Payments News Update – July 22, 2022

Legal and Regulatory Developments

SPOTLIGHT: Lawsuit Accuses Apple of Antitrust Violations Over Apple Pay
Reuters – July 18, 2022

Apple Inc (AAPL.O) was sued on Monday in a proposed class action by payment card issuers accusing the iPhone maker of abusing its market power in mobile devices to thwart competition for its Apple Pay mobile wallet.

According to a complaint filed in San Francisco federal court, Apple “coerces” consumers who use its smartphones, smart watches and tablets into using its own wallet for contactless payments, unlike makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay. . . .

Stablecoins to Face Bank-Like U.S. Regulation Under Draft House Bill – Source
Reuters – July 20, 2022

Issuers of so-called “stablecoins,” virtual currencies whose value is pegged to traditional currencies, would face bank-like regulation and oversight under a draft bill from senior U.S. House lawmakers, according to a source familiar with the matter.

Senior Democrats and Republicans on the House Financial Services Committee have nearly completed a draft that would subject stablecoin issuers to prudential standards on capital, liquidity and supervision, similar to those banks already face. . . .

Crypto Regulation Weekly: Congress Could Challenge Control SEC Seeks With Ripple Suit
PYMNTS – July 20, 2022

All in all, this wasn’t a very good week for Securities and Exchange Commission Chairman Gary Gensler’s fight to win regulatory control over cryptocurrencies.

As Gensler was again making the case that virtually all cryptocurrencies except bitcoin are securities over which his SEC has authority, Sens. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) said that while their broader crypto regulatory framework bill won’t see a vote until 2023, one key part might be incorporated into another bill the Senate Banking Committee will vote on this year. . . .

Consumer Bureau to Push Banks to Refund More Victims of Scams on Zelle, Other Services
The Wall Street Journal – July 19, 2022

The Consumer Financial Protection Bureau is preparing to prod banks to pay back more customers who are the victims of scams on Zelle and other money-transfer services, according to people familiar with the coming regulatory effort.

Under new guidance the bureau is preparing to release in the coming weeks, banks could face heightened requirements around certain scams that have become more prevalent on these platforms, these people said, such as when a customer is tricked into sending money to a scammer pretending to be a representative of his or her bank. . . .

BofA Asks NC Judge to Nix Cardholders’ Forex Rate Suit
Law360 – July 19, 2022 (subscription required)

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. . . .

Sezzle Sues Gamestop After Retailer Drops Buy Now, Pay Later Service
St. Paul Business Journal – July 18, 2022

Sezzle Inc., the Minneapolis-based fintech business, has sued GameStop Corp., claiming the video game retailer breached a financial contract when it dropped Sezzle’s payment services.

Sezzle, which sued Dallas-based GameStop (NYSE: GME) in Ramsey County District Court, operates a buy-now-pay-later system that lets customers pay for purchases over time. Its service is used by many U.S. retailers, including, for a time, GameStop. . . .

US Treasury Open to Nonbanks Issuing Stablecoins, Official Says
CoinDesk – July 18, 2022

As Congress considers a path for nonbanks to be allowed to issue stablecoins, Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, says that’s fine with the agencies that once recommended issuers be regulated as banks.

The President’s Working Group on Financial Markets, which recommended last year that stablecoins belong inside the regulated banking industry, didn’t mean to be overly rigid about how crypto firms might hit that mark, Liang said Monday at a Financial Services Forum event in Washington. . . .

CFPB’s Chopra Reminds Payments Players They’re in His Sights
Payments Dive – July 14, 2022

Consumer Financial Protection Bureau Director Rohit Chopra reminded players in the payments and banking industries this week that some of them are in his agency’s cross-hairs.

Chopra in a July 11 blog post reiterated industry practices that his agency considers troublesome and ripe for regulatory action. He framed the agency’s agenda as part of President Joe Biden’s effort to crack down on anticompetitive business practices. He noted three areas that have attracted the agency’s attention, and not in a good way. . . .

Industry Developments

SPOTLIGHT: More Than Token Progress: Tokenized Payments Will Hit 1 Trillion by 2026, Juniper Predicts
Digital Transactions News – July 18, 2022

The total volume of tokenized payment transactions worldwide will exceed 1 trillion by 2026, up from 680 billion this year, according to a report released Monday by Juniper Research. The growth will come mostly from click-to-pay options that allow buyers to pay with a single click, using tokenized credentials, the firm says.

These options, offered by major card networks like Visa and Mastercard, rely on tokenized cards on file to back up authorizations for payments. . . .

Zelle Volumes Climb Quickly for BofA, Surpassing Checks for the First Time
Digital Transactions News– July 19, 2022

Five years after its launch, the Zelle person-to-person payments service continues to boost payment volumes for one of its founders, Bank of America Corp. BofA reported Monday that its second-quarter P2P Zelle transaction volume hit 239 million, up 26% from 189 million payments a year earlier.

The value of the sent and received payments through email or mobile-phone identification was $73 billion, a 29% year-over-year increase. The Charlotte, N.C.-based banking giant says it now has 17 million active Zelle users versus 14.3 million a year ago, up nearly 19%. . . .

‘Burdensome’ Credit Card Swipe Fees Could Add $2.5 Billion to Back-To-School Spending, Merchants Say
CNBC – July 19, 2022

Considering the impact of inflation, consumers are spending more on back-to-school supplies — and then some — as retailers pass along credit card fees in the form of higher prices. This year, total back-to-school spending is expected to match the 2021 record high of $37 billion, according to the National Retail Federation.

The so-called swipe fees banks charge merchants to process credit card transactions on those purchases could total $2.5 billion during the peak shopping season, the Merchants Payments Coalition recently said. . . .

Instagram Users Can Now Buy Products in Chat
PYMNTS – July 18, 2022

Instagram has announced that shoppers can now make payments in chat for items they see while they scroll through their social media feeds, according to a Meta Platforms blog post Monday (July 18).

That includes making customizations to the items and other specifics that were previously not offered on the photo-sharing app, the post stated. “Each week, 1 billion people message a business across our family of apps — whether it’s chatting with brands, browsing products, asking for support or interacting with stories,” Meta said in the post. . . .

Half a Trillion Dollars Wiped From Once High-Flying Fintechs
Financial Times– July 18, 2022

Almost half a trillion dollars has been wiped from the valuation of once high-flying financial technology companies that took advantage of the boom in initial public offerings earlier in the pandemic.

More than 30 fintechs have listed in the US since the start of 2020, according to CB Insights data, as investors flocked to companies they believed could benefit from a long-term shift toward digitisation accelerated by the pandemic. . . .

Plaid Adds Support for Digital Asset Exchanges
PYMNTS – July 14, 2022