a walk in the park. Reportedly it’ll be a “stablecoin,” or a digital coin backed by traditional currencies. But details are sketchy.
While the social media giant’s challenge is enormous, the potential benefits are huge. . . .
Banks Waking Up to Fintech Threat Throw Billions Into Digital
Bloomberg – May 9, 2019 (subscription required)
Scrappy online financial startups have spent the past few years building buzz, backing and the beginnings of a customer base.
For a while, the world’s banking giants largely ignored them. Now they’re starting to feel the heat—and fighting back with the most formidable weapon in their arsenals: cash. . . .
JCB Teams With Viva Wallet to Add Merchants in Europe
PaymentsSource – May 8, 2019 (subscription required)
Japanese credit card brand JCB is working with Viva Wallet to build its merchant base in Europe as part of its ongoing expansion to new global markets.
Greece-based Viva Wallet will use its cloud-based processing services to enable JCB card acceptance within Greece and 11 additional countries in Europe beginning next year. . . .