Payments News Update -- May 29, 2019
Legal and Regulatory Developments
SPOTLIGHT: Financial Institutions Conflicted but Cautiously Optimistic About Open Banking Opportunity
The Fintech Times – May 29, 2019
Open banking was launched to spur innovation in the financial services industry and create a better deal for consumers. But new research published today by open banking platform Tink reveals that European financial institutions still have significant concerns about its impact. Two fifths (39%) see open banking regulation as the biggest current threat to their business model and 56% fear that consumer loyalty towards banks will be significantly reduced as a result of open banking.
Nevertheless, the report – based on a survey of 269 senior decision makers in financial institutions across Europe – suggests that financial institutions are also waking up to the importance of innovating to remain competitive in the new world order. . . .
ECB Supports Central Bank Digital Currencies
PYMNTS – May 29, 2019
A European Central Bank (ECB) official is throwing his support towards wholesale central bank digital currencies (CBDCs).
In fact, Vitas Vasiliauskas, a member of the Governing Council of the ECB and chairman of the board of the Bank of Lithuania, said the real issue at play is whether CBDCs should be retail, wholesale, or a combination of both. While a retail CBDC would be available for the general public, wholesale would serve a limited circle, primarily banks. . . .
Air China Sues Visa Over Card Fees in UK Antitrust Claim
MLex – May 24, 2019 (subscription required)
Visa has been hit with a UK antitrust claim from Air China, which is seeking to recoup losses suffered as a result of inflated payment-card fees, MLex has learned.
The airline, China’s flag carrier, filed the damages action at the High Court in London earlier this week, along with a second claimant that is unidentified. The defendants are five corporate entities of Visa, including the company’s operations in Europe, according to the listing for the commercial court. . . .
Europe’s GDPR Has Accomplished a Lot in Its Infancy
CNET – May 24, 2019
Europe’s General Data Protection Regulation, which celebrates its first birthday Saturday, has managed to do a lot as a tyke.
The GDPR changed the rules for companies that collect, store or process information on residents of the EU, requiring more openness about what data they have and who they share it with. The law is hailed as the global standard for privacy in the digital age, in which data is a precious commodity. . . .
U.S. Will Eventually Embrace GDPR…One State at a Time
PaymentsSource – May 24, 2019 (subscription required)
Even though the General Data Protection Regulation has put data security and privacy top-of-mind throughout Europe in its first year, it is not likely the U.S. will see a similar federal mandate any time soon — if ever.
Instead, it is far more likely that individual states will take up the spirit — and some of the particulars — of the European Union’s sweeping legislation that has given European consumers far more control over who has their data, how they use it and how long they can store it. . . .
FTC’s Surescripts Case Closely Tracks SCOTUS Amex Decision
MLex – May 22, 2019 (subscription required) (click here for transcript of FTC presentation)
The theory behind the US Federal Trade Commission’s recently filed monopolization lawsuit against electronic prescription provider Surescripts “has a great deal of similarity” to the type of market the Supreme Court described in its recent ruling in a case over American Express’ antisteering rules, a senior agency official said.
“What’s notable about this case is it involves two-sided transactional platform markets,” said Bruce Hoffman, who heads up the FTC’s Bureau of Competition, at a conference* today. “So for those of you who paid attention to the Amex case, this is that. It is very closely related in terms of this structure of a transactional platform. . . .
Industry Developments
SPOTLIGHT: Facebook Plans to Launch ‘GlobalCoin” Currency in 2020
BBC News – May 24, 2019
Facebook is finalising plans to launch its own crypto-currency next year.
It is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020. The social media giant wants to start testing its crypto-currency, which has been referred to internally as GlobalCoin, by the end of this year. . . .
Helping Merchants Play To Win In The $500B Subscription Space
PYMNTS – May 29, 2019
More than half of all Americans now subscribe to digital news or entertainment streaming services, and such offerings are already beginning to crop up in new industries, like cars and financial services.
Companies are developing new subscription boxes, tiers and perks to retain customers’ loyalty in the face of rising competition, too. Retailers, like Walmart, are using related retail packages to compete with rivals such as Amazon, while digital services like Spotifyand Apple Music continue to fight for music lovers’ attention and loyalty through competitive features. . . .
Commentary: Why Visa And Mastercard Have Been on a Buying Spree
Digital Transactions News– May 28, 2019
Amazon, Apple, and Microsoft each briefly enjoyed a market capitalization greater than $1 trillion. The two dominant global payment networks, Mastercard and Visa, aspire to join this august, and for the moment, memberless club.
In the near term, the networks could grow on autopilot. However, inevitably diminishing retail-payments growth in mature markets like Scandinavia, the United States, and the United Kingdom underscores the networks’ desire for additional avenues of growth. . . .
Venture Capitalists Bet Big on the $1.9 Trillion Payments Industry
CNBC – May 28, 2019
Technology firms from Silicon Valley’s Stripe to U.K.-based GoCardless are all trying to grab a slice of the same $1.9 trillion industry.
