Biggest Non-Surprise of the Year: Retailers Fight Effort to Repeal Durbin Amendment

Posted By: Elizabeth Rowe | September 9, 2016 | 0 Comments

EMV

New Cards Chip Away at Payment Companies; World’s Two Biggest Payment-Terminal Makers have Reported Disappointing Results, Citing Difficulties in the U.S.

6 September 2016, The Wall Street Journal

Before the holiday weekend, both Verifone and Ingenico (the largest global POS terminal manufacturers) saw their share prices drop 16% and 14%, respectively. Why? Because both companies had given positive financial guidance predicated on rising sales of terminals in the U.S. And that boon in sales has just not materialized. While big merchants bought new terminals a while back, smaller merchants have held on to their old terminals despite the transaction liability shift. Another factor pummeling their share prices is a concern that as smaller merchants wait, new competitors both within the U.S. and China will enter the market and be poised to grab market share when those merchants finally upgrade their equipment.

MOBILE PAYMENTS AND MOBILE BANKING

Android Pay to Work with Chase Visa

8 September 2016, Global Banking News

Android Pay has announced that Chase Visa debit and credit cards are now compatible with its payment app. Remember, Chase has issued 51 million credit cards and 13 million debit cards with the vast majority being on the Visa network which makes Android Pay’s move not inconsequential. Android Pay also announced that it is supporting checkouts on Google’s Chrome browser for merchants that include Groupon and 1-800-FLOWERS. And for good measure, the article threw in a stat from EMarketer which says that 19% of U.S. smart phone owners will make an NFC payment this year and that those transactions will total $27.05 billion.

Mobile Payments 0.9: Why Is the Tech Forever Stuck in Beta?

5 September 2016, PaymentsSource

The best-looking payments form factor was a huge hit at the Rio Olympics: Visa’s Contactless Payment Ring. It was designed to be unobtrusive, secure (it uses the Visa token), waterproof and recharge-less. It’s now available for pre-orders, costs $53 and will be shipped this December. But overall, contactless payments haven’t really caught on in the US. There’s not a “critical mass of consumers or merchants who can use them, and they don’t address a real problem.” What could provide a breakthrough? Getting rid of the disconnection points. Any retailer trying to use a single platform to accept payments at live events, at retail and online is out of luck – there are just too many participants in the ecosystem who do not want to relinquish any territory to others. There is “no easy way to transfer data, and everything you try to do seems to involve the undoing of all kinds of other related businesses.”

Mobile is Heaviest Used Banking Channel as Transactions Multiply: Report

6 September 2016, Mobile Commerce Daily

New research finds that the average mobile banking user accesses services 8.4 times a month. While consumers initially used mobile banking to check account balances and activities, increasingly, they are tapping mobile banking for bill pay and other transactions. Why the uptake of new functionality? Consumers have grown more comfortable with the tech, and the technology itself has become more robust in its functionality and more intuitive to use. Forty percent of all consumers have used mobile banking in the past 30 days and of those, 51% say they are using it more than a year ago. The numbers are even more positive for the youngest millennials (18 to 24), with 77% having accessed mobile banking in the past 30 days. Of those, 69% say they’re using mobile banking more than a year ago and 59% say they’re using mobile bill pay more.

Banks Brush Up Rewards Before Mobile Pay Adoption Takes Off

30 August 2016, PaymentsSource

Recent research has found that among the mass affluent in the U.S. (those in the top 15% of earners), 66% use digital payments whenever they can. Of those, 23% use digital coupons on their mobile devices. So how are FIs leveraging the convergence of the mandate to get their payments cards to be top of ewallet and consumers’ conditioned behavior to maximize rewards? By pairing the two in transparently valuable ways. For instance, Wells Fargo has merged mobile banking and digitized loyalty rewards by linking rewards to all accounts owned by a customer. Those accounts and their accruing rewards can be seen on any platform and “thanks to responsive design, they can set up automatic redemptions toward deposit accounts, some credit lines, or for certain merchant gift cards.”

REGULATION, JUDICIARY AND LEGISLATION

MasterCard Facing Damages Claim of $18 Billion Over High Swipe Fees

8 September 2016, The Wall Street Journal

International network rulings may presage future regulatory/judicial actions in the U.S. In 2014, MasterCard lost a case before the European Court of Justice (whose rulings cannot be appealed (think the U.S. Supreme Court)) which found that MC’s multilateral cross-border transaction fees breached European competition rules for 15 years. Now, the U.K.s Competition Appeal Tribune has filed a claim against the network asking for a judgment of $18.72 billion on behalf of U.K. consumers, alleging that they were charged “higher prices because of the card giant’s high swipe fees.” Per the case filing: “Because MasterCard’s fees have already been found to be illegal by the Commission, this ‘follow-on’ claim need only prove the damage consumers suffered as a result of MasterCard’s anticompetitive behavior.”

Retailers Fight Effort to Repeal Durbin Amendment

6 September 2016, Credit Union Times

Are you sitting down? Good. Because this is going to surprise you. (Not.) A large group of retailers has called on House Republicans to jettison their attempts to repeal the Durbin Amendment through both straight forward repeals and as a repealing add-on to a “comprehensive overhaul of the financial regulatory regime.” The retailers, who are supported by Sen. Dick Durbin, say the amendment has “provided significant protection to businesses from the anti-market practices employed by global credit and debit card brands.” Banks and credit unions say that Durbin introduced price-fixing into a “functional and competitive system….The amendment was supposed to exclude small issuers from interchange fee ceiling restrictions, but Dodd-Frank failed to include an exemption from costly network routing and exclusivity provisions.” Congress has very little in-session time left this year but these look like they’re the battle lines drawn up for big fights next year.

Apple Pay Could Lose Leverage in U.S. from Spat Down Under

1 September 2016, American Banker

Could the Apple Goliath be toppled by an Australian David? Apple stomped through the U.S. banking industry, imposing its 15bp fee on FIs wanting to access its payment app (and its affluent and enthusiastic handset owners) and monopolistically refusing to negotiate its terms or its fees. But in Australia (and just in time for contract renegotiations here in the U.S.), the banks and the country’s competition authorities are pushing back. Those banks have asked the Australian Competition and Consumer Commission to allow the banks to negotiate collectively with Apple, “claiming the company’s restrictive policy around Apple Pay is stifling mobile payments innovation in the country.” Interestingly, in addition to the Australian Payments Clearing Association, the Australian Retailers Association is supporting the banks’ request. The regulator has agreed to issue a draft decision next month.

 

 

 

Elizabeth Rowe

Elizabeth Rowe

Elizabeth tracks the shifting payments landscape for both PSCU and its member owners. Focusing on the interstice of the economy, competition, consumers, technology, payment products and channels and regulatory guidance, Elizabeth gleans the key challenges and opportunities facing our industry, our strategic plans and our success fulfilling our mandate of serving the American consumer.
Elizabeth Rowe

 


 

 
 
 

Leave a Reply