Legal and Regulatory Developments

SPOTLIGHT: FTC Cracks Down on Hotel Junk Fees
Hotel Dive – December 17, 2024

The Federal Trade Commission on Tuesday announced a final Rule on Unfair or Deceptive Fees, or “Junk Fees Rule,” that targets “bait-and-switch pricing” for short-term lodging and live-ticket events.

The rule requires up-front disclosure of total prices including fees, so that consumers booking hotels or vacation rentals are not surprised by “resort,” “service” or “convenience” fees at checkout. The rule targets pricing practices that “harm consumers and undercut honest businesses,” per the FTC’s announcement.

The Junk Fees Rule will mandate that pricing information is presented in a “timely, transparent, and truthful way to consumers” of short-term lodging and live-event tickets, two industries the FTC has studied in particular. . . .

FTC Excludes Restaurants From Junk Fee Rule
Restaurant Dive – December 19, 2024 

The Federal Trade commission’s final rule requiring full transparency on fees charged to consumers applies to hotels and live-event ticket vendors, but not restaurants, according to an announcement by the FTC.

Previous versions of the rule proposed requiring restaurants to disclose many fees, including service charges and delivery fees, to consumers as a part of the total price of goods.

Earlier this year, California also moved to exempt some kinds of restaurant fees from a rule requiring operators to include things like service fees in the price of individual goods. . . .

New Zealand’s Commerce Commission Proposes Cutting Merchant Card Fees
PYMNTS – December 18, 2024 

New Zealand’s Commerce Commission has proposed reducing the fees the country’s businesses pay for accepting Mastercard and Visa payments.

The Commission issued its draft decision Wednesday (Dec. 18) and is seeking feedback on it from consumers and businesses by Feb. 18, 2025, it said in a Wednesday press release.

“This work is the next step to further reduce, and simplify, payment costs for New Zealand businesses, and to save merchants and consumers a considerable amount of money,” Commission Chair John Small said in the release. . . .

CFPB Says Credit Card Point Devaluation May Break the Law
Law360 – December 18, 2024 (subscription required)

The Consumer Financial Protection Bureau warned Wednesday that credit card companies risk violating federal law when they or their merchant partners devalue rewards points and miles banked by their cardholders, casting it as a potential “bait-and-switch.” Reward devaluation — reducing the redemption power of already earned card rewards, like airline miles or hotel points — was one of several practices that the CFPB flagged as potentially illegal in new guidance on credit card rewards programs.

The guidance comes at the height of the holiday shopping season, a time when card originations and spending surge, and was released in tandem with new CFPB research that found higher costs and other risks associated specifically with retailer-branded cards.

Along with an online tool that the CFPB unveiled Wednesday to provide consumers with “unbiased, comprehensive data” on hundreds of credit cards, the actions also mark CFPB Director Rohit Chopra’s latest effort to turn up the heat on the credit card industry. . . .

The ABA’s Letter to the Fed Is the Latest Salvo in the Battle Over Debit Card Interchange
Digital Transactions News – December 13, 2024 

The American Bankers Association on Thursday issued a long and detailed letter it has sent to the Federal Reserve Board to argue its case against a Fed proposal that would reduce a longstanding cap on the interchange banks can earn on debit card transactions. The ABA’s action follows an analysis indicating nearly 80% of the more than 400 comments regarding the proposal oppose it.

Comments on the Fed’s proposed action, which would cut by nearly one-third the maximum interchange fee banks can charge on debit card transactions, were due May 12 after the Fed extended its original Feb. 12 deadline. The Fed has not acted on the proposal in the months since its deadline. The proposal emerged in October 2023 as part of an effort by the Fed to update the 13-year-old measure.

Passions regarding the matter, however, have not cooled in the intervening months as merchants contend both debit and credit card interchange is too costly, while banking groups argue against any reduction. . . .

Regulator Set to Limit Card Fees After Visa and Mastercard Price Hikes
City AM – December 13, 2024

The UK’s payments regulator has confirmed plans to introduce price caps on card fees paid by British merchants when European consumers make online purchases, after Visa and Mastercard hiked prices post-Brexit. After proposing some restrictions a year ago, the Payment Systems Regulator (PSR) is moving ahead with a consultation to decide at what level they should be set.

The PSR is concerned about charges set by Visa and Mastercard on behalf of banks which apply to online transactions between the UK and European Economic Area.

It is considering an initial cap of 0.3 per cent on credit card fees and 0.2 per cent for debit card spending, which would restore the limit which had been in place before Brexit. . . .

Industry Developments

SPOTLIGHT: Merchants Maneuver as Visa Enforces Surcharge Program
Payments Dive – December 17, 2024

Nearly two years after Visa began cracking down on surcharges, payments processors and independent sales organizations say they have a better understanding and sense of clarity on the network’s rules.

At that time, Visa imposed a credit card surcharge cap of 3%, down from the previous cap of 4%. Many in the industry found communication and details to be lacking, and Visa’s cryptic business notices left payments professionals searching for answers.

Merchants are innovating in the market to cover rising interchange fees Visa charges them whenever consumers swipe to pay with that network’s cards. Regardless of retailers’ and restaurants’ approaches, they must follow the network’s rules to accept such payments. . . .

Card Networks Challenge FinTechs for Account-to-Account Payments Share
PYMNTS – December 16, 2024

Earlier this year, PYMNTS Intelligence found that more than half of consumers were not aware of pay-by-bank options, or were hesitant to use them.

In an age where relationships with banks are nearly ubiquitous — the Federal Reserve noted last month that just about 96% of households have at least some form of checking or savings account with a bank or credit union — the move toward direct account-to-account (A2A) flows should be an intuitive one. But it hasn’t been, at least not yet, though the rise of open banking promises to change that.

Part of the issue can be traced to the speed of the transactions, where, as detailed here, a recent PYMNTS Intelligence report found 50% of consumers experience up to a week-long wait for payouts, starkly contrasting with 43% of consumers who prioritize real-time payments. . . .

Read Payments News Update – December 20, 2024 at constantinecannon.com