Payments News Update -- May 8, 2019
Legal and Regulatory Developments
SPOTLIGHT: Debit Dynamics
Digital Transactions News – May 1, 2019
Merchants have said it before, and they’re saying it again: It’s high time the Federal Reserve lowers its regulated debit card interchange rate.
The call by the Retail Industry Leaders Association came shortly after the Fed in March released its latest study of debit card revenues and expenses. The study, for the year 2017, says regulated debit card issuers’ authorization, clearing, and settlement (ACS) costs had declined 54% since 2009, the first year the Fed began collecting such data. . . .
Lawsuit Accuses FLEETCOR Of Anticompetitive Payment Processing
PYMNTS – May 8, 2019
A lawsuit filed this week by Gas Pos, a fuel station point-of-sale startup, is accusing fleet card company FLEETCOR of anticompetitive behavior and adding to the growing controversy over fees associated with processing and using fleet cards.
According to documents obtained by Bloomberg Law, Gas Pos Inc. filed a lawsuit against FLEETCOR Technologies on May 5 in an Alabama U.S. District Court accusing the firm of monopolizing the fleet card and truck stop payment processing market. . . .
San Francisco Requires Businesses to Take Cash Payments
Courthouse News Service – May 7, 2019
The San Francisco County Board of Supervisors voted unanimously Tuesday to require most businesses to accept cash rather than debit or credit cards only.
Citing discrimination against those who don’t have bank accounts and the poor in particular, county lawmakers voted to amend the Police Code to require brick-and-mortar businesses to accept cash payments for goods and services other than professional services. . . .
EU Regs Hear More Calls For Commercial Card Swipe Fee Caps
PYMNTS – May 6, 2019
As European Union (EU) authorities continue to combat interchange fees charged by credit card companies Visa and Mastercard, some are now calling on such regulatory action to apply to corporate and commercial cards as well.
Reports in The Moodie Davitt Report on Friday (May 3) said that Jacques Parson, chairman of Netherlands professional services company Kappé International, is campaigning on behalf of the travel industry to remove interchange fees for cross-border card payments within Europe, along with other travel and retail companies. . . .
The Fed Says an Announcement About Operating a Real-Time Payment System Is a Ways Off
Digital Transactions News – May 6, 2019
Will it or won’t it? Those eagerly awaiting word about whether the Federal Reserve will directly operate a real-time gross settlement system will have to wait a bit longer.
The Fed last October said it was considering whether to directly develop and operate a RTGS system as an outgrowth of its years-long payment system improvement project to promote faster, more efficient, and more secure U.S. payments. But a direct Fed role in faster payments is controversial, even though the Fed has operated one of the nation’s two automated clearing house network switches for years. . . .
Wells Fargo Expects to Refund Debit-Card Fees Amid Review
Bloomberg – May 3, 2019 (subscription required)
Wells Fargo & Co. said it expects to refund certain fees paid on debit-card accounts as it reviews disclosures that may have confused customers.
The San Francisco-based bank, which is working to emerge from a series of customer-abuse scandals, also said Friday in a filing that potential legal losses rose by $400 million in the first quarter. It’s the second consecutive quarter that this figure — essentially a worst-case scenario — has risen at the bank. . . .
Judge Green-Lights NY Regulators’ Lawsuit Against Federal Agency Over Fintech Charters
New York Law Journal – May 2, 2019 (subscription required)
A federal judge on Thursday rejected a motion from an office within the U.S. Treasury Department to dismiss a lawsuit from the New York State Department of Financial Services seeking to prevent the federal government from issuing certain bank charters to financial technology companies.
The state agency, which regulates financial institutions in New York, is suing the Office of the Comptroller of the Currency over a decision to essentially label fintech companies as banks, saying it will diminish its power to regulate the activities of those entities. . . .
Central Banks Settle Cross-Border Payments With Blockchain for First Time
Coindesk – May 2, 2019
The central banks of Canada and Singapore have concluded a trial of cross-border payments using blockchain technology and central bank digital currencies.
The Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) jointly announced Thursday that the successful trial – the first of its kind between two central banks – showed “great potential to increase efficiencies and reduce risks for cross-border payments.” . . .
