Payments News Update – August 30, 2024 - Constantine Cannon

Posted  August 30, 2024

Legal and Regulatory Developments

SPOTLIGHT: CFPB Seeks Developers’ Comments on Apple’s Rules on Tap-to-Pay Access
PYMNTS – August 28, 2024

The Consumer Financial Protection Bureau (CFPB) is seeking public comment on Apple’s recently announced rules governing how financial companies and app developers offer tap-to-pay functionality on its devices.

“The CFPB is working to better understand further details about Apple’s announcement to determine whether it is a meaningful shift away from blocking competitive payments offerings from banks, credit unions and technology companies other than Apple,” CFPB Director Rohit Chopra wrote in a Wednesday (Aug. 28) blog post.

“We encourage developers and others with a stake in Apple’s regulations on contactless payments to contact the CFPB’s Office of Competition and Innovation.” . . .

Restaurants Fight Back Against the FTC Crackdown on ‘Junk Fees’ as Diners Balk at New Charges
CNBC – August 24, 2024 

Lawmakers want to crack down on “junk fees,” but restaurants are trying to stay out of the fight.

Surcharges or fees covering everything from credit card processing to gratuities to “inflation” have become more popular on restaurant checks in recent years.

Last year, 15% of restaurant owners added surcharges or fees to checks because of higher costs, according to the National Restaurant Association. In the second quarter, 3.7% of restaurant transactions processed by Square included a service fee, more than double the beginning of 2022, according to a recent report from the company. . . .

CFPB to Issue FAQs Helping BNPL Lenders Comply With Laws
PYMNTS – August 23, 2024 

Buy now, pay later (BNPL) lenders will soon be able to access a set of frequently asked questions (FAQs) to help them comply with federal laws and regulations.

The Consumer Financial Protection Bureau (CFPB) plans to issue these FAQs in September, CFPB Director Rohit Chopra wrote in an Aug. 16 blog post.

These FAQs will answer questions the agency heard in meetings with BNPL providers and in comments submitted in response to the interpretative rule it issued in May that explained how existing federal laws and regulations apply to BNPL loans, Chopra wrote in the post. . . .

8th Circ. Reboots Fed Swipe Fee Suit After High Court Ruling
Law360 – August 21, 2024 (subscription required)

An Eighth Circuit panel on Wednesday remanded a suit challenging Federal Reserve debit card swipe fee rules, ordering new proceedings in the case after the U.S. Supreme Court ruled that it was not untimely after all.

The suit by truck stop Corner Post and two North Dakota associations over the alleged high fees was dismissed by a district court and the Eighth Circuit based on the statute of limitations. The Supreme Court heard oral arguments in the suit in February, and last month it determined that the six-year window to sue doesn’t start closing until a rule harms someone, even if the rule became final decades earlier.

The Eighth Circuit said Wednesday that in accordance with the Supreme Court’s decision, its 2022 decision is vacated, and the case remanded to the district court for further proceedings. . . .

Industry Developments

SPOTLIGHT: Is this the End for the Magnetic Stripe?
BBC – August 15, 2024

As he slipped the key card into the reader on his hotel room door and tried the handle – to no avail – he realised what he had done.

For years, Steven Murdoch, a security researcher at University College London, had taken care not to put tickets or cards with magnetic stripes in his pocket next to his smartphone. This is because the magnets in smartphones are sometimes strong enough to wipe the data on magnetic stripes.

But so-called magstripe hotel key cards are rare these days, increasingly superseded by contactless cards with radio frequency identification (RFID) chips inside them. As such, during his hotel visit in January this year, Prof Murdoch forgot to take precautions and, he concludes, wiped his room key – having used it only once. . . .

Shoppers’ Online Fraud Fears Escalate
Payments Dive – August 28, 2024

Identity theft is the top concern of consumers who are shopping online. The credit monitoring company Experian polled 2,000 consumers and found that 84% said they worry about identity theft, a 20 percentage point increase from a 2023 survey, according to an Aug. 21 report on the results.

The number of consumers who worry their credit card information will be stolen also spiked between 2023 and 2024. The poll showed that 80% of consumers said they worry about bad actors acquiring their card information, a jump of 19 percentage points compared to the survey conducted in 2023.

An emerging technology, generative AI, was a top concern among the 700 businesses Experian polled, with 71% saying they are worried about criminals using artificial intelligence to commit fraud. . . .

Pay Your Rent, Get 2% Cash Back: Landlords Join Craze for Rewards
The Wall Street Journal – August 25, 2024 (subscription may be required)

The only reward for paying your rent used to be a place to live. Now landlords are offering credit-card-style incentives like 2% cash back or points redeemable for home goods and gift cards.

Behind the incentives are about a dozen companies including Stake, Incentco and Piñata. Some of these companies say it is a big benefit for landlords because people in these programs are more likely to renew a lease, even when the rent goes up.

Given the high cost of rent, tenants say even small rewards can affect their decisions about where to live. About 12 million renters spent more than half their income on housing as of 2022, a Harvard University report this year said. Turning people’s biggest expense into a loyalty program may take a tiny bit of the sting out of paying rent. . . .