Legal and Regulatory Developments

SPOTLIGHT: Chopra Defends CFPB Open Banking Rule in Face of Lawsuit
Payments Dive – October 28, 2024

Consumer Financial Protection Bureau Director Rohit Chopra said on Sunday that a lawsuit filed over the agency’s open banking rule finalized earlier this month is an obstacle to increasing competition among financial institutions.

Some banks are concerned about competing with smaller players and don’t want to change the status quo, Chopra said during a question and answer session at the annual Money 20/20 conference in Las Vegas. “It’s not a big surprise that some of the largest players are the ones who want to slow and stop it,” he said.

The director further questioned the litigants’ understanding of the final rule. “I haven’t read their lawsuit, and I don’t think they read the rule,” the CFPB director said during a question-and-answer session, noting that the 56-page lawsuit was filed shortly after the CFPB released the nearly 600-page rule on open banking. . . .

Illinois’ Landmark Law Limiting Credit Card Fees Put to Legal Test
WTTW News – October 30, 2024

Illinois banks are “freaking out,” their attorney told the chief judge of Chicago’s federal courts Wednesday.

Lawyer Charlotte Taylor used the colloquial phrase several times during a more than two-hour court hearing that was otherwise so focused on complex intricacies of banking case law that U.S. District Court Chief Judge Virigina Kendall joked she’ll have to return to law school to make a decision.

The Illinois Bankers Association, American Bankers Association, America’s Credit Unions and the Illinois Credit Union League are asking Kendall to put a preemptive temporary hold (known as a preliminary injunction) on Illinois’ first-in-the-nation law that starting in July will limit institutions in the lucrative practice of charging a fee when consumers use a credit or debit card. . . .

How DOJ’s Visa Debit Monopolization Suit May Unfold
Law360 – October 28, 2024 (subscription required)

On Sept. 24, the Antitrust Division of the U.S. Department of Justice filed a Section 2 monopolization suit against Visa Inc., alleging that Visa had misused its monopoly power in general purpose debit network services and general purpose card-not-present debit network services.

The DOJ’s U.S. District Court for the Southern District of New York lawsuit also alleges that Visa has entered into illegal agreements not to compete with competitors and potential competitors, as well as unlawful agreements with merchants, issuers and acquirers that unreasonably restrain trade.

These agreements include de facto exclusive deals with merchants and acquirers that have the practical and economic effects of requiring exclusive routing and locking up debit volume. . . .

Industry Developments

SPOTLIGHT: How Open Banking Will Shape the Future of Payments
Payments Dive – October 29, 2024

The advent of open banking in the U.S. could change the way consumers apply for credit cards and pay for goods and services.

The new approach to letting consumers share personal account information and other financial data is aimed at increasing competition among financial institutions for consumers’ business. It could particularly give non-bank fintechs more leverage in wooing consumers.

Last week, the financial services industry got a look at the long-awaited new open banking rule issued by the Consumer Financial Protection Bureau. . . .

Visa Unveils New Push-to-Wallet Virtual Card Solutions
PYMNTS – October 29, 2024 

Visa says it is expanding its push-to-wallet capabilities to cover virtual card use.

As the payments giant said in a news release Tuesday (Oct. 29), this lets users push virtual cards to mobile wallets such as Apple Pay and Google Pay with the ability to set spending limits and monitor transactions for fraud and unauthorized expenditures.

“Visa is an early mover in virtual card push-to-wallet, recognizing the importance of creating seamless, digitally native B2B payment experiences that mirror the consumer ones we have all come to expect,” the release said. . . .

Are We There Yet? Mobile Wallet Shift Hindered By Plastic
American Banker – October 28, 2024 (subscription required)

Mobile wallets are becoming more popular with consumers, but banks shouldn’t expect plastic cards to disappear anytime soon.

“It’s low-tech, but it’s also super easy. And muscle memory is a thing,” said Craig Lancaster, analyst and content specialist at Javelin Strategy & Research, who explored the idea of a cardless payments landscape in a recent report.

Digital wallets have been gaining ground for the past several years following Apple’s groundbreaking attempt to upend consumers’ reliance on plastic cards. The COVID-19 pandemic helped propel mobile wallet use, but physical credit and debit cards are still widely popular, especially in the U.S. . . .

Mastercard Goes Networkwide With Its Installments Program
Digital Transactions News – October 25, 2024 

Mastercard Inc. announced early Friday it is expanding its Installments payments program to all eligible digital points of sale within its network in the United States.

The expansion will enable merchants, financial service providers, payment processors, and digital-wallet providers to present installment offers to consumers through any eligible credit card from participating issuers via a single platform, the network says.

Global Payments Inc., Skipify Inc., a San Francisco-based digital wallet and checkout app provider, and buy now, pay later provider Splitit are working with Mastercard to facilitate the expansion. . . .

Read Payments News Update – November 1, 2024 at constantinecannon.com