Payments, a sector long dominated by cash, has gone digital as a number of start-ups enter the fray looking to make it easier to pay for things online as well as in stores. . . .
The New Payment Experience: How Brands and Consumers Are Shaping the World of Commerce
Forbes – May 28, 2019
According to a recent Pew Research study, Americans are relying less on physical currency, with roughly 29% of U.S. adults saying they don’t use cash to make any purchases during a typical week. For anyone with a credit card or a smartphone, this shouldn’t be a surprise, as the transition to a more cashless society has been gradually underway for a while. As a 25-year veteran of the payments industry, creating products for retailers, processors and financial institutions, I’ve seen the payment experience noticeably diversify in recent years with the growing popularity of mobile shopping and new e-wallets.
As payments change, they are becoming more ingrained within the user experience. Companies like Uber and Amazon are leading the way by embedding payments directly into the buying process. However, with more options for mobile wallets and custom consumer applications, every business can provide an Uber- or Amazon-like experience for their customers. . . .
Global Payments and TSYS Merge in $21.5 Billion Deal
Forbes – May 28, 2019
Putting weeks of speculation to bed, Global Payments and TSYS made it official, announcing a $21.5 billion merger of the two payments companies.
It marks the third mega-deal in the industry since the start of 2019 and underscores the changing nature of the marketplace. With digital payments growing in popularity, the industry is looking to capitalize and expand its offerings, fueling a spate of mergers. In January Fiserv announced a $22 billion deal to acquire First Data Corp. Shortly thereafter Fidelity National Services purchased WorldPay for $34 billion. . . .
Rabobank Is the Second Major Bank to Cancel Its Cryptocurrency Wallet
The Next Web – May 23, 2019
After exploring the opportunity last year, major Dutch bank Rabobank has decided it’s not going to take its plans for a cryptocurrency wallet any further.
In February last year, news surfaced that Rabobank was working on a cryptocurrency service – called Rabobit – which promised to bridge the gap between bank accounts and cryptocurrency wallets. But the bank has now confirmed it’s canned the project. . . .
Mastercard, Visa Warm to Crypto Debit Cards in the U.K.
PaymentsSource – May 23, 2019 (subscription required)
If cryptocurrency is on its way to becoming a mainstream payment method in the U.K., it will be due to an increased appetite from major card networks for forming alliances with leading cryptocurrency providers.
Last month, Coinbase became the latest cryptocurrency exchange to launch a Visa debit card in the U.K. The Visa card converts cryptocurrencies such as bitcoin, ethereum and litecoin to traditional currency, and thereby allows shoppers to spend their crypto in high street stores and online. . . .
Zero Raises $20 Million From NEA and Others for a Credit Card That Works Like Debit
TechCrunch – May 23, 2019
Just ahead of the launch of the Apple Card, a startup that has its own take on modernizing the credit card industry, Zero, is announcing the close of its $20 million Series A. The new round of funding was led by New Enterprise Associates (NEA), and brings Zero’s total raised to date to $35 million, including both equity and debt funding.
Other investors in the round include SignalFire, Eniac Ventures, Nyca Partners and some unnamed school endowments. Zero had previously announced an $8.5 million raise in fall 2017, led by Eniac, and had raised $7 million in venture debt from Silicon Valley Bank. . . .
Kyriba to Offer Real-Time Payments Through J.P. Morgan’s API
IBS Intelligence – May 23, 2019
Cloud treasury and finance solutions provider, Kyriba, has launched a real-time payments (RTP) service through J.P. Morgan’s API. The new service will enable Kyriba’s and J.P.Morgan’s clients to send real-time payments in the U.S. through The Clearing House’s RTP Network.
“Kyriba’s vision to broaden the payment choices available to corporate CFOs and treasurers aligns with J.P. Morgan’s open banking initiatives. Our clients value the option to transmit real-time payments, and the API integration we have implemented with Kyriba enables these payments to be processed and confirmed within seconds,” said Sairam Rangachari, global head of Open Banking at J.P. Morgan. “Together we have launched the next generation of payments technology to truly modernize the payments experience for our joint clients.” . . .
AT&T Says It’s Now the First Mobile Carrier to Accept Cryptocurrency for Bill Payments
Digital Transactions News – May 23, 2019
AT&T Communications said on Thursday that starting now it will accept bill payment in cryptocurrency, making it the first mobile carrier, and one of the largest companies overall, to do so.
The company, a unit of AT&T Inc., is using Atlanta-based processor BitPay Inc. to handle digital-currency payments. No information was immediately available from the telecom company regarding how many such transactions AT&T expects to receive.as a proportion of its ordinary flow of payments. . . .
Chase and Visa Provide an Easier Way to Get Around New York City with a Tap
PR Newswire – May 23, 2019
Chase customers can soon benefit from an easier way to get around town by tapping their Visa contactless cards to ride New York City’s subways and buses, removing the need to stand in line to purchase or load a separate transit card. . . .