Industry Developments
SPOTLIGHT: Facebook ‘Has Lit A Fire’ Under Bitcoin And Crypto
Forbes – May 8, 2019
Facebook, the world’s largest social media network, boasting more than two billion users across its various platforms, is ramping up its plans to launch a rival to bitcoin following reports it’s looking to get venture capital firms to invest in its cryptocurrency project.
The bitcoin price, which has recently rallied to year-to-date highs, has been desperately seeking direction over recent months as the traditional finance industry, global tech giants, and the world’s regulators mull how to proceed with bitcoin, blockchain, and cryptocurrencies. . . .
Amazon Go Opens for the First Time in New York. And the Cashier-Free Store Will Accept Cash
CNBC – May 7, 2019
Amazon is finally bringing its cashier-less convenience store to New York. And it will also mark the first time this type of store, called Amazon Go, accepts cash.
The e-commerce company announced Tuesday that Amazon Go is opening to the public this week at Brookfield Place in downtown New York, on the second level of the enclosed shopping mall. The roughly 1,300-square-foot store makes this the twelfth Amazon Go location to open in the U.S. It is, however, the first one to make it to New York, with most of the others blanketing the West Coast, including in Seattle and San Francisco. . . .
Is Real-Time Payments A Threat To Credit Cards?
PYMNTS – May 6, 2019
There’s no clear winner yet in the “war on cash,” so investment is flowing into technology that’s designed to accommodate a wide set of payment options that can still take cash along for the ride.
For example, Stripe and General Catalyst recently invested $40 million in Rapyd to fuel a Software-as-a-Service checkout product designed to power a single reconciliation for more than 500 localized payment types in more than 100 countries — including cash, transfers, local cards and digital and mobile wallets. . . .
Can Open Development Solve the Cashless-Retail Conflict?
PaymentsSource – May 6, 2019 (subscription required)
Samsung is another big-name company to consider issuing its own cryptocurrency. Similar stories have already emanated from the likes of Facebook and JPMorgan Chase, with analysts speculating on various use cases for these cryptocurrency tokens.
While not yet confirmed officially, a “Samsung Coin” could find application as a payment means on the company’s app store and traded on cryptocurrency exchanges. The company has revealed that its flagship Galaxy S10 smartphone will have a built-in cryptocurrency wallet. . . .
PIN-Based Payment Companies Could Benefit From Consolidation
Forbes – May 6, 2019
There’s money —a lot of money — to be made helping people spend theirs, from signing on a check and swiping a card to tapping your phone on a point-of-sale terminal. The billion-dollar companies that make technology to make payments go are the targets of game-changing mega-mergers, as innovation in the industry advances at a rapid clip.
PIN-debit networks were once an innovation of electronic payments that freed people from the burden of having to carry cash. However, smaller networks are now hobbled by strong competition from incumbents and the next generation of disruptors. M&A could help them better compete with market leaders Visa and Mastercard. . . .
5 Reasons to Worry About Facebook’s Cryptocoin
PaymentsSource – May 3, 2019
Facebook’s pursuit of a crypto-based payment system would seem to be filled with potholes and red flags. The social network’s stealth project isn’t much of a secret, and another Facebook virtual currency has already failed years earlier. But Facebook also has a lot in its corner — enough to threaten the e-commerce and payment processing establishment, should its crypto project take off.
The social network hasn’t publicly discussed building a cryptocurrency payment system, though its corporate moves would appear to make a launch inevitable. It transferred David Marcus from his post overseeing Messenger to a job heading Facebook’s blockchain development. Facebook founder Mark Zuckerberg has said blockchain could be the basis of a wide range of innovation. . . .
Mark Zuckerberg at F8 Conference Announces New eCommerce and Payment Platform
SearchEngine Journal – April 30, 2019
Facebook’s founder Mark Zuckerberg gave a keynote presentation at the F8 Conference where he revealed that Facebook-owned WhatsApp is moving toward hosting web shops where customers can browse a store’s products and make purchases. This may represent a way to move beyond the advertising model by becoming an eCommerce platform. . . .