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NewsBriefs

This article contains excerpts from news stories recently posted under Visa reportedly dispatched an army of secret shoppers to
Breaking Industry News on our homepage. For links to these and other identify merchants that are adding surcharges to tickets
full news stories, please visit www.greensheet.com/breakingnews. in violation of its rules and is fining those merchants' ac-
php. quirers.
UK BNPLs face increased regulatory scrutiny

The United Kingdom's Financial Conduct Authority (FCA)
launched a formal investigation into buy now, pay later
(BNPL) best practices to protect consumers' financial
health and ensure that BNPL promotions are "clear, fair
and not misleading," FCA representatives stated.
The FCA has been monitoring BNPL providers and con-
Can neobank models save BNPL providers? firmed it will continue to enforce its guidelines after pe-
nalizing 4,226 promotions in 2022.
Buy now, pay later (BNPL) plans represent 3 percent of
global ecommerce, but high default rates and economic Examples of non-compliant promotions include:
headwinds are impacting BNPL providers. • risk of debt—promotions that customers cannot af-
ford to repay, which would increase debt loads;
Recent examples include New Zealand brands Openpay
and Laybuy, currently in receivership, and U.S. BNPL pro- • severe penalties—promotions that levy harsh fines
on customers who miss a payment deadline;
vider Affirm, which disclosed plans to lay off 19 percent
of its workforce following an earnings dip in the fourth • adverse consequences—promotions that carry harsh
quarter of 2022. penalties capable of severely impact consumer credit
scores and financial health; and
Nandan Sheth, CEO at Splitit, has seen BNPL providers • lack of transparency—promotions that fail to dis-
expand digital banking services and expects this trend to close when charges become payable.
continue in 2023 among leading players in the space. "If a
credit card portfolio has more than 60 points of write-offs, During an August 2022 roundtable discussion held to dis-
you'd call that a subprime portfolio," he said. cuss upcoming regulations, the FCA urged financial ser-
vice providers to do more to support borrowers in finan-
"BNPL is accelerated subprime, with no path to profitabil- cial difficulty.
ity, so these BNPL companies are going to offer banking
services to the millions of consumers they've registered." Payments forum joins PINless debit push
New BNPL add-on services may include bill pay, finan-
cial solutions and other neobank product offerings, Sheth The U.S. Payments Forum developed a resource it says
stated. will simplify the PINless debit implementation process for
retailers, networks and acquirers.
Visa changes surcharge rules
PINless debit is a debit card transaction that gets routed
Visa decreed that beginning April 15, 2023, merchants through regional ATM/POS networks without the need
cannot assess surcharges in excess of 3 percent on credit for PIN verification. While the capability has existed for
card payments. The news was coupled with a change in nearly a generation, PINless debit took off during the pan-
registration procedures for surcharging. demic for situations where PIN verification isn't practical,
like ecommerce and contactless payments.
Now, instead of notifying Visa directly, merchants plan-
ning to surcharge will need to notify their acquirer at least In a new white paper, the U.S. Payments Forum said its
30 days before the start of surcharging. analysis suggests PINless debit is especially popular
among retailers that handle smaller transaction amounts,
"I think Visa takes this issue very seriously, and it has as well as quick service restaurants.
made its opinion clear," said James Shepherd, president of
CCSalesPro. Not only does the new cap seriously impact Verticals like hospitality and petroleum, on the other
residuals on surcharging accounts, but it could also affect hand, have been slow to adopt PINless debit due to their
other pricing models that shift processing costs to card- reliance on dual-messaging technology (preauthorization
holders. followed by transaction). Several card issuers have been
slow to support PINless debit, leading regulators to force
Any pricing model that adds a line-item charge—as is the them off the collective dime.
case with many cash discount programs, for example—
could be construed as surcharging.

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