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How will Facebook’s cryptocurrency change payments and nance—if given a chance? Volume Sixteen, Number Ten • DigitalTransactions.net • October 2019 ALSO IN THIS ISSUE: A New Network Crackdown Selling the ACH Why Bank Wallets Fold The Revolution in Remittances pax-2019-smart-retail-solutions(digitrans).indd 1 2/19/19 12:08 PM OCTOBER 2019 • VOLUME 16, NUMBER 10 Under the Sign of Libra 24 Facebook’s digital money could empower the underbanked, usher cryptocurrency into the mainstream, and accelerate the arrival of real-time payments. For some, that’s not good enough. THE GIMLET EYE Big Bad Libra 4 TRENDS & TACTICS 6 The Network For FedNow, No Place Like EMV’s Steady Apple Pay Takes Chase And Crackdown on a Lot More Home for March O on Southwest WePay Team on Negative-Option Questions Than Mastercard Some 80% of Airlines Faster Merchant Billers Answers Think the U.S. storefronts now Apple’s mobile Funding accept EMV cards, Visa and With rollout a market is played wallet turned Chase drafts out for the big up from 68% in 5 years old and Mastercard are long way o , December. its WePay unit taking action much remains card networks? got a present for service in against those unknown about Not exactly. from one of the the speedier- enticing o ers the Fed’s real-time country’s biggest payments fray. that automatically payment service. airlines. sign you up for a subscription. Plus, Security Notes warns of the four risks of digital money. ACQUIRING 16 MCOMMERCE 20 STRATEGIES 33 Will That Be Credit, Folding the Wallet The Digital Revolution Debit … Or ACH? Chase and other banks are shuttering Comes to Remittances their wallet apps. Is there no longer—or Historically, ACH processing hasn’t Western Union, MoneyGram, and was there ever—a place for bank-spon- been a big item on most merchants’ Ria are being challenged by a slew of sored wallets for mobile payments? wish lists. That could change soon. digital- rst upstarts. NETWORKS 30 ENDPOINT 39 How Libra Is a Spark for How to Help SMBs Blockchain Technology Compete And Thrive Facebook’s cryptocurrency initiative has Uni ed token payments o er bene ts the potential to rewire the underpin- that include but go well beyond nings of the entire payments system. enhanced security. Cover Illustration: Jason Smith, 123RF.com Digital Transactions (USPS 024-247) is published monthly by Boland Hill Media LLC, 800 Roosevelt Road, Building B, Suite 212, Glen Ellyn, IL, 60137. Periodicals Postage Paid at Glen Ellyn, IL, and at additional mailing o ces. POSTMASTER: Send address changes to Digital Transactions, P.O. Box 493, Northbrook, IL 60065-3553. 2 DIGITAL TRANSACTIONS | OCTOBER 2019 CONTENTS OCTOBER 2019 • VOL. 16, NO. 10 PUBLISHER Robert A. Jenisch BIG BAD LIBRA EDITORINCHIEF John Stewart SENIOR EDITOR Jim Daly NO SOONER DID FACEBOOK INC. PULL THE COVERS OFF its Libra crypto- currency project this past June than the social-media giant ran into a buzz- SENIOR EDITOR, DIGITAL Kevin Woodward saw of criticism—from Congress, central bankers, the press, and seemingly CORRESPONDENT right-thinkers everywhere on the planet. Seldom has a payments announce- Peter Lucas ment—let alone one that has to do with digital money—drawn so much ART DIRECTOR/PRODUCTION EDITOR worldwide attention, let alone blowback. Jason Smith By September, Facebook was hauling itself o to Europe to face an inqui- EDITORIAL ADVISORY BOARD sition from central bankers and company o icials were making soothing Eula L. Adams assurances that Libra would not go forward until everyone was satisfied. John Elliott To be sure, Facebook hasn’t done itself any favors with its privacy lapses Alex W. “Pete” Hart and other dubious business practices. And, to be sure, no outsider can know Former Chief Executive O cer, Mastercard International the inside dope on what Libra will do for Facebook, for the other 27 com- William F. Keenan panies backing it, and for money and payments generally (for much of the President, De Novo Corp. background on this, see our story on page 24). Dr. Gideon Samid But let’s look at a few facts and see if we can get an idea of just how big Chief Technology O cer, AGS Encryptions Ltd. this bogeyman really is. Libra, when it finally gets traded, will be an open- source cryptocoin that will ultimately operate on a so-called permissionless DIRECTOR OF ADVERTISING Robert A. Jenisch, 877-658-0418 blockchain. That means, first, that any entity whatever can build applica- [email protected] tions on top of the Libra codebase. Second, within five years, any entity—not ADVERTISING SALES REPRESENTATIVES just those with “permission”—will be able to run nodes on the network. The Robert Mitchell, 877-658-0418, x7 sti ing hand of all-powerful Facebook certainly looks menacing in that. [email protected] Further, Libra will o er a currency anyone in the world can send to any- Rob Akert, 877-658-0418, x6 [email protected] one else in the world at costs that should be considerably less than what they Digital Transactions, Digital Transactions News, pay now for remittances. Competition—if the