The Green Sheet Online Edition
July 28, 2025 • 25:07:02
Good news in payments you might have missed
We are hammered, seemingly daily, with news about how bad things are going—for the economy, financial institutions (FIs) and merchant services providers. But there's no need to let doom win the day. Read on for some good news highlights from the payments and fintech sphere.
One eye-opening piece of good news is that small business sales are growing. Yes, growing. The Fiserv small business index revealed that year-over-year sales grew 4.4 percent in June. Compared to June 2024, sales of services (up 5.2 percent) outperformed sales of goods (up 2.3 percent). Service-based businesses saw strong growth year-over-year, including professional services, Fiserv reported.
Meanwhile, the Federal Reserve Bank of New York found that median inflation expectations fell 0.2 percent to 3.0 percent on the one-year ahead horizon. Additionally, year-ahead expectations about households' financial situations improved, with a larger share of households expecting a better financial situation a year from now. Better than one in four (27.8 percent) expect to be much better off, the New York Fed reported.
Payments moving faster
Another bright spot is that payments are moving faster. Same-day ACH payments were up 15 percent in the second quarter compared to the same quarter in 2024. And both RTP and FedNow, the two operational instant payment networks, are posting rapid growth rates.
"Businesses are shifting to move money faster, in larger amounts, and with greater control," said Jim Colassano, senior vice president of RTP business product management at TCH, which operates RTP. RTP posted 195 percent growth in the value of transactions crossing the network. Key drivers included account-to-account transfers, digital wallet defunding, gig economy payouts and merchant settlements, TCH reported.
FedNow, a relative newcomer to the instant payments scene, charted equally robust growth in 2025's second quarter, moving more than 2.1 million payments, with an average value of $115,331 compared to $3,154 in the second quarter of 2024. Chief FedNow Executive Nick Stanescu, pointed to an "explosion of instant payment innovation emerging among financial institutions, payment processors and fintechs."
FedNow owes much of its growth to community and regional FIs getting on the faster payments bandwagon. The Fed said it now has 1,400 FIs moving payments across the network, including FIs like Patelco Credit Union, which has begun working with payment services firm Payfinia to accept payments into wealth management accounts.
District court sides with card brands
In another heartening development, the card brands deflected a court case brought by disgruntled merchants. A U.S. district court judge in Illinois dismissed a lawsuit accusing Mastercard and Visa of conspiring with Apple to suppress network competition and causing merchants to pay inflated prices for processing transactions.
District Court Judge David Dugan ruled merchants hadn't provided enough evidence to support their claim that Apple illegally declined to launch a competing payment network to rival Visa and Mastercard. They only presented a "slew of circumstantial allegations," he wrote.
Retailer Mirage Wine and Spirits led the lawsuit, a class action, which reportedly included thousands of other merchants. The lawsuit alleged Visa and Mastercard paid "ongoing cash bribes" that amounted to hundreds of millions of dollars a year to keep Apple from competing with them.
Visa and Mastercard denied the allegations and countered that their agreements with Apple expressly preserved the right for the company to compete with them. Apple, for its part, claimed it never had plans to compete with Visa and Mastercard.
Durbin credit card bill stymied
Reassuring news came out of Washington, too. Efforts to get congressional approval of what some are calling Durbin 2.0 have been thwarted. Senators Dick Durbin, D-Ill., and Roger Marshall, R-Kan., have tried at least twice, and failed, to attach the Credit Card Competition Act to must-pass legislation this year, most recently, the GENIUS Act, which created a regulatory structure for stablecoins.
The Credit Card Competition Act has been dubbed Durbin 2.0 because it would have a dramatic impact on credit card issuers, much as the Durbin Amendment to the Dodd-Frank Act had on debit card issuers. Specifically, the legislation would require large banks (those with over $100 billion in assets) to enable at least two unaffiliated networks to process transactions initiated with the cards they issue, but only one of those networks could be affiliated with Visa or Mastercard. The idea being that merchants would choose lower cost options.
Meanwhile, a Federal Reserve proposal to lower the debit card interchange cap remains in limbo. The cap is currently 21 cents plus 0.05 percent of the transaction and a penny to cover investments in fraud prevention. A Fed proposal first floated in the fall of 2023 would lower the cap to 14.4 cents plus 0.04 percent and a fraud prevention adjustment of 1.3 cents.
