Payment News Update - April 10, 2019
Legal and Regulatory Developments
SPOTLIGHT:
Law360 – April 4, 2019
Britain鈥檚 antitrust watchdog said Thursday that it has opened a preliminary investigation into whether Visa鈥檚 拢247 million ($324 million) offer for payment network Earthport PLC will hinder competition in the U.K.鈥檚 cross-border payments sector.聽 The Competition and Markets Authority could open a full assessment, known as a phase 2 investigation, into the acquisition based on its findings. It is seeking responses from companies in the payments and money transfer markets.聽 Visa made its bid for the U.K.-based Earthport in February after Mastercard Inc. tabled a 拢233 million offer in January. . . .
StreetInsider.com – April 8, 2019
Fiserv Inc. (NASDAQ:聽) disclosed in an SEC filing related to its First Data (NYSE:聽) deal:聽 On April 4, 2019, Fiserv, Inc. (鈥淔iserv鈥�) and First Data Corporation (鈥淔irst Data鈥�) each received a request for additional information and documentary materials (the 鈥淪econd Request鈥�) from the U.S. Department of Justice (the 鈥淒OJ鈥�) in connection with the DOJ鈥檚 review of the proposed聽 contemplated by the Agreement and Plan of Merger, dated January 16, 2019, by and among Fiserv, 300 Holdings, Inc. and First Data (the 鈥淢erger Agreement鈥�). . . .
PaymentsSource 鈥� April 5, 2019 (subscription required)
The Securities and Exchange Commission has issued guidance [see below] on determining if startups should be regulated as securities, a potential step toward regulating Initial Coin Offerings and other blockchain initiatives.聽 The securities guidance “may” apply to entities that are involved in selling, offering, marketing, promoting, buying, trading, holding, storing and offering financial services. The SEC stressed it’s not a rule, but guidance, so there’s still some room for interpretation.聽 The battle over whether cryptocurrency startups should be regulated as securities has been fierce, with companies such as Ripple contending their cryptocurrencies are separate from the company, and thus should not be regulated as securities. The SEC has nudged toward such regulation, though it has not taken a final stance.聽. . .
Industry Developments
SPOTLIGHT:
Digital Transactions News 鈥� April 8, 2019
A recent聽Forbes聽article attempted to refute many of the conclusions of a prior聽Wall Street Journal聽article that had illustrated how the card schemes (Visa Inc. and Mastercard Inc.) have dramatically increased their fees in recent years. In response, the Forbes article challenged the聽Journal聽article by completely changing the subject to interchange fees instead of scheme fees. . . .
American Banker – April 5, 2019
The U.S. payments system is about to dramatically change how our money deposits are held and transferred among banks, credit unions and other depository institutions. The headline for consumers is that we are finally catching up to the rest of the world in terms of being able to send and receive funds practically immediately, and fully replace check writing. The less sexy, but fundamental, question is who will operate this new system.聽 At issue is whether the Federal Reserve should continue to play a competitive, operational role as a payments processor. Or, whether it should stand back and award the payments services network to The Clearing House 鈥� an advocacy group and bank services provider that is, in its own words, 鈥渙wned by the world鈥檚 largest banks.鈥�. . .
Blockchain Has Many Champions, But are Any Close to Mainstream Use?PaymentsSource聽 – April 2, 2019 (subscription required)
When cutting through the noise generated by the highs and lows of cryptocurrency value, the underlying blockchain technology is poised to keep advancing toward mainstream payments.聽 Blockchain 鈥� the distributed ledger technology originally designed for bitcoin payments 鈥� underpins many ongoing efforts to streamline payments and reduce cost. But it doesn’t always live up to the promise. . . .
Digital Transaction News 鈥� April 3, 2019
Convenience stores saw their payment card acceptance costs rise nearly 10% in 2018 even though sales increased only 9%, according to data by the trade association NACS [infographic attached and available .聽 NACS, formerly known as the National Association of Convenience stores, says credit and debit card fees paid by its members rose 9.9% to $11.1 billion from $10.1 billion in 2017. The higher fees came as total U.S. c-store sales rose 8.9% to $654.3 billion from 2017鈥檚 $601.1 billion, according to the upcoming NACS State of the Industry report.聽, the fee assessed by the card brands for their issuers, typically makes up most of the fees merchants pay for card acceptance.聽. . .
ZDNet – April 4, 2019
A unified competitive response by the tech giants is required in order to counter the Apple Card from potentially monopolizing the future of the smart wallet and mobile payments industry.聽 Last week, the Cupertino consumer electronics powerhouse聽, which will move the company into the financial services space as an e-payments leader by further leveraging its Apple Pay NFC-based electronic wallet and mobile payments system, in partnership with banking firm Goldman Sachs and MasterCard.聽 MasterCard and Apple聽, when the partnership introduced further integration of its cards with increased security using tokenization into Apple Wallet and the Apple Pay service. . . .
10 Ways Central Banks are Experimenting with Blockchain
World Economic Forum – April 3, 2019
While research and experimentation with blockchain technology across sectors has been underway for several years, few organizations have deployed it. Although central banks are among the most cautious and prudent institutions in the world, a聽聽indicates that these institutions, perhaps surprisingly, are among the first to implement blockchain technology. . . .
The New York Times聽– April 2, 2019
SAN FRANCISCO 鈥� Paul Chou was among the many Bitcoin aficionados who thought big Wall Street institutions were about to become heavy hitters in the cryptocurrency markets.聽 Mr. Chou came from one of those institutions, Goldman Sachs, and created a cryptocurrency exchange, LedgerX, that would cater to big investors with sophisticated financial contracts.聽 Now, in the wake of last year鈥檚 Bitcoin crash, Mr. Chou is being forced to confront how few of the big finance companies acted on their cryptocurrency plans.聽 鈥淚t was definitely part of the original plan that institutions would be a big part of this market,鈥� he said. 鈥淲e were wrong.鈥�. . .