Consumer advocacy organizations, led by U.S. PIRG, challenged Mastercard's alleged collection and sale of cardholder data to unrelated third parties. Calling for the practice to stop, they emphasized the need for Mastercard to collect data only essential for secure payments. Eight advocacy groups endorsed the initiative, including the ACLU and Privacy Rights Clearinghouse, believing Mastercard's substantial access to consumer spending data drives significant revenue through data monetization.
This includes bundling and selling transaction data online, increasing the risk of breaches and misuse of data. The company, they added, also offers services that help advertisers target high-value prospects. Mastercard denied selling personal cardholder data for marketing or tracking and emphasized its commitment to privacy and data responsibility principles.
The Federal Reserve Board proposed to reduce the cap on POS) debit card payments by more than 30 percent starting in 2025. The Fed also proposed adjusting the cap every two years without public comment. This move aims to reflect changes in issuer costs since the cap's introduction in 2011. Retailers see it as a cost-saving measure for themselves and customers, but they believe it doesn't go far enough. Financial institutions are critical of the proposal.
They argue that the current system benefits merchants and consumers but doesn't cover the actual costs for debit issuers, as intended post-Durbin Amendment. The proposed changes, effective June 30, 2025, lower the cap to 14.4 cents plus 0.04 percent and a 1.3-cent fraud prevention adjustment, based on 2021 data. In 2021, interchange fees reached $31.59 billion.
J.P. Morgan Chase introduced a pay-by-bank solution that utilizes the ACH rails and Mastercard's open banking technology. This innovation enables merchants to offer customers the option of direct payments from their bank accounts via the ACH rails or instant-payment networks like RTP. J.P. Morgan Chase ranked second in both ACH credits and debits origination and reception in 2022, according to Nacha data.
Mastercard, committed to open banking, provides tools for analyzing optimal payment timing and reducing risks. Verizon is set to pilot J.P. Morgan Chase's pay-by-bank offering, aiming to enhance customer payment experiences. Mastercard is also collaborating with Worldpay Merchant Solutions to support consumer bill payments and account owner verification. The company also offers real-time underwriting in partnership with Zip.
Weeks ahead of the 2023 holiday season, analysts were expecting retail spend to exceed last year's levels as shoppers leverage an array of digital payment methods. The National Retail Federation forecast, released Nov. 2, 2023, predicted in-store spending of between $957.3 billion to $966.6 billion in November and December, an increase of 3 and 4 percent, respectively, over 2022.
These numbers are consistent with an average annual uptick of 3.6 percent from 2010 to 2019, according to Matthew Shay, president and CEO of the NRF. Jack Kleinhenz, NRF chief economist, mentioned that the pandemic pushed shoppers to online and digital commerce methods, which may increase by 7 to 9 percent this year to between $273.7 billion and $278.8 billion, up from $255.8 billion during last year's holiday season.
The 20th annual Western States Acquirers Association's conference drew over 1,400 attendees, 150 exhibitors and 50 sponsors from 500 organizations. WSAA, a non-member trade association, focuses on merchant acquiring-related services for brick-and-mortar and ecommerce merchants. The conference featured ample panels and discussions covering card brand thought leadership, instant payments in the on-demand economy, payfac trends, and working with Capitol Hill regulators.
Additional topics addressed included sustainability, resilience, human resource management, cash discount and surcharging practices, AI's impact on payments, entrepreneurship, and creating the ultimate customer experience. Industry professionals praised WSAA for its vibrant exhibit hall and diverse agenda, emphasizing the importance of networking and knowledge exchange in the payments industry.
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