This week’s payment news roundup covers payment industry trends to consider, like new grab-and-go tech implementation at sports arenas, as well as potential regulations for BNPL, solutions for rising data breaches, and the venture capital pinch that could impact payments firms.
Tax authorities are considering real-time compliance amid digital commerce boom
Online shopping continues to gain significant momentum, and some US tax authorities are considering accelerating the collection of sales tax.
Sales tax — which is collected from the buyer by the seller and forwarded to the state for certain goods and services — is usually paid monthly, quarterly or annually depending on the location of a business. According to PaymentsJournal, however, US businesses could soon be required to pay sales tax on a daily basis.
Details for implementation are limited for now, but PaymentsJournal shares three things independent software vendors (ISV) and payment processors should prepare for that could impact operations:
- Data visibility: Granular tax data will be needed to ensure sales tax is accurately remitted to tax authorities, so payment processors will have to adjust their technology and processes to get a more accurate and comprehensive breakdown of a company’s electronic sales.
- Sales tax collection: If a majority of retailers don’t know how much sales tax they have collected until they process their books, payment providers will need to invest in new infrastructure that allows them to transfer sales tax collections on a daily basis on behalf of their customers.
- Shopping behavior: The current taxable period allows for returns and the general fluidity of sales, but adjusting for returns and credits could become burdensome for payment processors who need to remit taxes for their customers each day.
Though it could be years before real-time compliance is a requirement for US businesses, other parts of the world are moving toward near-instantaneous tax management as ecommerce grows. As tax authorities work to shift some of the sales tax responsibilities from retailers, payment processors should brace for the opportunities and challenges ahead.
Regulators could introduce new rules for BNPL sooner than later
More developing changes across the payment industry include the potential of new regulations for buy now pay later (BNPL) companies.
After racking up approximately $97 billion in transactions in 2021, BNPL is attracting significant regulatory interests across the globe — and a proposed rule could be published as early as December 2022.
Pymnts.com reports the Consumer Financial Protection Bureau (CFPB) launched an inquiry against five BNPL providers in December 2021 in order to gain insight about this product.
The CFPB says its biggest concerns are:
- Poor fee transparency
- The ability for consumers to take credit with a soft credit check or no credit check at all
- Consumer credit score outcomes if the consumers fails to repay the credit
Regulations would ensure consumers are protected, but educating shoppers about how BNPL products work can also help consumers protect themselves.
Still, consumers will continue to demand innovation and choice in their transactions, creating further growth for this rapidly-growing alternative financing option despite any potential financial risks.
In the meantime, payments-forward ISVs should continue offering point-of-sale (POS) financing flexibility to boost conversions and help consumers make payments that work best with their individual budgets.
MLB park introduces frictionless payment technology for home run customer experience
With the return to live entertainment after the COVID-19 outbreak two years ago, many businesses are introducing new technologies to bolster the on-site experience.
In an effort to reduce the amount of time consumers spend standing in line waiting for hot dogs and popcorn, Pymnts.com says many venues, including Minute Maid Park in Houston, are using digital payment technologies that get fans back to the game faster.
The article says Major League Baseball (MLB) recently announced that the Houston Astros are partnering with Amazon to bring Just Walk Out, a cashierless checkout option, to two concessions stores within the team’s stadium.
Just Walk Out technology from Amazon allows consumers to scan their credit cards as they enter a store, and any items they exit with will be automatically charged when they leave the store. Having grab-and-go tech options is a first for the MLB, though other sports facilities like TD Garden in Boston, Massachusetts have been fitted for the checkout-free shopping experience.
As consumers increasingly prefer self-service payment trends like Just Walk Out, this speedy, frictionless option knocks it out of the park for attendees who want a quicker purchasing experience that helps them spend less time away from their highly-sought seats.
Venture capital squeeze could impact funding for payments startups
In other payment news, global venture capital funding dropped 19% in the first quarter of 2022 according to Payments Dive.
This is the largest quarterly decline since the third quarter of 2012, and some payments startups — who are among the biggest recipients of venture capital money — are starting to feel the squeeze. The decline comes just one week after a sizable e-commerce checkout business “abruptly shut down” after being unable to raise new funding.
The recent pinch indicates the investor community may be apprehensive about climbing inflation rates and new supply chain constraints as well as geopolitical turmoil.
Though the public markets are facing some uncertainty, private markets may not be “feeling the downdraft [as] equally.”
Payments Dive reports a partner with Pritzker Group Venture Capital predicts additional fintech shutdowns may be on the horizon as venture capitalists tighten their purse strings.
With less free-flowing funding available, some payments players may be forced to pivot to accommodate a lack of capital.
Data breaches soar, increasing duties of ISVs and other fintech operations
Data breaches are on the rise for the third consecutive year — mostly as the result of cyberattacks including phishing and ransomware — according to payments industry news source Digital Transactions.
The number of known data breaches across the US saw a 14% increase from Q1 in 2021 to Q1 of 2022. Despite the surge of cyberattacks in the first quarter, there have been significantly fewer victims affected by the breaches. The Identity Theft Resource Center reported there were about 50% less victims during the first quarter of 2022 versus 2021.
Still, the report from Identity Theft Resource Center says breach notices should include more transparency in an effort to reduce risk to organizations and individual consumers.
As cyberattacks become more complex and sophisticated, ISVs and consumers alike need to practice cyber safety. ISVs should partner with fintech solutions that promote data security at the core of their services to help protect their businesses and customers against rising breaching incidents, especially because payment technology services have an obligation to safeguard the data of its framework and customers.
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