Visa, Mastercard $30 Billion Swipe Fee Settlement Rejected by US Judge

Hey Payments Fanatic!

A U.S. judge has rejected a $30 billion antitrust settlement involving Visa and Mastercard, which aimed to limit fees charged to merchants for card transactions.

Judge Margo Brodie of Brooklyn denied preliminary approval, influenced by opposition from merchants and trade groups like the National Retail Federation. Critics argued that the proposed settlement would maintain high fees and give Visa and Mastercard too much control over transactions.

Visa and Mastercard might now need to renegotiate or face trial.

The settlement was initially intended to resolve ongoing litigation since 2005 over interchange fees, which generated about $72 billion in 2023. These fees, ranging from 1.5% to 3.5% per transaction, often fund rewards programs.

The proposed settlement included a temporary reduction in swipe fees and caps for five years, along with the removal of anti-steering provisions. However, many merchants opposed these terms, citing inadequate long-term relief and restrictions on steering customers to cheaper cards.

Trade groups and some U.S. senators, advocating for more competition, criticized the settlement for perpetuating a "cartel" of Visa, Mastercard, and banks.

What do you think? Do we need more competition for Mastercard and Visa? And who/what will challenge them in the future?

Cheers,

Marcel

INSIGHTS

European PayTech deal activity on track to almost half in 2024.

Here are Key European PayTech stats in Q1 2024:

PAYMENTS NEWS

???? Rainforest lands $20M to challenge Stripe with embedded payments for SaaS providers. Rainforest is capturing volume as software platforms migrate from legacy processors such as Fiserv and FIS. As that happens, it competes against companies like Stripe to embed financial services and payments.

???? Klarna Plus, issued by WebBank, has reached a milestone of 100,000 subscribers in the US since its launch earlier this year. The Klarna+ subscription service allows members to maximize their shopping experience through access to a variety of features and offers, including waived service fees on the Klarna One Time Card, rewards, and access to special deals with popular brands in the Klarna app.?

???? Gr4vy, a cloud-native payment orchestration platform (POP), is extending its partnership with Trustly, a FinTech in open banking payments, to launch in Europe. The partnership allows Gr4vy’s online merchants to include Trustly as a payment option , offering greater flexibility and convenience to customers.?

???? Payabli closes $20m series A to scale operations and drive innovation for its payments infrastructure and monetization platform. The new funding will also enhance security and scalability , boost customer acquisition, and help software partners integrate and activate processing volume more efficiently.

???? Frost Bank taps Finzly for FedNow and RTP instant payments. The partnership will allow Frost Bank to meet the growing demand for instant money movement by offering the ability to send real-time payments while also providing greater choice when making payments.

???? Nuvei secures UAE license. The Retail Services Category II License enables Nuvei to offer its comprehensive suite of payments technology to businesses operating in the thriving UAE market, including direct local acquiring, payment aggregation services, and domestic and cross-border fund transfers.?

???? EU payment gateway Computop is calling on merchants to join pilot trials of the bank-backed European Payments Initiative's Wero wallet scheme . Wero transactions will usually be carried out by the customer in the bank’s own app or in the new Wero wallet.

???? Wearable paytech provider MuchBetter launches 'free' contactless payments ring in Italy. The ring is free as long as users load it with €100 through the associated app . Following its launch in Italy, it will also be available in Germany, Austria, the UK, Ireland and Poland.

???? GoCardless has announced a partnership with integration and automation platform Celigo to accelerate its growth through indirect channels . Leveraging Celigo’s integration platform (iPaaS) will enable GoCardless to build integrations between its payment platform and the back-end systems commonly used by businesses.

GOLDEN NUGGET

Account-to-Account (A2A) Payments are slowly but surely disrupting traditional payments, a trend accelerated by Open Banking??

A2A payments have been the backbone of our economy for decades, especially essential in sidestepping the hassles of the payment card system. Traditional A2A systems used legacy banking rails leading to prolonged transaction processing times. They also required consumers to jump several hoops such as logging in, manually entering beneficiary details, and enduring a cooling-off period before transactions could be initiated. So, what's different now?

- Open Banking ??

Open banking has significantly propelled the growth of A2A payments, acting as a strong driving force. It has revolutionized A2A payments, making them more user-friendly and merchant-friendly. In the UK/EU, they are known as Payment Initiation Services, while in the US as Pay-by-Bank.

Initially popular for more business-to-business (B2B) or peer-to-peer (P2P) use cases, today A2A payments are gaining traction among consumer-to-business (C2B) models. Key players making waves included: payment processors, networks, merchant platforms embedding A2A payments, and a handful of neobanks and infrastructure players joining the fray:

??Nuvei teamed up with Plaid to announce its Pay-By-Bank services in North America, ensuring a seamless and cost-efficient solution for businesses and end-consumers alike

??Waave collaborated with Gr4vy, Inc to initiate their Pay by Bank solution across major retail outlets throughout Australia, elevating the payment experience for consumers while also helping retailers optimize transaction costs and enhance payment security.

?? Shopify partnered with Volt.io to allow merchants in Europe, the UK, and Brazil to offer Volt's Pay by Bank solution at checkout, letting customers initiate real-time A2A payments

A2A payments are also entering the Recurring Payment space, quickly and efficiently (??perfect use case).

?? Variable Recurring Payments (VRP) enables customers to give permission to a third party to make a series of payments from their bank account at variable amounts and intervals with one Strong Customer Authentication (SCA) step to set up.

??Plend | B Corp partnered with GoCardless to offer VRPs via the latter's Instant Bank Pay feature

??Lendable implemented variable recurring payments by integrating TrueLayer's Account Information Services (AIS) and VRP products into its financial ecosystem

In 2023, collaborations in the open banking world boomed, pushing VRP and Pay-by-Bank mainstream. Incorporating Financial Products within Open Banking is next. 2024 is when it explodes ??

Source: WhiteSight & Sanjeev Kumar

And I highly recommend following my partner at Connecting the dots in payments... Arthur Bedel ?? ?? for more great updates like this one??

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