Category: Payment Systems

1
Australian Gift Cards – Additional Consumer Protections
2
The Rise of PayWear
3
Australian Council of Financial Regulators consults on changes to Stored-Value Facilities Regulation
4
South Carolina Is the Latest State to Implement Money Transmitter Licensing Laws and Regulations
5
Surprise: New York State Court Ruling Means That NY Payroll Card Regulations Could Go into Effect After All
6
RBA: accessibility, security and resilience are key to the future of retail payment systems in Australia
7
Vermont Signals Broad Interpretation of Money Transmitter Law
8
Augmented Reality: Coming to a Store Near You?
9
US Court signals that proving data breach class actions will be difficult
10
A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization

Australian Gift Cards – Additional Consumer Protections

By Jim Bulling, Edwin Tan and Elise Hamblin

Every year, Australian consumers suffer an estimated loss of $70 million through gift cards expiring before use. On 18 October 2018, the Treasury Laws Amendment (Gift Cards) Act 2018 (Gift Card Act) was passed in an effort to reduce this loss.  Fintech card issuers should be aware of the upcoming changes and start making preparations to ensure that they continue to be compliant with the regulatory requirements.

What will change?

The Gift Card Act amends the Australian Consumer Law to create a national regime where:

  • gift cards must have a minimum expiry period of three years;
  • expiry information on gift cards must be prominently displayed; and
  • the charging of fees (except certain prescribed fees) after a gift card has been supplied will be prohibited.

We expect that the amendments will not apply to reloadable cards.

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The Rise of PayWear

By Jim Bulling and Elise Hamblin

Contactless payment technology has expanded beyond traditional credit or debit cards to include smart watches and phones that are fitted with “Near Field Communication” technology. Westpac is now the first major bank in Australia to embrace “PayWear” as the next development in this space.

What is “PayWear”?

PayWear allows a consumer to make payments by tapping a “Smart” accessory to a contactless payment terminal. For example, Westpac’s “Centsitive Objects” range has reimagined the traditional Debit Mastercard as an accessory. Other smaller banks have also recently introduced PayWear options for consumers, including Heritage Bank’s wearable wrist band and Bankwest’s payment ring.

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Australian Council of Financial Regulators consults on changes to Stored-Value Facilities Regulation

By Jim Bulling, Felix Charlesworth and Edwin Tan

The Australian Council of Financial Regulators (CFR) today published an Issues Paper reviewing the regulatory regime of stored-value facilities including purchased payment facilities (PPFs).  The CFR comprises regulators such as APRA, ASIC and the RBA.

PPFs enable funds to be stored for the purpose of making future payments and include mobile wallet services and prepaid cards.  PPF providers must be licensed and supervised by APRA or otherwise rely on an exemption from complying with the legislative requirements.  The RBA has declared several class exemptions for PPFs, including the “limited-value facilities” exemption for PPFs with payment obligations of $10 million or under.

To date, PayPal is the only entity licensed and supervised by APRA as a PPF provider and only one entity has obtained individual exemption from the RBA.  These results support arguments that the current framework is too complicated, deters potential new entrants and imposes significant compliance costs.

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South Carolina Is the Latest State to Implement Money Transmitter Licensing Laws and Regulations

By Eric A. Love and Judith E. Rinearson

On May 25, 2018, South Carolina’s money transmitter licensing law, the South Carolina Anti-Money Laundering Act, and its implementing regulations (collectively, the “Act”) became effective.

This means that the newly established Money Services Division (the “Division”) within the SC Attorney General’s Office is now accepting applications for licensure to engage in money transmission and currency exchange in that state.  Entities that were engaging in such activities in South Carolina as of May 25 had until June 29, 2018 to submit an application.  After submission, such entities were able to continue operating while their applications were being reviewed.

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Surprise: New York State Court Ruling Means That NY Payroll Card Regulations Could Go into Effect After All

By Judith Rinearson and Eric A. Love

The years-long endeavor in New York State to extensively regulate payroll cards (referred to in the NY regulations as “payroll debit cards”) recently entered a new phase when the New York State Supreme Court, Albany County, annulled the New York State Industrial Board of Appeals’ (“IBA”) February 2017 decision to revoke new payroll card regulations that had previously been issued in that state.  This means that, depending on the outcome of the recently filed appeal of the court’s decision, the controversial and highly restrictive NY payroll card regulations could become effective after all.

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RBA: accessibility, security and resilience are key to the future of retail payment systems in Australia

By Jim Bulling and Felix Charlesworth

The Assistant Governor of the Reserve Bank of Australia (RBA), Michele Bullock, delivered a speech at the Bund Fintech Summit in Shanghai on the developments in the retail payments industry and the potential implications these pose for regulators.

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Vermont Signals Broad Interpretation of Money Transmitter Law

By Jennifer Crowder and Jeremy McLaughlin

Recently, largely due to emerging payment systems and new ways of conducting business online, there has been a trend developing among states that certain activity does not require money transmitter licensing.  For example, several states have amended their statutes or issued regulatory guidance to indicate that a license is not needed if an entity is acting as an “agent of the payee” or as a “payment processor,” so long as certain conditions are met.  In general, an agent of the payee is an entity that has a contractual relationship with the merchant or other ultimate payee such that payment to that entity constitutes, in effect, final payment.  New York, for example, describes it as “any person authorized by a payee to receive funds on behalf of the payee and to deliver such funds received from the payor to the payee.”  N.Y. Comp. Codes R. & Regs. tit. 3, § 406.2(l).

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Augmented Reality: Coming to a Store Near You?

By Cameron Abbott, Warwick Anderson and Georgia Mills

Recent moves from PayPal and Target have brought fresh attention to the use of augmented reality (AR) in commercial settings. The technology remains in its infant stage but the revival of PayPal’s patent for payment-enabled AR glasses has some analysts wondering how close the technology is to becoming the mainstream.

The software described in the patent would give consumers with the glasses access to product and purchasing data simply by looking at an item on a store shelf.

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US Court signals that proving data breach class actions will be difficult

By Andrew C. Glass, David D. Christensen, Cameron Abbott and Matthew N. Lowe

In the US, several attempts at class actions for those affected by a data breach have failed challenges in early procedural stages.  In Dieffenbach v. Barnes & Noble, Inc., 887 F.3d 826 (7th Cir. Apr. 11, 2018), the Seventh Circuit allowed a data breach class action to survive the pleadings stage.  At the same time, the Court indicated that the plaintiffs may have a tough time proving their claims on the merits or establishing that class certification is warranted.  At the end of the day, the Dieffenbach decision may prove to be less of a boon and more of a bust for plaintiffs in data breach class actions.  Although it may provide a means to get into court, the decision makes clear that obtaining a favorable outcome may be a “difficult task.”  For a full summary of the Dieffenbach decision please see our client alert here.

A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization

By Jeremy M McLaughlin

The time and expense of applying for state money transmitter licenses can be an incredibly steep barrier to entry for many fintech and cryptocurrency businesses.  Seven states—Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington (collectively, “Signatory States”)—have taken an initial step to lower that barrier.  They have signed an agreement (“Protocol”) aimed at expediting and simplifying the application process for money services businesses.  The Conference of State Bank Supervisors (“CSBS”) announced the agreement and indicated other states are expected to join.

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