Payments News Update – June 24, 2022

Legal and Regulatory Developments

SPOTLIGHT: UK Watchdog to Review Post-Brexit Visa and Mastercard Fees
Reuters – June 21, 2022

Britain’s payment systems regulator (PSR) will conduct two market reviews of card fees charged by Visa and Mastercard, the U.S. companies that account for 99% of debit and credit card payments in the UK. The PSR’s announcement on Tuesday follows heavy pressure from lawmakers to launch full market reviews to tackle card fees paid by retailers, which are typically passed on to consumers.

“We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal,” said Natalie Timan, the PSR’s head of strategy. . . .

CFPB Wants to Use Banks’ Revenue Data to Change Card Late Fees
PYMNTS – June 23, 2022

The Consumer Financial Protection Bureau (CFPB) took its first step yesterday, June 22, to change the regulation affecting credit card late fees. The Bureau published an Advance Notice of Proposed Rulemaking (ANPR) seeking data about credit card late fees and late payments to assess whether those fees are “reasonable and proportional.”

Additionally, the CFPB is also asking card issuers about their revenue and expense, the potential deterrent effect of late fees and the role late fees play in credit card companies’ profitability. . . . .

Regulation May Loom, but for Now BNPL Is Enjoying a Growth Blowout
Digital Transactions News – June 22, 2022

It may have attracted the attention of federal regulators, but the buy now, pay later trend is poised for further strong growth driven by easier-to-use apps, the entry of major new players like Apple Inc., and expansion into new retail markets, according to a report issued early Wednesday.

U.S. purchase volume on BNPL platforms will reach $75.6 billion this year, up 77% from 2021, according to the report from New York City-based Insider Intelligence. But while growth rates will slow as the numbers get bigger, that volume will approach $95 billion in 2023 and will hit $112 billion in 2024, forecasts the report. . . .

Britain Plans to Regulate ‘Buy Now, Pay Later’ Lenders
Reuters – June 20, 2022

Britain plans to make “buy now, pay later” (BNPL) companies carry out affordability checks, gain approval by the Financial Conduct Authority (FCA) and ensure adverts are fair and clear, the government said on Monday, in measures to regulate the sector.

BNPL businesses, which are unregulated, typically offer interest-free short-term loans that spread payments for retail goods such as clothing and have, according to the government, rapidly increased in popularity. “Buy-now, pay-later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place,” said John Glen, economic secretary to the finance ministry. . . .

CFPB to Give Credit Card, Mortgage Rules ‘Fresh Look’
Law360 – June 17, 2022 (subscription required)

Consumer Financial Protection Bureau Director Rohit Chopra said Friday that his agency will take a “fresh look” at some of its existing regulations on credit cards and credit reporting, as well as certain Trump-era mortgage lending rules. In a blog post, Chopra said the CFPB was reviewing a “host” of old rules on its books, including those that set inflation-indexed limits on what credit card issuers charge in late payment penalties and other fees, which he has sought to rein in as part of an effort to save consumers money.

Chopra said that the CFPB was also reviewing rules it inherited years ago under the Fair Credit Reporting Act, the main law governing the credit reporting industry. In the process, the agency aims “to identify potential enhancements and changes in business practices,” Chopra explained. . . .

Opinion – Card Fees: The Price Hike Nobody Is Talking About
Payments Dive – June 17, 2022

The Senate Judiciary Committee recently held a hearing featuring Visa and Mastercard executives alongside merchants who testified about the detrimental impacts credit card swipe fees have on Americans who are already financially strained amid record inflation. I was among the witnesses.

Representing the National Association of Convenience Stores (NACS), I made clear to Congress that without increasing competition in the payments marketplace, the Visa and Mastercard duopoly would continue to indiscriminately raise swipe fees on U.S. businesses and their consumers as they just did in April. . . .

Costco Reaches Deal With Creditors, Banks in Swipe Fee MDL
Law 360 – June 17, 2022 (subscription required)

Costco told a New York federal court Friday that it has reached a deal to end its direct action claims in 17-year-old multidistrict litigation accusing Visa, Mastercard and several banks of jointly maintaining a series of anti-competitive rules that cause merchants to pay high transaction fees.

