Merchants Want Choice and Congress Is Listening

Lawmakers are moving to regulate credit card interchange by attaching the Credit Card Competition Act to a stablecoin bill, gaining strong bipartisan and industry support. Visa launches a new embedded payments program aimed at fintechs and commercial partners, starting with vehicle-based payments through Car IQ. Nevada considers special bank charters to give fintechs direct access to payment rails, bypassing traditional intermediaries. And in the UK, regulators are cracking down on buy now, pay later with new rules to rein in risky consumer debt.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your weekly dose of payments notes.

Merchants, Durbin, Have Genius Idea

Merchants are one step closer to getting federal regulation of credit card interchange.

Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) are planning to offer the Credit Card Competition Act (CCCA) as an amendment to the GENIUS Act. The GENIUS Act (officially, the Guiding and Establishing National Innovation for U.S. Stablecoins Act) aims to create the first comprehensive federal regulatory framework for stablecoins, which are cryptocurrencies pegged to stable assets like the U.S. dollar. Debate on the GENIUS Act was ended on May 19, through a procedure known as cloture, passing on a 66-32 vote. A vote on the bill is expected once lawmakers return from the Memorial Day recess.

The Credit Card Competition Act would mandate that merchants be able to choose over which networks their payment card transactions get processed. To accommodate that, the largest issuers of credit cards (those with at least $100 billion in assets) would be required to program the cards they issue to be able to be processed on two networks, only one of which could be owned by Visa or Mastercard. The premise is that merchant choice could lower interchange rates, as networks compete for business.

The CCCA has broad support—from retailers, Republicans and Democrats in the House and Senate, and even Indian tribes. In a recent letter to Majority Leader Thune and Senate Minority Leader Charles Schumer (D-NY), the Coalition of Large Tribes asked that the CCCA be attached to any “stablecoin legislation” such as the GENIUS Act “or any other moving [legislative] vehicle.”

In a press release, the Merchants Payments Coalition claimed the CCCA has the support of “almost” 2,000 companies and nearly 300 trade associations, as well as a “broad group” of consumer, labor, and pro-competition organizations.

At a hearing on the bill held last year by Durbin, prominent Republican Senators Lindsey Graham (R-S.C.) and Thom Tillis (R-N.C.) both chastised the card brands, with Tillis asserting that “small businesses have a legitimate concern” and “if you don’t figure that out, you’re going to get Durbin-Marshall.”

Visa Program Advances Embedded Payments

Visa has announced a new program that helps businesses embed payments into their products and platforms.

The Visa Commercial Integrated Partners program aims to improve connectivity between financial technology firms and Visa commercial products through its commercial platform, the company explained in a press release. Visa said it will make available advanced APIs to embed Visa products in business partners’ applications and make these integrations available to its financial institution clients, allowing them to offer new seamless payment experiences to business customers.

Visa said the Commercial Integrated Partners program provides the ecosystem, technology, and framework for innovative fintechs and other business application providers to integrate payment functionalities into their platforms with ease and enable Visa credentials offered by Visa Commercial issuers.

One of Visa’s first partners in the program is Car IQ, a leader in fleet and vehicle technology, which is enabling integration with the commercial platform. Clients will soon be able to access Car IQ software for their business customers and enable in-app payments with virtual cards at fuel providers, without extensive supplier onboarding or development—potentially saving 18–24 months of due diligence, integration work, and project management.

"We believe transforming the vehicle into a Visa payment credential for fuel, tolls, and services will help banks recapture fleet spend that is currently lost to legacy card programs and private networks,” said Sterling Pratz, founder and CEO of Car IQ.

Financial institutions can leverage Visa Commercial Integrated Partners to offer customers enhanced payment solutions, such as payments within ERPs, expense management, mobile and vehicle apps, tokenization through virtual cards, more elaborate transaction controls, and enhanced data on settlements. This not only improves the customer experience but also strengthens the institution’s commercial card product offerings and competitive position in the market, Visa said in a press release.

They also gain access to pre-evaluated fintech partners already integrated with Visa, which will drive faster adoption and implementation.

"Visa Commercial Integrated Partners represents a significant step forward in our mission to empower financial technology providers and financial institutions with innovative digital payment solutions," said Darren Parslow, Global Head of Visa Commercial Solutions. "By leveraging our network and Commercial APIs, we are enabling our partners to innovate faster, reduce development and distribution costs, and deliver superior payment experiences to their clients—it underscores Visa's commitment to driving the future of digital payments and supporting the growth of the fintech ecosystem globally."

Nevada Considers Charters for Payment Banks

The Nevada legislature is considering a bill to give a special charter for banks that just handle payments, with an eye toward allowing fintechs and others to access payment rails and help retailers reduce expenses associated with traditional card payments.

The legislation would establish procedures for licensing retailers, payment processors, remittance companies, and others to apply for charters as banks for direct access to U.S. payment systems like the ACH, Fedwire, and FedNow. They would be prohibited from engaging in lending and lending-related activities. The bill also would set a limit on merchant acquiring activity of 0.25% (or 25 basis points).

The goal is to eliminate “middlemen” that add costs and delays to settlements, Assembly Speaker Steve Yeager, a Democrat, said during a hearing on the bill, according to published reports, and the Retail Association of Nevada is lobbying for the bill.

Payment banks would not be insured by the FDIC.

Several states issue special charters for banks, including Connecticut and Georgia. Last year, Georgia granted payment processor Fiserv a bank charter.

UK Regulates BNPL

Here’s an interesting news item from across the pond, where the government has said it wants to end the “wild west” of unregulated POS borrowing that is buy now, pay later.

According to the BBC, 11 million folks in the UK have used BNPL in the past year, but there are fears some are spending more than they can afford.

Under new legislation set to take effect next year, the government says BNPL firms will have to follow consistent standards so shoppers know what they are signing up for, and upfront checks to determine if they can afford the purchase, along with directions on how consumers can seek help if needed.

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.