Payments News Update – March 10, 2023

Legal and Regulatory Developments

SPOTLIGHT: The Credit Card Competition Act: What Is It, and Why You Should Care
PaymentsJournal – March 7, 2023

The Credit Card Competition Act—introduced last year by a bipartisan group of senators—may be under consideration during this session of Congress, and industry groups are lining up for and against.

If implemented, cards from the nation’s largest banks would be required to be routed over at least one competing network in addition to Visa or Mastercard’s networks. . . .

Visa and Mastercard Said to Pause Plan for New Merchant Code for Guns (Updated)
Seeking Alpha – March 9, 2023 (subscription required)

Visa and Mastercard are pausing a plan to track firearm sales with a new merchant category code (MCC) as a number of bills advancing in several states related to the use of the new code would complicate matters.

A Mastercard spokesperson confirmed the pause. “Today, there are bills advancing in several states related to the use of this new code. If passed, the result will be an inconsistency in how this ISO standard could be applied by merchants, issuers, acquirers and networks,” the spokesperson said via email to Seeking Alpha. . . .

Wells Fargo Won’t Refund Stolen Gov’t Payments, Suit Alleges
Law360 – March 9, 2022 (subscription required)

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. . . .

A Looming Capitol Hill Meetup Triggers a Renewed Assault on Efforts to Cap Credit Card Costs
Digital Transactions News – March 3, 2023

As industry lobbyists prepare to converge on Capitol Hill next week, payments interest groups are issuing salvos designed to move the argument over limits on credit card acceptance costs in their favor.

One such advance move came Thursday with an email campaign launched by the Electronic Payments Coalition citing a trade-magazine article that the lobbying group says reinforces the advantages merchants gain from accepting credit cards. . . .

Senators Warn Regulators on Zelle Fraud Risks
PYMNTS – March 3, 2023

In a letter addressed to the Federal Reserve, the FDIC, the National Credit Union Administration and the Office of the Comptroller of the Currency, the senators warned that Zelle’s “model has opened the door to fraud and scams on a tremendous scale.”

The senators — Jack Reed of Rhode Island, Mark Warner of Virginia, Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio and Robert Menendez of Ohio — noted that Zelle offers a convenient way to send money through the banking system. . . .

Mastercard Infringes Digital Wallet Tech Patent, Suit Says
Bloomberg Law – March 2, 2023

Mastercard Inc.’s cloud-based payment technology infringes a patent related to a method for securing mobile wallet transactions, according to a federal lawsuit in New York.

The complaint, filed in the US District Court for the Southern District of New York, comes as digital wallet applications become more popular for payments online and at brick-and-mortar retailers, and the need to secure customers’ payment data grows. . . .

Industry Developments

SPOTLIGHT: Merchants Tap Open Banking to Expand In-Store Payment Options Amid Self-Checkout Boom
PYMNTS – March 5, 2022

From self-checkout lanes and kiosks to fully autonomous stores, unattended retail is gaining momentum around the world. With this retail experience, merchants are able to accommodate a broad range of customer preferences while cutting back on labor costs and serving more customers in a shorter period of time.

In fact, according to a PYMNTS report on innovating the retail checkout experience, 85% of retail customers surveyed considered self-checkout faster than waiting for a cashier, while 60% of shoppers said they preferred self-checkout to interacting with a human cashier. . . .

FedNow May Draw in Low-Income Users
PaymentsDive – March 9, 2023

The real-time payments system due later this year could have particular appeal to unbanked and underbanked Americans, Fed researchers say.
FedNow, the instant payments system being launched by the Federal Reserve later this year, may be particularly useful to lower-income segments of the U.S. population. At least that’s the theory of some Fed researchers who study lower-income communities’ financial needs. . . .

Bad Times or Good Times, Fraudsters Show No Signs of Slowing Down
Digital Transactions News – March 9, 2023

If there is one constant about fraud, it’s that it never takes a holiday.

A new report from Nice Actimize, a provider of fraud-prevention solutions, reveals that attempted fraud transactions skyrocketed in 2022 by 92%, compared to 2021, and that the money criminals attempted to steal soared by 146%. . . .

BNPL Platform Affirm Quits Australia
Finextra – March 8, 2023

A month after laying off 19% of its workforce, American buy now, pay later platform Affirm is quitting the Australian market.

In a notice on its website, the company says: “As of 28 February 2023, Affirm has made the decision to begin an orderly wind-down of our operations in Australia.” . . .

Half of Low-Income Consumers Pay With Debit and PayPal
PYMNTS – March 6, 2023

The payment methods favored by those on stable financial footing compared to those struggling to meet bills is often a tale of living strictly within one’s means or having the freedom to use the bank’s money — as is the case in the defining line between credit and debit use.

Exploring this in the PYMNTS study Digital Economy Payments: The Ascent of Digital Wallets based on surveys of over 2,700 U.S. consumers, we see the divide clearly represented in go-to cards used by consumers who dwell at different places along the financial lifestyle spectrum. . . .

PayPal Leans on Venmo for Growth
PaymentsDive – March 6, 2023