Legal and Regulatory Developments

SPOTLIGHT: Visa and Mastercard Accused of Card Monopoly by UK Watchdog
PYMNTS – March 6, 2025

Visa and Mastercard face regulatory action in the United Kingdom following a payments watchdog’s investigation.

The Payment Systems Regulator (PSR) is considering “remedies” for the two companies after uncovering a lack of competition in the card payment market, according to a Thursday (March 6) press release.

“Cards are a popular and convenient way to make payments in the U.K., so any issues in the card market can have a negative impact on … businesses and ultimately consumers,” PSR Managing Director David Geale said in the release. “We have found that there is a lack of competition in the market and evidence that Mastercard and Visa might have been able to charge U.K. businesses millions of pounds more than they would in a properly competitive market, impacting on their ability to invest and grow. . . .

Kansas House Bill Seeks to Exempt Taxes, Tips From Calculation of Credit Card Processing Fees
Kansas Reflector – March 4, 2025

National Federation of Independent Business lobbyist Dan Murray welcomed the opportunity to urge Kansas legislators to forbid credit or debit card companies from collecting swipe fees on tip and tax portions of electronic transactions.

Murray works in the Capitol on behalf of 4,000 NFIB members who operate businesses in Kansas and have endured consequences of inflation and thinning margins. He said one piece of the economic puzzle was the slice taken by card companies in processing fees applicable to the cost of a good or service as well as sales tax paid and workers’ hard-earned tips. Swipe fees have doubled since 2012, he said.

“Unfortunately, credit card processing fees, which can range from 1.5% to 3.5% on each transaction, exacerbate the financial strain of Main Street, making it harder for employers to expand their operations, raise wages and keep their costs competitive,” Murray said. . . .

CFPB Drops Zelle Fraud Suit Against JPMorgan, BofA, Wells Fargo
Banking Dive – March 4, 2025

The Consumer Financial Protection Bureau notified an Arizona federal court Tuesday that it is ending its lawsuit against JPMorgan Chase, Bank of America, Wells Fargo and Early Warning Services over fraud committed on the peer-to-peer payment network Zelle.

The agency’s one-page filing dismissed the complaint with prejudice, meaning it cannot be revived in the future. Over the past two weeks, the CFPB has dropped at least a half-dozen lawsuits filed during the Biden administration, including complaints against Capital One, Rocket Homes and TransUnion.

The agency alleged in its December complaint that Zelle’s parent company, EWS, along with JPMorgan Chase, Bank of America and Wells Fargo, allowed fraud to “fester” on the payment network. The banks’ customers lost $870 million to fraud on Zelle’s platform over seven years, according to the lawsuit. . . .

Federal Judge Orders Top CFPB Official to Testify on Agency Dismantling
Courthouse News Service – March 3, 2025

The federal government must provide witness testimony to explain what actions it has taken against the Consumer Financial Protection Bureau, a federal judge ruled on Monday.

U.S. District Judge Amy Berman Jackson scheduled the evidentiary hearing for March 10 after receiving little clarity from the Justice Department and CFPB Chief Operating Officer Adam Martinez on whether legally mandated services were still being provided.

The Barack Obama appointee said she received several declarations from employees, as recent as Sunday night, indicating that services meant to protect the elderly and veterans from financial scams and to assist those affected by natural disasters were affected by acting Director Russell Vought’s broad stop-work order. . . .

Trump Administration, Musk’s DOGE Plan to Fire Nearly All CFPB Staff and Wind Down Agency, Employees Say
CNBC – February 28, 2025

The Consumer Financial Protection Bureau’s Trump-appointed leadership plans to fire nearly all its 1,700 employees while “winding down” the agency, according to testimony from employees.

In a trove of statements released late Thursday, federal employees said that the mass layoff was discussed in meetings they attended this month with senior CFPB leaders and members of Elon Musk’s so-called Department of Government Efficiency.

“My team was directed to assist with terminating the vast majority of CFPB employees as quickly as possible,” said an employee identified as Alex Doe, a pseudonym used out of fear of retaliation. . . .

Banks’ Fight Over CFPB Open Banking Rule Put On Pause
Law360 – February 26, 2025 (subscription required)

A Kentucky federal judge agreed Tuesday to pause a banking industry challenge to the Consumer Financial Protection Bureau ‘s open banking rule, giving the agency’s new leadership time to review what it wants to do with the Biden-era measure.

U.S. District Judge Danny C. Reeves ordered a 30-day stay at the request of the CFPB and its opponents in the case, which include the Bank Policy Institute and Kentucky Bankers Association. The stay also tolls compliance deadlines set to start phasing in next year.

The rule, issued under Section 1033 of the Dodd-Frank Act, calls for banks to make certain account data freely available for secure, consumer-authorized sharing with third parties. The rule also addresses how such data can be shared and what usage restrictions apply. . . .

Industry Developments

SPOTLIGHT: Visa Lays Out Blueprint for Global Growth
Payments Dive – March 3, 2025

Visa executives called out commercial payments and ancillary services as areas with expansion opportunities, as consumer card growth ebbs in some places, including the U.S.

Visa CEO Ryan McInerney presented the potential growth opportunities in his first investor day presentation since taking the company’s top post in 2023 and assembling his executive team.

Visa’s “deep bench was on display as was an evolution of its strategy toward unbundling solutions to enhance growth prospects, via Visa-as-a-Service, a product of its technological transformation begun a decade ago,” analysts for investment firm TD Cowen said of the investor day presentation in a Feb. 23 note to clients. . . .

Klarna to File for $1 Billion-Plus IPO as Soon as Next Week
Bloomberg – March 5, 2025 (subscription required)

Klarna Bank AB is seeking to raise at least $1 billion in a US initial public offering and is set to file publicly as soon as next week, according to people familiar with the matter.

The Stockholm-based payments business aims to price the IPO in early April, the people said, asking not to be identified as the information isn’t public. Klarna is targeting a valuation of more than $15 billion in the New York Stock Exchange listing, the people said.

Deliberations are ongoing and details of the listing plan including timing could still change, the people said. A representative for the company declined to comment. . . .

Usage Blooms for Visa’s Tap-to-Phone Offering
Digital Transactions News – March 3, 2025

A 3-year-old technology enabling merchants to accept contactless payments using a regular smart phone with no special hardware has bloomed with a global year-over-year growth rate of 200%. That rate is even higher in the United States, United Kingdom, and Brazil, the three countries with the highest adoption rates, Visa Inc. says.

The growth rate in these three markets is 234% on the VisaNet system. Visa did not release actual usage data. Visa announced the Tap to Phone technology in 2020. Versions of it are available for Android and Apple smart phones. Apple’s service launched in 2022. For its own offering, Google uses the name Tap to Pay on Android.

One advantage of the technology is that no external device is needed to accept payments. The NFC chip in contactless cards is able to communicate with the NFC chip in many smart phones, using dedicated software to secure and process the transactions. . . .

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