Payments

On Wednesday, May 5, 2021, the Board of Governors of the Federal Reserve System (“Federal Reserve”) issued a notice requesting public comment on proposed guidelines articulating a series of principles to be used by Federal Reserve Banks in evaluating requests for Reserve Bank master accounts and payment services (the “Proposed Guidelines”). The Federal Reserve intends…

On April 3, 2020, the European Commission launched two public consultations on a new digital finance strategy for Europe and on a retail payment strategy for Europe, which will both run until July 15, 2020.  The consultations follow two other consultations on an EU framework for markets in crypto-assets and on a potential initiative on digital operational resilience in the area of financial services, both launched in December 2019.  The efforts are part of the larger Commission’s Digital Finance Outreach 2020 to prepare the new digital finance strategy.  However, due to the COVID-19 pandemic, most events have either been cancelled or postponed.  An overview of upcoming events, such as DG FISMA’s online roundtables and other national events, is available here.
Continue Reading European Commission Launches Key Consultations Regarding Digital Finance

On November 19, the Basel Committee on Banking Supervision (the “BCBS”) released a report on open banking and application programming interfaces (“APIs”), focusing specifically on aspects of open banking related to customer-permissioned data sharing, including sharing between a customer’s bank and various third party firms. The report builds on the BCBS’ February 2018 paper (“Sound Practices: Implications of fintech developments for banks and bank supervisors”), which noted the increasing adoption of advanced technologies—including APIs—by banks, service providers, and fintech firms to deliver innovative financial products and services. The key findings from the report are outlined below.
…
Continue Reading Basel Committee on Banking Supervision Releases Report on Open Banking

England’s Court of Appeal has decided that the Competition Appeals Tribunal (the “CAT”) erred in rejecting certification of former financial ombudsman Walter Merricks’ class action against MasterCard, for £14 billion.  As a result, the CAT will now reconsider whether to certify the class.  The decision has lowered the bar that will need to be cleared in this and future class actions in order to achieve certification.  In this alert, we consider the decision and its implications for the UK’s fledgling class action regime.
…
Continue Reading English Competition Appeals Tribunal to Reconsider £14 Billion Class Action Against MasterCard

On February 6, 2019, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) released its much-anticipated proposed amendments to the payday lending rule. The proposed revision is Kathy Kraninger’s first major regulatory initiative since becoming the director of the CFPB.

The Bureau issued two notices of proposed rulemaking that would (i) repeal the mandatory underwriting provisions in the payday lending rule and (ii) delay the compliance date for these provisions until November 19, 2020, which would allow the Bureau to consider comments and issue a final rule before the underwriting provisions take effect. The Bureau’s proposed revisions would not amend or delay the effective date of the payment provisions of the payday lending rule, although the preamble to one of the proposed rules makes clear that the Bureau may separately consider whether any revisions to the payment requirements are appropriate.…

Continue Reading CFPB Releases Proposed Revisions to Payday Lending Rule

Innovation in financial services continues to move at a rapid pace. The significant increase in the number of fintech companies in recent years has highlighted a burgeoning market with significant economic potential, and a commercial need to create efficiencies and modernize the provision of financial products and services. Federal and state financial services regulators remain…

On January 17, 2019, the Payment Card Industry Security Standards Council (the “Council”), a payment industry association, released a new framework for PCI software security – the PCI Software Security Framework – to assist companies in designing and maintaining secure software for processing payment transactions. The framework includes two standards: the PCI Secure Software…

On October 17, 2018, Federal Reserve Board Governor Lael Brainard discussed the potential for financial innovation, and in particular, fintech products and services, to foster financial inclusion of underserved families and small businesses.  She has frequently addressed the importance of fintech, including cryptocurrencies, digital currencies and distributed ledger technologies and the role of banks in…

The Payment Services Directive (PSD2), which took effect on January 13, 2018, puts an obligation on banks to give Third Party Providers (TPPs) access to a customer’s payment account data, provided the customer expressly consents to such disclosure. The new legislation is intended to improve competition and innovation in the EU market for payment services. The General Data Protection Regulation (GDPR), which is due to take effect from May 25, 2018, enhances individuals’ rights when it comes to protecting their personal data. The interaction between PSD2, aimed at increasing the seamless sharing of data, and the GDPR, aimed at regulating such sharing, raises complicated compliance concerns.

For example, where banks refrain from providing TPPs access to customer payment data for fear of breaching the privacy rights of their customers under the GDPR, competition authorities may consider this a breach of competition law. This concern is already becoming a reality for banks – on October 3, 2017, the European Commission carried out dawn raids on banking associations in Poland and the Netherlands following complaints from fintech rivals that the associations were not providing them with what they considered legitimate access to customer payment data.…

Continue Reading Overlap Between the GDPR and PSD2

On January 3, 2018, in Italian Colors Restaurant v. Becerra, No. 15-15873, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit invalidated an application of a California law that would prohibit merchants from imposing a surcharge on credit card payments. The California law would allow offering discounts for payments by…