Legal and Regulatory Developments

SPOTLIGHT: Maryland Gets Tough on BNPL
Payments Dive – September 3, 2024

Zip and Four Technologies revamped their buy now, pay later strategies in Maryland after the state cited them for operating without the correct licenses.

In May, the state fined Four Technologies for offering BNPL services in violation of the state’s lending laws. And the Australian BNPL company Zip stopped operating in Maryland because it didn’t have the proper credentials to work in the state.

Maryland’s rules are complex — while some buy now, pay later companies might be exempt from licensing requirements, other providers generally need a consumer lending license to offer their services in Maryland, Antonio Salazar, the state’s commissioner of financial regulation, explained in an email. . . .

Payments 3.0: Cool Off and Reconsider
Digital Transactions Magazine – September 1, 2024

The payments industry seems to be gearing up for more lawsuits in the wake of a recent Supreme Court decision, but cooler heads should prevail.

In June, the Court issued a decision in Loper Bright Enterprises v. Raimondo, Secretary of Commerce, that overtuned the Chevron Doctrine.

In 1984, the Court ruled in Chevron U.S.A. Inc. v. Natural Resources Defense Council that if a law was ambiguous with regard to a specific regulatory question, a court must defer to a regulatory agency if that agency offered a permissible construction of the statute. This tipped the scales in favor of regulators where the law wasn’t clear. The decision in Loper said the Chevron doctrine violated the Administrative Procedures Act and that any ambiguities in laws related to regulations must be decided by the courts. . . .

Fed Official Questions Faster Cross-Border Payments Ties
Payments Dive – August 29, 2024 

The U.S. and other countries might experience increased fraud, money-laundering and other negative consequences if they tie together faster payments systems, Federal Reserve Governor Christopher Waller warned in a speech in India Wednesday. He suggested a cautious approach to any such efforts, with a mindfulness of potential “trade-offs.”

Waller also noted that the U.S. might reconsider a new faster payment connection with Europe and Canada, but would carefully assess the “costs and benefits,” according to the text of his speech at the Global Fintech Fest in Mumbai, India.

While the Fed will continue to be “heavily engaged” on cross-border linkage possibilities, the central bank’s “chief focus in the near- to mid-term” is on increasing U.S. bank participation in its new FedNow real-time payments system, Waller emphasized. . . .

Industry Developments

SPOTLIGHT: Mobile Debit Card Payments Are Ramping. But the Economics for Issuers Are in Flux
The Financial Brand – August 21, 2024

The popularity of debit cards is continuing to grow, even as the ways in which they are used evolve. More debit card spending is occurring in “card not present” transactions and a small but rapidly growing portion of debit transactions are flowing through mobile devices.

In a related trend, half of institutions surveyed plan to add digital instant-issue ability to their debit card lineups, pushing the payment credential to digital wallets ahead of delivery of physical cards, further accelerating the shift to mobile debit card spending. The push would apply both to original issuance as well as replacement of lost or stolen cards. Four out of five demand deposit customers have debit cards tied to those accounts and two thirds of those customers use the cards to make monthly purchases.

The 2024 Debit Issuer Study by Discover’s PULSE network, source of the data above, also found that 38% of debit cards have been loaded into digital wallets, with Apple Pay continuing to be the most popular choice. This trend by itself suggests how the economics of offering debit cards will morph as volume shifts to digital wallets. . . .

Visa Debuts a New Product Designed to Make It Safer to Pay Directly From Your Bank Account
CNBC – September 5, 2024

Visa said it plans to launch a dedicated service for bank transfers, skipping credit cards and the traditional direct debit process. Visa, which alongside Mastercard is one of the world’s largest card networks, said Thursday it plans to launch a dedicated service for account-to-account (A2A) payments in Europe next year.

Users will be able set up direct debits — transactions that take funds directly from your bank account — on merchants’ e-commerce stores with just a few clicks.

Visa said consumers will be able to monitor these payments more easily and raise any issues by clicking a button in their banking app, giving them a similar level of protection to when they use their cards. . . .

What the US Can Learn From Europe’s Digital Wallet Renaissance
PYMNTS – September 3, 2024

Digitization over the past decade-plus has transformed the back office with next-generation software solutions. But it’s not just the back office; innovations like digital wallets have been transforming the proverbial back pocket, too.

The impact digital wallets are having as mobile technology advances and consumer preferences shift is becoming impossible to ignore — particularly outside of the United States, where digital wallets are evolving beyond payment tools and offering a broader range of functionalities that cater to diverse needs.

“In Europe, we have been quite advanced in digitization of payments, and the usage of digital wallets has been growing rapidly,” Deniz Oran, head of payment partnership, EMEA at Google Wallet, told PYMNTS. . . .

Mastercard Wants to Get Rid of Card Numbers for Online Shopping
BNN Bloomberg – August 30, 2024

Mastercard Inc. is doubling down on efforts to eliminate the use of credit card numbers when customers make purchases online in a bid to fight fraud.

A decade after it first unveiled a technology that replaces consumers’ card numbers with so-called tokens, the company is now processing 1 billion such transactions every week, Chief Executive Officer Michael Miebach said in an interview. That’s after it took the payments behemoth three years to process the first billion of such transactions.

Now, Mastercard is planning to expand the use of the technology to replace security measures like passwords with biometric data such as fingerprints or face scans, Miebach said. It’s the latest step that the financial industry is taking to combat the rising issue of online payment fraud, which is expected to exceed $91 billion by 2028. . . .

Read Payments News Update – September 6, 2024 at constantinecannon.com