In a joint stipulation filed by Costco Wholesale Corp. and the defendants, including Visa Inc., Mastercard Inc., Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co., the parties told the court that the wholesale retailer “fully settled all of its claims against all of the defendants” but did not disclose details of the deal. . . .

India Lifts Ban on Mastercard
Payments Dive – June 16, 2022

India has lifted business restrictions on Mastercard, nearly a year after imposing the ban, once again allowing the cards giant to add new customers in the South Asian market after it demonstrated “satisfactory compliance” with the local data storage rules, the central bank said on Thursday.

In a series of moves last year, the Reserve Bank of India indefinitely barred Mastercard, American Express and Diners Club from issuing new debit, credit or prepaid cards to customers over noncompliance with local data storage rules (PDF). The business restrictions on American Express and Diners Club remain in place in the country, though they are permitted to continue to serve their existing customer base. . . .

Industry Developments

SPOTLIGHT: Twitter Partners With Shopify to Bring Merchants’ Products to Twitter Shopping
TechCrunch – June 22, 2022

As part of its ongoing efforts to expand into e-commerce, Twitter today announced a new partnership with Shopify. The deal will see Twitter launching a sales channel app that will be made available to all of Shopify’s U.S. merchants through its app store. The app allows merchants to onboard themselves to Twitter’s Shopping Manager, the dashboard offered by the social media company where sellers can access product catalog tools and enable other shopping features for their profiles.

The news follows Twitter’s recent launches of shopping-related features, including this month’s introduction of a “Product Drops” feature, and Twitter’s earlier launches of mobile storefronts and livestream shopping. . . .

Facebook Pay Rebrands to Meta Pay as Zuckerberg Details Plans to Create a Digital Wallet for the Metaverse
TechCrunch – June 23, 2022

Meta CEO Mark Zuckerberg announced this week that Facebook Pay has officially been renamed Meta Pay. The current product features and overall user experience that people are used to with Facebook Pay will remain the same across across Facebook, Instagram, WhatsApp and Messenger. The change is rolling out in the United States and will then launch globally over time.

Zuckerberg says although the service will remain the same, the rename represents Meta’s first step toward creating a digital wallet for the metaverse. . . .

The War on Cash
New York Magazine – June 22, 2022

Of all the futuristic promises that were made at the end of the 20th century, mobile digital payments is one of the handful that our society has delivered. Whenever you have to pay for something, there is a very good chance you can do it with your card, phone, or even watch. During the first decades of the 21st century, cash has gone from the primary American form of payment to third place. Debit cards jogged past in 2018, and credit cards followed in the first pandemic year, 2020.

Now, cash usage has dipped below 20 percent of transactions, only seven points above direct bank transfers and only five above “other.” . . .

How the Global Microchip Shortage Is Affecting the Payments Industry
Tearsheet – June 20, 2022

With the Covid-19 pandemic, the global semiconductor supply chain took a significant hit. Buying microchips became more expensive as cycle times increased. As video game makers, smartphones, and automobile manufacturers evaluated where they stood, the payments industry found itself no less immune.

China, the world’s largest chip manufacturer, went into a series of lockdowns as part of the country’s zero-Covid policy. This resulted in the closure of factories and a drastic decrease in output. China’s lockdowns decreased total chip output by 5.1% in March this year. . . .

Report: Merchants Accept Crypto at Checkout Despite Investment Value Decline
PYMNTS – June 20, 2022

Consumer interest in cryptocurrency is on the upswing. The percentage of consumers who held crypto at some point during the year rose to 23% in 2021 from 16% in 2020. Despite gaining traction in recent years, the crypto acceptance rate at many retailers is still quite low. In addition, the sharp decline in the investment value of bitcoin and other key cryptocurrencies raises questions about when the financial markets will be ready to resume investing in crypto.

As it currently stands, 46% of merchants say they have integrated crypto into their mix of accepted payment methods, although most purchases that use cryptocurrency are made with digital wallets. . . .

Surging Use of Digital Wallets Threatens Traditional Credit Card Market
The Financial Brand – June 20, 2022