The rise of buy now, pay later (BNPL) services has sparked regulatory and legislative concerns. Senators Sherrod Brown, D-Ohio, and John Fetterman, D-Pa., called on the Consumer Financial Protection Bureau (CFPB) to establish BNPL consumer protections. About half of U.S. adults have used BNPL, and 40 percent are open to it, per Statista Consumer Insights.
During the 2023 holiday season, BNPL for online purchases reached a record $16.6 billion, according to Adobe Analytics. The CFPB has observed that BNPL users often have lower credit scores and frequently use credit cards, payday loans and other high-interest financial services.
CFPB Director Rohit Chopra stressed the need for consistent protections and regulations for BNPL. The Office of the Comptroller of the Currency also voiced concerns, particularly regarding loans advertised as interest-free with fewer installments.
Senators Brown and Fetterman urged the CFPB to use its authority to shield consumers from potential BNPL risks, given increased BNPL use amid reduced household savings, mounting debts and the fact that BNPL late fees can be substantial.
U.S. Census Bureau data released on Jan. 17, 2024, confirmed the retail industry's positive outlook for 2023 holiday spending. Published directly after the NRF's annual conference, the report revealed a 3.8 percent increase in holiday spending compared to 2022, nearing pre-pandemic levels.
Holiday sales exceeded $929.5 billion, aligning with NRF's projected 3- to 4-percent increase. NRF Chief Economist Jack Kleinhenz highlighted consumer spending resilience in 2023 despite economic concerns, with easing inflation and a robust labor market contributing to the holiday season's strength.
The data also shows a continued, consistent year-over-year increase of around 3.6 percent in retail, as seen between 2010 and 2019. Notably, categories like electronics and appliance stores, health and personal care stores, online sales, and clothing stores performed well. In addition, seasonal jobs reached 439,500 for November and December. NRF CEO Matthew Shay emphasized low unemployment rates and wage growth were drivers of consumer spending.
Elon Musk, CEO of X, disclosed that X is expanding to disrupt the payments industry. X recently heralded its receipt of a money transmitter license from Utah, the 15th state to approve such a license for X. Musk stated he envisions X becoming an "everything app" that integrates financial services into the platform.
While specifics were not provided in the announcement, Musk emphasized that X would offer peer-to-peer (P2P) payments, with ambitions to encompass users' entire financial lives, including money and securities, ultimately eliminating the need for traditional bank accounts.
Musk's background includes founding X.com in the 1990s, which later became PayPal and went public in 2001. Analysts believe X will face fierce competition in the P2P payments market, with established players like Zelle, Venmo and Cash App dominating the field. Existing wallet providers continue to innovate, making it challenging for newcomers like X to convince consumers to switch platforms.
Artificial intelligence (AI) recently took the spotlight at two industry events, showcasing its growing influence. At CES 2024, held from Jan. 9 to 12, 2024, in Las Vegas, AI technology was prominently featured. The event showcased products such as laptops, smart televisions and telescopes equipped with innovative AI capabilities, making stargazing, for example, accessible to users of all experience levels.
The National Retail Federation's 2024 convention, held from Jan. 14 to 16 in New York, explored AI's role in retail through exhibits, presentations and discussions.
A panel featured on opening day discussed how AI is transforming the retail landscape, with Walmart sharing insights on leveraging AI for growth and competitiveness.
On Jan. 11, the House Financial Services Committee established a bipartisan AI Working Group to examine AI's impact on financial products, fraud prevention, compliance and workforce modernization. The group aims to ensure effective oversight and global competitiveness in the rapidly advancing field of AI.
To combat trends in identity theft, first-party fraud and other financial crimes, technology leaders recently formed partnerships to protect against known and unknown threats. Underdog Fantasy, a gaming platform, is collaborating with Sift, a real-time fraud protection service.
Underdog Fantasy's CFO and COO, Dustin Cooper, emphasized the partners' commitment to player protection through innovation and stated that Sift's expertise in machine learning will help identify and block emerging fraud threats without hindering the player experience.
Darwinium, a digital security and fraud prevention provider, joined forces with AtData, an email address intelligence service, to enhance customer journey orchestration with email address insights. This partnership is designed to enable Darwinium to optimize its orchestration layer using AtData's email-centric intelligence data, strengthening decision-making in account creation, management and payment transactions.
Forter, a trust platform for digital commerce, introduced Abuse Prevention, a next-generation solution to combat policy abuse by helping merchants identify and block abuse through customized self-service policies and simulations. This initiative, Forter stated, addresses the growing issue of policy abuse by providing merchants with more intelligence and control.
The Federal Reserve's plan to lower allowable debit card interchange faces delays as the deadline for comments on the proposal is extended from Feb. 12 to May 12, 2024. The plan aims to reduce permissible debit interchange by up to 30 percent, and its implementation was initially scheduled for mid-2025. However, given the extended comment period and the usual approval process timeline, it's unlikely any new cap will take effect within a year of the comment deadline.
Regulated debit interchange, affecting card issuers with assets over $10 billion, currently has a cap of 21 cents plus 0.05 percent and an additional penny for fraud prevention, totaling about 24.5 cents for a $50 purchase. The proposed changes would lower the cap to 14.4 cents plus 4 basis points and 1.3 cents for fraud prevention, totaling 17.7 cents for a $50 transaction.
The proposal has received mixed reactions, with financial institutions criticizing the proposed reduction, merchants wanting an even lower cap, and disagreements even within the Federal Reserve itself. 
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