viewers-with-alarm allow it to and DigitalTransactions.net are publications of happen—is likely to ensure that. Companies will be able to put digital wallets Boland Hill Media LLC, 800 Roosevelt Road, Suite B212, Glen Ellyn, IL 60137 into the hands of these folks and of anyone else who want to trade in Libra. John Stewart, Managing Director Facebook itself is working on just such an app called Calibra. Robert A. Jenisch, Managing Director And, speaking of so-called faster payments, these transfers are likely to For advertising information, call 877-658-0418. To subscribe or zip along in seconds if the underlying blockchain can avoid the kind of con- give us a change of address, go to gestion that has plagued Bitcoin. www.digitaltransactions.net and click on “Subscriber Care” or call 847-559-7599. So there remain a couple of other concerns: what nefarious purpose The views expressed in this publication are Facebook really has here; and what injury Libra will do to the world’s mone- not necessarily those of the editors or of the members of the Editorial Advisory Board. tary system. There’s not enough space to do justice to the second item, except The publisher makes reasonable e orts to to say, can Libra do worse than national currencies, which governments may ensure the timeliness and accuracy of its content, but is not engaged in any way in in ate at will? o ering professional services related to nancial, legal, accounting, tax, or other As to the first concern—neither Facebook nor any other company oper- matters. Readers should seek professional ates contrary to the interests of its shareholders. If those interests happen to counsel regarding such matters. All content herein is copyright © 2019 Boland Hill Media align with those of Joe Everyday, what regulator can object? LLC. No part may be reproduced without the express written permission of the publisher. John Stewart, Editor | [email protected] Subscription prices: $59/year for subscribers in the United States; $69/year for Canadian subscribers. All other subscribers, $119/year, payable in 4 DIGITAL TRANSACTIONS | OCTOBER 2019 U.S. currency. We believe if you’re only focused on payments, you’re missing the big picture. Lead the future of commerce with Poynt’s revolutionary platform. Visit https://info.poynt.com/manifesto to become a believer. trends & tactics THE NETWORK CRACKDOWN ON NEGATIVE-OPTION BILLERS Ever signed up for a free trial approval at the end of the trial be- merchants, not just physical mer- subscription and then forgotten fore they start billing. Merchants chants,” Standfield says. about it, only to find out you’ve also must send the cardholder, Visa, which declined to comment roped yourself into receiving an either by email or text message, the for this story, posted a notice about unwanted service or publication on transaction amount, payment date, its planned changes on a Web site it an ongoing basis? Both bank card and merchant name, along with maintains for merchants. The post networks have now implemented clear instructions on how to cancel. notes Visa has had rules to regulate or plan to implement stricter rules Mark Standfield, president of negative-option billing and subscrip- on so-called negative-option billing Midigator LLC, an American Fork, tion merchants since 2011. The notice and subscriptions with free trials. Utah-based firm that works with identifies several “pain points” in Visa Inc. is set to impose updated merchants and merchant acquir- promotions and introductory offers, policies April 18, a year after ers to prevent and mitigate including cardholder complaints and Master card Inc. tightened its rules chargebacks, says Visa’s upcoming confusion when customers forgot or on negative-option billers. These changes are largely similar to Mas- did not understand they had signed are billers who, after getting a con- tercard’s, though there are some up for a subscription, the lack of a sumer to sign up for a trial sub- differences. Visa’s rule will cover mechanism to distinguish transac- scription for a product, automati- physical and digital goods sold tions involving promotional or trial cally charge the customer’s card on through subscriptions, whereas offers from any other subscription, file after the trial ends or until the Mastercard’s covers only physical and a lack of card-issuer clarity on consumer cancels. goods, he says. available dispute rights. Mastercard’s rule change re- “The biggest difference that we Despite a network crackdown on quires merchants to gain cardholder saw is that Visa included digital subscription billers about a decade MASTERCARD UPDATED NEGATIVE-OPTION BILLING POLICIES IN 2019, AND VISA PLANS TO IN 2020 ‘The biggest difference that we saw is that Visa included digital merchants, not just physical merchants.’ —MARK STANDFIELD, PRESIDENT, MIDIGATOR LLC 6 DIGITAL TRANSACTIONS | OCTOBER 2019 TRENDS & TACTICS ago, problems have persisted and it triggers an escalated response by problems came to light mainly led to enforcement actions by the the brands,” he says.

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