TransUnion Completes Acquisition of Verisk Financial Services
TransUnion completed its acquisition of Verisk Financial Services. Together, our combined capabilities will help us better serve customers through enhanced insights into customer behaviour. Read More.
First introduced over a decade ago as part of the Dodd-Frank reforms, the Fed is now expanding its requirement (effective from July of next year) that merchants must be able to choose between two distinct networks when routing debit card-not-present transactions. The move expands the reach of the original rule, which has applied to card-present purchases since 2011. The onus in both situations is now upon issuers to put alternatives at merchants' disposal. Many banks, especially in the community tier, are already compliant, with back-end advances in recent years, having eased the technical obstacles. The move is supported by the Department of Justice and the Federal Trade Commission, who see network choice as an indirect way to stoke up competition in a space where some three-quarters of debit-card transactions are processed by the two big networks.
Meanwhile, a legislative manoeuvre by the senators behind a not-dissimilar routing mandate for credit cards means that new rules for credit-card routing are becoming more of a possibility. These reforms are intended to lower merchant costs; however, opinions divide sharply over what the real-world outcomes will be, with some observers noting that the 2011 Durbin Amendment saw precious few merchants passing on interchange savings to the consumer.
North of the border, Canadian merchants can now, as of yesterday, pass on credit-card interchange costs directly to the cardholder – it remains to be seen how this development will be received by the shoppers affected.
Following a multi-year review, the Payment Systems Regulator (PSR) in London has announced a set of what it describes as remedies for the 14 leading acquirers and payments facilitators in the British market : the most meaningful of these mandates may well be a new contractual limit of 18 months for the leasing of POS terminals, with only month-to-month renewals permitted once that period has elapsed. The PSR had previously flagged concerns over merchants feeling locked into acquiring relationships. The other requirements are Summary Boxes setting out key service-provider information and an online tool deploying that information for clearer comparison.
Retailer complaints about a lack of costs transparency and indefinite contracts had been a focus of the review since the outset. The regulator continues to look at the fees paid by acquirers to schemes. Last November, the PSR noted that card-acquiring practices were only working well for merchants enjoying card turnover over £50 million ($56m) per annum. In a speech this week, the chief executive flagged other areas being examined, with certain interchange fee increases and the potential of account-to-account solutions being examined for market impacts.
One of America's most prominent BNPL providers made an intriguing move on Wednesday with the announcement of a new monthly payment option that comes with a simple, rather than compound, interest rate for the loans involved. Amounts can go as high as $4,000, with $400 being the threshold for eligibility. The Afterpay offering, which can run for six or twelve months, caps the amount of interest that can be charged at 35.99 percent; as with the interest-free options, consumers are told upfront what they will end up paying by the end of the term.
The pay-later industry has generally demonised interest-bearing loans so it remains an open question if their target segment will be comfortable with this development. However, as the first inflation-impacted Holiday Season for many years draws near, Afterpay (now a Block subsidiary) could see a significant bump in their originations. The loans are underwritten by First Electronic Bank, which also partners with Block for Cash App loans.
Other stories of interest this week...
Africa: Flutterwave adds Google Pay to payment-methods offering
Europe: Adyen partners Tink for Open Banking payments, starting in UK
Europe: SocGen picks up PayXpert stake on expansion plans
Global: SWIFT sets out blueprint for CBDC network
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The Weekly News Digest from Argus Advisory Research highlights significant developments in payment cards, digital payments, acquiring, processing, retail banking and consumer credit. Our writers and researchers frame these items in contexts such as historical, sectoral and regional trends, adding a layer of value often missing from the rolling news cycle.
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