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Banks: The Only Winning Move is Not to Play
An e-commerce crisis brews as payment processors scramble to form new banking partnerships to maintain operations.
by Tod Maffin and Steph Gunn
Today's News
Big Bank Abandons Payment Processors. What Now?
Wells Fargo has stopped providing a critical service to fintech companies, leaving a huge problem for payment providers and, in turn, marketers.
The bank's exit from the "BIN sponsorship" business means companies like Square, Stripe, and Paypal need to find new partners to process credit card transactions.
Why They’re Pulling Out
The fintech sector is facing a major threat as banks become more cautious about working with these businesses. Banks are under pressure from regulators to ensure their fintech partners comply with laws and regulations. This has made it riskier and more expensive for banks to work with fintechs.
The Search for New Partners
Some fintechs are turning to smaller banks or alternative partners.
Deutsche Bank has emerged as a possible replacement for Wells Fargo, but it's being selective about which merchants it will work with.
Square is still looking for a new partner to replace Wells Fargo, and is currently relying on JPMorgan Chase, but they are currently without a backup.
How It Could Affect You
The exit of Wells Fargo from the BIN sponsorship business has significant implications for marketers and merchants. It could lead to disruptions and increased costs for companies like Square and Stripe, which would likely pass that down the line.
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FTC Requires Easy Subscription Cancellation
If you sell any recurring service that can be bought online, the American trade regulator is about to make it easier for your customers to cancel their subscriptions.
The Federal Trade Commission has a new "click-to-cancel" rule will require sellers to make cancellation as simple as signing up was.
The rule applies to most subscription services and will go into effect in about six months.
What's Changing
The new rule is part of the FTC's effort to update its 1973 Negative Option Rule.
The FTC received more than 16,000 comments on the proposed rule, including complaints from consumers and feedback from businesses.
The new regulation also prohibit sellers from misrepresenting facts, failing to disclose terms, and making it hard to cancel.
Everything Is Politics
The FTC says it will enforce the rule, but it was hardly a guaranteed thing: In the end, the FTC board vote was 3-2. One board member, in her dissenting statement, said the only reason the majority wanted it passed was because it favoured their political candidate in the upcoming American elections.
What is the practice of making UI difficult for users to cancel subscriptions called? |
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