The U.S. Faster Payments Council, in collaboration with the FPC’s Fraud Work Group and Verafin, released Fraud Trends and Mitigation Opportunities, a report urging increased efforts to combat faster payments exploitation. The report focused on threat detection and prevention and called for industry-wide collaboration to strengthen defenses against fraud. The report identified authorized push payment (APP) fraud as a major concern and recommended enhanced education and awareness alongside improved business workflows.
Previous research by the FPC linked faster payments to various financial crimes, prompting calls for technical and behavioral controls. Significant gaps in fraud detection and mitigation were identified, including fragmentation and limited information sharing. Researchers emphasized the need for unified action to safeguard the payments ecosystem and called for improved fraud prevention processes and enhanced information sharing practices among industry stakeholders.
Recent developments in gift, loyalty and rewards programs signal their increasing prominence in consumer transactions. Examples include Blackhawk Network's plan to acquire Tango Card, and Factor4 and LMS-POS integration to facilitate gift card transactions. Studies by Runa and i2C Inc. highlight consumer preferences for flexible spending options and personalized programs. The 2024 State of Merchant Branded Payments report underscores the value consumers place on digital balances usable across multiple merchants.
The Credit Economy: The Role of Reward Programs in Consumer Credit Usage revealed Gen Z's preference for nontraditional rewards over cashback programs, emphasizing the need for tailored rewards offerings. Consumers across demographics show high interest in rewards programs, with Gen Z favoring mobile app delivery.
Capitol Hill is divided over the Consumer Financial Protection Bureau's plan to regulate big tech companies' payment activities. Senate Democrats urge the CFPB to proceed with supervising tech giants' payment services to ensure consumer protection against fraud and errors. Meanwhile, House Republicans led by Representative Patrick McHenry demand the proposal's withdrawal or an extended public comment period, arguing its proposal exceeds the CFPB's regulatory mandate. The plan targets major tech firms like Amazon, Apple and Google, requiring them to adhere to banking regulations for consumer protection that financial institutions are required to follow. The Senate Banking Committee, led by Senator Sherrod Brown, supports the CFPB's initiative, citing consumer security concerns.
The CFPB approach stands in stark contrast with opinions expressed by EU policymakers, who have expressed few concerns about consumer protections and financial stability when it comes to big tech firms' subsidiaries providing digital payment services. Amid this, industry stakeholders in the United Stated seek clarification and engagement from the CFPB regarding the proposed rules.
J.D. Power's 2024 U.S. Merchant Services Satisfaction Study revealed heightened dissatisfaction among small and midsize merchants with their service providers. The report noted contrasting satisfaction levels between innovators embracing alternative payments and traditionalists focused on credit and debit transactions. Emerging payment methods like buy now, pay later (BNPL) and pay by bank garnered higher satisfaction than traditional card processing. Survey respondents expressed concerns over delays in funding, fees and fraud management, urging for improved credit and debit experiences and innovative solutions.
The study detailed aspects of the divide between innovators and traditionalists, with higher overall satisfaction among the former. Key recommendations included addressing barriers to risk management and fraud prevention. The study, conducted between September and November 2023, surveyed 5,383 SMB merchants that processed with 19 primary payment processors. Shopify received the highest satisfaction ranking, followed by Paysafe and Bank of America.
The Federal Reserve Board's proposed slash in allowable debit card interchange could cost consumers upwards of $2 billion, as outlined in a white paper authored by Nick Bourke, former director of consumer finance at The Pew Charitable Trusts, with support from the Consumer Bankers Association. Drawing on previous research on the Durbin Amendment, which implemented debit card interchange caps, the paper highlights potential impacts on consumer costs if the proposal is finalized. The initial cap, set in 2011, resulted in covered issuers losing an estimated $5.5 billion annually in debit card interchange.
The Fed's new proposal aims to further reduce interchange fees, potentially leading to increased bank account fees for consumers. Bourke suggested that consumers may face an extra $1.3 billion to $2 billion annually in higher bank fees if the proposal goes through, with interchange fee revenues dropping by $3 billion annually, prompting banks to adopt higher account fees and raise minimum account balances, which would affect consumers across the board.
Capitol Hill's attention remains on safeguarding children from social media harms following the January 2024 Senate Judiciary hearings with major tech executives. Over the past year, policymakers have introduced bipartisan legislation to tackle the issue comprehensively. This includes the STOP CSAM Act, EARN IT Act, SHIELD Act, Project Safe Childhood Act, and REPORT Act, aimed at enhancing online platform accountability and transparency, combating exploitation, and modernizing investigation and prosecution of online crimes against children.
Meanwhile, the surge in social media usage during the pandemic, as noted by industry experts Allen Kopelman and Sue Fennessy, underscores concerns about addiction and societal damage. Fennessy's solution, the WeAre8 app, offers a novel approach by rewarding users for their time spent while promoting community support and content that uplifts. With a revenue-sharing model and focus on user protection, WeAre8 seeks to inspire positive offline engagement and economic empowerment among users.
New York merchants must now disclose total product costs, including credit card surcharges, before checkout, as per a state law effective Feb. 11, 2024. The law allows displaying inclusive prices on items or shelves or separate prices for cash and credit card payments. Surcharges cannot exceed the merchant's processing fees. Violating merchants face $500 penalties per violation. Secretary of State Robert Rodrigues maintains that the law promotes transparency. In 2017, New York's anti-surcharge law was deemed unconstitutional by the U.S. Supreme Court, prompting a refinement to ensure compliance with merchants' free speech rights.
Connecticut, Massachusetts, and Maine laws also address credit card surcharges, while Kansas and Texas have seen their surcharging laws declared unconstitutional. According to legal analysis by Bass Berry & Sims, merchants must navigate state-specific requirements for surcharge presentation, reflecting a broader trend of nuanced regulation in this area. 
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