Legal and Regulatory Developments

SPOTLIGHT: 6 Swipe Fee Plaintiffs ‘Arbitrarily’ Picked for 2025 Trial
Law360 – August 7, 2024 (subscription required)

Six retailers including department store giant Target will go to trial in 2025 on claims that Visa and Mastercard overcharged them, a Manhattan federal judge said Wednesday, explaining that he arbitrarily chose from among 60 plaintiffs in a long-running, multibillion-dollar antitrust battle.

U.S. District Judge Alvin K. Hellerstein, having slated Oct. 20, 2025, for an estimated six-week trial, selected Target, T.J. Maxx and Macy’s as representatives from a group of 17 swipe-fee plaintiffs referred to as the Target group.

From a second, larger group of 43 retailers who additionally accuse big banks including Citigroup, Bank of America, JPMorgan Chase and Wells Fargo alongside Visa and Mastercard of antitrust violations, the judge selected Marathon Petroleum, Circle K and the Gap as representatives. . . .

Illinois Credit Card Swipe Fee Law Sparks Legal Fight With Banks
Bloomberg Law – August 8, 2024 (subscription may be required)

Illinois is the first state to bar credit card companies such as Visa Inc. and Mastercard Inc. from charging swipe fees on retail tips and taxes, but implementation hurdles and likely litigation from banks means it may also be the last.

The Interchange Fee Prohibition Act was included in the Illinois omnibus budget bill (HB 4951) and signed into law by Gov. JB Pritzker (D) on June 7. Beginning in July 2025, credit card issuers won’t be able to collect interchange fees on sales and excise taxes and gratuities if a merchant elects to separate out those charges from the price of a purchase.

The law comes amid a decades-long fight pitting retailers like Walmart Inc., Target Corp., and Amazon.com Inc. against banks over interchange fees that credit card issuers charge to process transactions. . . .

Regulators Probing Big Banks’ Handling of Zelle Scams
The Wall Street Journal – August 7, 2024 (subscription may be required)

Regulators are investigating some of the biggest U.S. banks for their handling of customer funds on the peer-to-peer payments platform Zelle, which has been facing scrutiny over scams and fraudulent transactions.

The Consumer Financial Protection Bureau probe focuses on JPMorgan Chase, Bank of America and Wells Fargo, among other large banks, according to people familiar with the matter.

It is broad in nature and meant to examine how the banks respond when customers dispute transactions made through Zelle, the people said. JPMorgan disclosed in a filing Friday that it was responding to CFPB inquiries regarding Zelle; other large banks are expected to disclose contact with the CFPB soon. . . .

House GOP Aims to Repeal CFPB’s Buy Now, Pay Later Rule
The FinRate – August 6, 2024

In a recent legislative move, House Republicans have put forth a bill seeking to overturn the Consumer Financial Protection Bureau’s (CFPB) newly implemented rule governing Buy Now, Pay Later (BNPL) services.

This rule, introduced in an effort to enhance transparency and consumer protection in the burgeoning BNPL sector, mandates that lenders disclose additional information about repayment terms and potential fees.

The GOP’s proposed repeal is fueled by concerns that the CFPB’s regulations could impose unnecessary restrictions on BNPL providers, thereby limiting consumer access to flexible payment options and stifling innovation in the financial services industry. . . .

Banks Want More Fintechs Regulated Under CFPB Open Banking Rule
American Banker – August 4, 2024 (subscription required)

Banks remain concerned about the security risks and liability from unregulated fintechs and data aggregators when consumers gain control over their financial data under the Consumer Financial Protection Bureau’s data access rule.

Banks and some data aggregators have asked the CFPB for an extended two-year timeframe to comply with the CFPB’s final rule on personal financial data rights. The CFPB has received more than 11,000 comment letters on its proposed open banking rule — known in the industry simply as “1033” for its section of the Dodd-Frank Act — which is expected to be finalized in October. . . .

BNPL Firms’ New Regulatory Reality Unclear as CFPB’s Commentary Period Closes
PYMNTS – August 1, 2024

The comments are in. The battle lines have been drawn. As the regulatory landscape shifts for buy now, pay later (BNPL) providers, a few key questions have seemingly been yet to be answered: What will the companies have to do to comply with new obligations to consumers — and when? What might the impact be for BNPL users, and providers, too?

Given the fact that the Consumer Financial Protection Bureau’s rule regarding consumer protections will be, arguably, a work in progress, we’d note, too, that the fine-tuning of how BNPL companies operate will have ripple effects throughout the burgeoning industry.

And that poses another question: Will the fine tuning, and mounting costs of new regulatory oversight pose headwinds to innovation? . . .

Industry Developments

SPOTLIGHT: PayPal Rolls Out Its Fastlane Checkout Service for Online Sales
Digital Transactions News – August 6, 2024

PayPal Holdings Inc. Tuesday announced its Fastlane By PayPal checkout service is now officially available to merchants of all sizes in the United States.

PayPal began piloting Fastlane, which speeds guest checkout by allowing online shoppers to complete a purchase in one click, earlier this year with BigCommerce Inc. merchants.

Reducing friction in the guest-checkout process can help boost conversion rates for e-commerce merchants, PayPal says. Increasing conversion among consumers using guest checkout is important, as many online shoppers prefer to check out as a guest even if they have registered an account with the merchant, according to PayPal. . . .

Debit Usage and Spending Remain on the Rise, a Pulse Study Finds
Digital Transactions News – August 8, 2024

Consumers are using their debit cards more frequently than ever and generating higher tickets in the process, according to a report based on data from the Pulse electronic funds transfer network.

Active debit card holders now use their cards 34.6 times per month on average, up more than 4% year over year, according to the report, officially the “2024 Pulse Debit Issuer Study,” which was commissioned by Pulse and its parent company, Discover Financial Services. Purchases at the point-of-sale represent the bulk of these transactions (30.7), followed by account-to-account transfers (2) and ATM transactions (1.9).

The average amount spent per purchase is $46.89, up 3.4% from a year earlier. In total, debit card holders spent $17,274 in 2023, up 8.1% from the year before. . . .

JPMorgan Fires Up Biometric Payments Processing
Payments Dive – August 7, 2024

JPMorgan Chase is piloting biometric payments processing with merchants nationwide, including at Whataburger locations where a partnership between the burger chain and PopID lets customers pay with a face scan, according to a Tuesday press release from the bank.

The biggest U.S. bank’s payments division is locking arms with the biometrics payment firm PopID to aid merchants in speeding up checkouts and boosting customer tabs by way of the new technology, according to the release.

Pasadena, California-based PopID, which is owned by Cali Group, provides biometric payment services at some 380 U.S. retailers and restaurants, according to the release. . . .

Read Payments News Update – August 9, 2024 at constantinecannon.com