Legal and Regulatory Developments

SPOTLIGHT: Credit Card Giants Drain Billions: Can Congress Take Action?
GV Wire – February 4, 2025

Few Americans know that they spend on average $1,100 a year to pay for credit card transaction fees. In addition, U.S. retailers pay $170 billion annually to process credit card transactions, according to testimony from the Senate Judiciary Committee in November 2024.

More than a decade ago, the federal government limited how much companies such as Visa could charge for debit card transactions. Legislators want to do the same now with credit cards.

For several years, a bipartisan coalition of legislators has gone after Visa and Mastercard for their domination of payment processing. . . .

Legislators Tell Credit Card Issuers to Stay Out of Merchant Tip Jars
CardRates.com – February 3, 2025

States have introduced legislation to restrict the fees merchants pay card issuers on the gratuity and tax portion of a customer’s bill.

Interchange on sales tax is relatively small on a per transaction basis, but it amounts to trillions of dollars per year in the aggregate.

Experts have opposing viewpoints regarding the viability of excluding gratuity and tax amounts from interchange charges. . . .

Chopra Leaves CFPB in Widely Expected Move
Banking Dive – February 3, 2025

Rohit Chopra has left the Consumer Financial Protection Bureau, according to a letter he posted Saturday on the social media platform X. “This letter confirms that my term as CFPB Director has concluded,” Chopra wrote in a letter addressed to President Donald Trump. “I know the CFPB is ready to work with you and the next confirmed director, and we have devoted a great deal of energy to ensure continued success.”

Trump designated Treasury Secretary Scott Bessent as the bureau’s interim chief, according to a statement posted on the agency’s website. “I look forward to working with the CFPB to advance President Trump’s agenda to lower costs for the American people and accelerate economic growth,” Bessent said Monday. . . .

The Interchange Battle 2025
Digital Transactions Magazine – February 1, 2025

The ongoing battle between merchants and card networks over interchange and network fees has only intensified since the adoption of Regulation II, which capped debit interchange, more than a decade ago. And there are few if any signs that tension over the issue of transaction costs will cool this year.

The latest salvo, intended as a pre-emptive strike, was fired in early January by the Electronic Payments Coalition, which released a study detailing the negative impact the Credit Card Competition Act would have on the United States economy if passed.

The study, conducted by Oxford Economics Research, claims the CCCA’s impact on the U.S. economy four years after passage would amount to a drop of $227 billion in discretionary consumer spending and the loss of 156,000 jobs. . . .

Government Exit Packages and Defunding May Mute Financial Regulators
PYMNTS– January 31, 2025 

The shakeup on Capitol Hill — still ongoing, as the Trump administration settles in for its second round, as the new Congress has been seated — will extend to financial regulations.

These disruptions will likely touch the very structure of those agencies — the FDIC and the CFPB chief among them. The recent news regarding so-called “exit packages” being extended to millions of federal workers may bring with it a significant march of feet toward the exits at those agencies. By extension, any exodus might truncate the efforts to put forth new rules and regulations, or at least carry on with pending changes to the way banks and FinTechs are monitored.

For the chief critics of these agencies — and they’ve been vocal critics through the past few months — there’s the advantage of limiting regulatory reach without resorting to Congress to do so. . . .

Visa, Mastercard and Banks Oppose Swipe Fee Do-Over Bid
Law360 – January 31, 2025 (subscription required)

Visa, Mastercard and several major banks have filed a motion opposing cardholders’ solicitations for a New York federal judge to reconsider dismissing claims from their interchange fee suit.

The plaintiffs are Visa and Mastercard cardholders who accuse the companies and their member banks — which include Wells Fargo, Bank of America and PNC — of conspiring “to fix interchange fees for various merchant-transactions” at artificially high default rates, which merchants then pass along to consumers in the form of higher retail prices. The suit alleged that Visa and Mastercard’s terms prevent merchants from lowering their transaction costs. . . .

Bill Would Require Ohio Businesses to Accept Cash Along With Credit and Debit Cards
The Statehouse News Bureau– January 31, 2025 

There’s a saying that cash is king. And one state lawmaker has a bill to keep it that way, or at least ensure it’s an option in Ohio.

Sen. Bill Blessing (R-Colerain Twp.) said there are places in Ohio where someone who wants to use cash finds it difficult, if not impossible. Senate Bill 30 would require businesses to allow cash in addition to cashless options. “It requires retail businesses to accept cash and if they don’t, it allows a cause of action in the bill so you can sue them,” Blessing said. He added the legal course of action would come with significant fines. . . .

Industry Developments

SPOTLIGHT: What Lies Ahead for the XMoney-Visa Partnership?
Digital Transactions News – February 3, 2025

Leveraging tie-ins with sister companies to facilitate payments and converting fiat currency to cryptocurrency are some of the possibilities that lay ahead for XMoney, the digital wallet from social-media platform X, in the wake of its partnership with Visa Inc.

Enabling Tesla charging stations to accept the wallet is an obvious low-risk starting point, payment experts say. . . .

Extending XMoney acceptance across other companies operated by X owner Elon Musk is another option, as it could provide XMoney with a ready-made user base that could generate significant transaction volumes. . . .

RTP Network Hits 1 Billion Payments 18 Months After 500 Million Mark
PYMNTS – February 3, 2025

It took the RTP® network more than five years to surpass 500 million instant payments. Getting to the 1 billion mark didn’t take nearly as long.

Eighteen months after reaching 500 million payments, the network has more than doubled that figure, The Clearing House, which operates the RTP network, announced Monday (Feb. 3).

“After taking more than five years to reach the first half a billion payments, the network’s recent rapid growth underscores the expanding acceleration of instant payments adoption in the United States,” the company said in a news release. “This extraordinary increase reflects the growing demand for faster, more transparent, and always-available payment solutions from consumers, businesses, and the financial community.”. . .

How Zelle’s GM Denise Leonhard Plans on Leading the Firm to $1 Trillion a Year and Beyond
Tearsheet – January 28, 2025

Half a trillion dollars were transferred over the Zelle network in the first half of 2024, according to Zelle’s report in October. This came with a 27% increase in transaction volume YOY for the firm, showing how quickly the Zelle network is expanding.

At the start of 2025, Denise Leonhard, Zelle’s GM, joins the The Quarterly Review roster to report that the firm is doubling down on this growth and plans to surpass that golden $1 trillion mark very soon. Her strategy spearheading this effort to go beyond the growth benchmark is a mix of focusing on fundamentals like consumer experience and security, as well as a strategic move to let the growing adoption numbers “do the talking” and attract more banks into joining the network. . . .

Read Payments News Update – February 7, 2025 at constantinecannon.com