Still Plenty of Payment News Beyond Election Implications

Posted By: Elizabeth Rowe | November 17, 2016 | 0 Comments

It’s time for us to start planning for sharp revisions to Dodd-Frank, including the possible repeal of the Durbin Amendment. I don’t yet have a secondary source article on this topic, but don’t forget that if Durbin disappears, large banks will reengage with debit cards. They will reverse some of their post-Durbin fee structure changes (which included raising fees on deposit accounts an average of 3% to 5%) and will pull back some of their marketing and rewards for credit cards as they can once again push debit card rewards and their use for payment transactions.

  • Citibank has introduced its Citi Pay mobile wallet which will be available in the U.S. in early 2017.
  • Investors are pushing up bank stocks and pushing down a bit on non-traditional financial companies as the light-touch regulations Silicon Valley fintechs have enjoyed may disappear as a competitive advantage if big banks (which will still not be nimble) have more leeway in their marketing and product development processes.
  • And once again, a new survey of Millennials shows us that if we, as an industry, are not offering robust mobile banking features to them, they will leave.

FTC sues NetSpend over prepaid ad claims

10 November 2016, PaymentsSource

Putting prepaid card marketers into another tight spot may be the result of a lawsuit filed by the FTC against NetSpend for “deceiving” customers in its card advertising. Here’s the deal: NetSpend ads say its card customers are “guaranteed approval” and have “instant access” to their direct deposit funds. Each ad is followed by an asterisk which then caveats its previous statements by noting that its promises are “contingent upon passing (a) mandatory identification verification.” The central issue in the suit is whether the language following the asterisk, while precise, involves a process that is, in fact, more time consuming and more challenging than a consumer might correctly assume. The prospective cardholder is given no guidance on how long that verification process can take or what it entails. The types of federally required identification can be onerous to produce for some consumers, and the verification process can take days or even weeks. That means that people who buy a NetSpend card and then set it up for direct deposits may have no access to their funds for weeks as NetSpend completes it ID check. The FTC has noted that users have been “unable to access their money for long periods of time and suffered severe hardships such as evictions and car repossessions.”

Stakes high in battle between Walmart, Visa

November 10, 2016, Winnipeg Free Press

Walmart has 400 stores in Canada and says those stores pay Visa more than $100M a year in interchange fees. Back in June, Walmart threatened to stop accepting Visa at those stores unless Visa lowered the chain’s interchange rate. Visa didn’t budge so in July, Walmart started a slow rollout of its new Visa-less policy. First, it shut out Visa in its three Thunder Bay Ontario stores. Visa put up billboards reminding Ontarians that 4,240 Thunder Bay locations accept Visa. Visa also offered a $10 statement credit when a cardholder paid $50 or more at a grocery store accepting Visa. Now Walmart has turned off Visa at its 16 Manitoba stores, and Visa has once again put up billboards and offered its cardholders $10 to shop at another grocer. In Canada, card issuers and Visa are worried about their loss of interchange and card use analytics data. And there is a fear that if Walmart can demand lower interchange rates, the country’s three big grocers, Loblaws, Sobeys, and Metro, will demand discounts and then other smaller retailers will follow suit.

Consumer Credit Rose in September; Category including student and auto loans paced the increase

November 7, 2016, The Wall Street Journal

In September, consumer credit outpaced consensus estimates by economics by growing 19.29B vs. the estimate of $18.8B. In the overall 3Q, consumer credit grew 7.0%. Annualized, revolving credit grew at a rate of 5.16%, and nonrevolving credit grew at a rate of 6.68%.  On the other side of the household balance sheet, personal consumption grew by 0.5% in September and spending on durable goods grew 1.3%.Auto sales remain strong with auto loans outstanding topping $1 trillion for the very first time. Defaults rates remain low. And finally, unemployment is down to 4.9% and “wages notched their largest annual rise since June 2009.”

Bank of Hawaii to add card-less payments to its mobile app

November 9, 2016, Global Banking News

Bank of Hawaii’s mobile banking app now includes a cardless ATM withdrawal feature. A customer receives a one-time-use QR code that can then be scanned at the bank’s 185 ATMs to initiate an account withdrawal. The process takes 15 seconds, and Bank of Hawaii asserts that it is the first bank to provide this service to its customers.

Citibank whips out its own digital wallet with Citi Pay

November 10, 2016, New York Business Journal

In early 2017, US customers of Citibank will be able to download and use the new Citi Pay mobile wallet that will feature NFC payments and Masterpass. Before the year’s end, Citi Pay will be available to Citi customers in “Singapore, Australia, and Mexico. Interestingly, Citi Pay will use the same online user ID and password customers use to access and manage their full online Citibank account.

Millennials Want CUs to Be More Selfie Aware

November 10, 2016, Credit Union Times

Smartphone-owning Millennials are consistent in their expectations, indeed requirements, that their FIs provide great mobile banking services. A new survey by Black Diamond finds that older Millennials (29 to 34), far more than younger millennials, are active users of mobile features and don’t forget, they make (on average) $10,000 more per year than their younger counterparts.  The surveys takeaways are:


Silicon Valley-Backed Fintech Firms May Lose Under a Lighter Regulatory Regime; Many online lenders aren’t participating in the postelection rally in bank stocks

November 10, 2016, The Wall Street Journal

In a day and a half of post-election stock trading, for-profit prison stocks were up 43%, and the KBW Nasdaq banking index jumped 7%. Regional banks also saw sharp gains as investors anticipate more bank mergers post Dodd-Frank repeal as banks no longer shy away from their $50B asset ceiling above which additional capital requirements go into effect. But on Wednesday morning, the shares of LendingClub, PayPal, and Square all dropped.  Why? The nimble, non-bank players that have advantaged  themselves by challenging banks in consumer credit, payments, and retail banking “may suddenly find themselves competing with banks that feel unleashed, rather than hamstrung.”

Better Ways to Handle Debt Collections

November 9, 2016, Credit Union Times

No one gets to be nostalgic yet about the CFPB. It’s still here and it’s pushing lenders to be in compliance with the Fair Debt Collection Practices Act. The FDCPA does not specifically regulate loan originators’ collections practices, but the CFPB is using the Act as a compliance template to enforce its mandate to prohibit “unfair, deceptive or abusive acts or practices.” Navy Federal was hit with a big fine for shutting off account access to borrowers with late payments and threatening to report those same military members to their commanding officers.  It’s been noted that Navy Federal tripped up by using “standard industry loan forms and contracts that don’t specifically address default remedies.” If the loan forms don’t say a CU can shut off account access, they can’t. And if a CU sends out a late payment notice and threatens debt collection actions or a lawsuit, then it has to carry through. The CFPB said that Navy was deceptive in its process because it threatened actions that were only carried out 2.5% of the time – if you’re going to make threats, then carry through.

CU Advocates: Dodd-Frank, CFPB Are in the Crosshairs Now

November 9, 2016, Credit Union Journal Online

Credit unions are anticipating “regulatory relief” from the new Trump administration and while Dodd-Frank will be retooled and reshaped, it will not be repealed (per Lloyd Blankfein, the Goldman Sachs CEO who is widely considered to be Trump’s choice for Treasury Secretary). However, Jeb Hensarling, (Rep. TX) is also being considered for the slot and he’s a proponent of repealing and replacing Dodd-Frank with his deregulatory plan, the Financial CHOICE Act, which is described as a trade-off: “Banks can free themselves from various regulations, such as severe stress testing, as long as they maintain capital equal to at least 10% of total assets and high ratings from their regulator.”

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




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