Open banking rule on the chopping block
In addition, the Consumer Financial Protection Bureau plans to rescind the open banking rule it adopted in October 2024. According to a legal filing in response to a challenge to the rule, the bureau "determined the rule is unlawful and should be set aside."
The open banking rule would have required FIs with more than $850 million in assets to open access to consumer financial account data they maintain to data aggregators (think Quicken, Plaid) designated by consumers, and to do so free of charge.
"This provides a recognition and structure for allowing banks to monetize their businesses," Ken Musante, president of Napa Payments and Consulting, noted.
Almost immediately following the news, JPMorgan Chase stated it would begin charging third parties seeking such data. According to reporting by Bloomberg News, the mega-bank sent pricing sheets to data aggregators outlining new charges that may vary by use case, with payment-focused firms facing the highest fees. Other banks are sure to follow Chase's lead.
Clarity around merchant-assessed fees
Visa generated favorable news, as well, by providing rule clarity, through acquirers, about how and when merchants can assess various types of fees (surcharges, service fees, convenience fees) on payments and what constitutes compliance.
For example, Visa made it clear that a surcharge not exceeding 3 percent of the ticket can be assessed in the 46 states that allow surcharging, but only on credit card transactions. Merchants are not required to register to do so, but must notify their acquirer, Visa and Mastercard at least 30 days before implementation of such fees.
The existence of a surcharge must be disclosed before the transaction occurs, and the disclosure must make it clear that the surcharge is being assessed by the merchant, not the card brands, to cover their processing costs. Notices are required at the point of entry and the point of sale, or verbally disclosed when an order is taken over the phone
Additionally, any surcharge must be listed as its own line item on the receipt. Non-compliance will result in fines, with each card brand handling fines differently. "Now that Visa has finalized both the rules and enforcement, we can expect more merchant acceptance and less rogue pricing," Musante said. Feds diss checks, promote EFT
And there's positive movement on the EFT front. The federal government is sunsetting its use of checks, which means more payments for electronic payment networks. Under an executive order handed down in March 2025, all government payments will be made using direct deposit, prepaid cards and other digital payment methods, beginning Sept. 30.
The American Bankers Association is among a passel of organizations cheering the move, noting in a statement that it will "provide another important opportunity to further reduce the number of unbanked in the country from the current record low of 4 percent."
Innovation continues to generate new players, investments
One enduring source of promise is that merchant services continues to attract entrepreneurs eager to deliver innovative products and services.
"The trend is toward more customizable solutions," said Dee Karawadra, CEO at Impact PaySystem and Impact TechLab. Karawadra and his team recently completed work on ISOHub.com, which had its genesis in CRM, "but it's more than that," Karawadra said, adding that it's an agent management tool that's built to be intuitive and generate any reports an ISO might need.
There is also a greater focus on embedded payments. One company making significant strides on that front is Full Stack Payments, a unified payment platform that enables SaaS companies and ISOs to monetize transactions through seamless embedded solutions. Some of the verticals where the company has been getting traction include self storage facilities, restaurants, gym/fitness facilities and gun shops.
Recently Full Stack secured $4.5 million from Netivia Financial to accelerate its SaaS and ISO channel expansion. By combining a robust agent-led distribution network with a scalable onboarding infrastructure, the company is positioned to deliver measurable value to both technology partners and ISOs, said Full Stack CEO John Shirey.
"Our SaaS partners want more than a PayFac – they want a true payments partner that understands their vertical and can execute with speed," Shirey said. "This funding helps us meet that demand at scale while leveraging our agent/ISO distribution channel."
In addition, merchant services providers and their partners, both upstream and downstream, are using AI to improve efficiency, security and the customer experience. It can be leveraged to support real-time pricing adjustments and optimize transaction routing, for example.
"Risk monitoring and merchant adjudication is a perfect application," Musante said. "AI can be used today to lessen false positives, more quickly review applications and determine exposure."
Editorial Note: Patti Murphy is senior editor at Green Sheet and president of ProScribes Ink, (hwww.proscribes.net). You can also follow her blog, Today in Payments, at (Todayinpayments.com), and her podcast, Merchant Sales Podcast, co-hosted with James Shepherd at www.ccsalespro.com/podcast.
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