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Yahoo
2 days ago
- Business
- Yahoo
Remittance tax draws fintech pushback
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. A provision of the budget bill making its way through Congress that would impose an excise tax on cross-border money transfers has drawn opposition from fintech groups. The tax would be paid by consumers sending the money, but not by those who are U.S. citizens, according to the text of the May 20 House budget proposal. The budget bill, known as the Big Beautiful Bill, was passed by the House of Representatives last week, and still awaits a vote in the Senate. Both chambers are controlled by Republicans, who have worked alongside President Donald Trump's administration to craft the bill. In a Tuesday press release, the American Fintech Council said it 'expressed strong concern' about the tax in a letter to congressional leaders that day. Such a tax 'would harm small businesses and everyday consumers while empowering bad actors and undermining effective anti-money laundering enforcement,' the letter said, according to the release. The council has locked arms with other industry organizations on a joint response to the remittance tax proposal, including the Financial Technology Association and Electronic Transactions Association. The proposal would increase costs for pharmacies and grocers, as well as other small businesses that offer such money transfer services, the council said in its release. Consumers who use the transfers to send money to other countries would also ultimately shoulder the increased cost, the release added. The organizations also object to Americans being required to disclose personal information to avoid having to pay the tax. 'Under the proposal, American citizens would be required to submit personal information to financial institutions and the Internal Revenue Service in order to avoid paying a new tax on cross-border payments,' the FTA contended in a separate Wednesday press release. 'This would impose an undue tax burden on everyday Americans, who would be forced into more complicated tax treatment for sending money abroad or miss the tax break when filing.' Such cross-border payments are often sent by migrants living in foreign countries to their family and friends back home. The transfers are often referred to as remittances. The U.S. is the country from which the majority of remittances flow, with the top recipient countries being India, Mexico and China, respectively, according to a World Bank blog post in December. A cottage industry of payments startups have sprung up in recent years to offer digital remittances. Such international transfers have long been relatively costly and complicated to send. The expanding service providers see an opening to reduce costs related to such transfers, including for the consumer, and thereby increase volume. Some new fintech entrants include Seattle-based Remitly and the British company Wise. They're increasing competition for established industry players such as Denver-based Western Union, Dallas-based MoneyGram and San Jose, California-based PayPal Holdings. When asked about the tax during an interview, MoneyGram CEO Anthony Soohoo said it was 'unfortunate' that such a tax would be included in the budget. He noted that sending such payments is usually 'a need' as opposed to 'a want' for consumers. 'At this time, we are monitoring the situation and seeing how that plays out, and if it becomes something that does pass, we'll adapt like we have with any legislation, but it's really, right now, hard for us to know how to react,' Soohoo said. PayPal, Remitly and Wise all have representatives on FTA's board, according to the organization's website. Spokespersons for those companies didn't immediately respond to requests for comment. The budget tax on such international money transfers was initially proposed as a 5% levy, but then reduced to a 3.5% tax proposal, according to an amendment. Recommended Reading Cross-border payments remain focus for Fed
Yahoo
2 days ago
- Business
- Yahoo
PayPal's venture arm taps new leader
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. PayPal's venture arm has appointed Ian Cox Moya, 42, as managing partner, the fintech giant said in an emailed statement Wednesday to Payments Dive. Moya's predecessor, James Loftus, exited PayPal to 'pursue another opportunity,' a PayPal spokesperson said in the statement. According to Loftus' LinkedIn page, he joined talent management tech company Velocity Global as chief financial officer this month, after being managing partner of PayPal's venture capital unit from 2022 until 2025. 'Ian has been an integral part of our team since he rejoined PayPal three years ago,' the spokesperson said. 'His deep fintech expertise in the U.S. and Latin America has been pivotal in shaping our global investment strategy, and he has supported many visionary founders across the fintech and e-commerce ecosystems.' Moya was part of PayPal's strategy development in Latin America from 2012 to 2015, and he rejoined the company in 2022 as a partner for the San Jose, California-based company's venture capital arm, according to his LinkedIn account. He formerly led card company Synchrony's venture arm from 2018 to 2021. To date, PayPal's venture arm has poured about $850 million into dozens of companies spanning the fintech, artificial intelligence and cryptocurrency industries, according to the company's website. Among those that have received venture capital are Acorns, FreshBooks, Ellevest, Plaid and Raise, per the company's website. Following Ian's return in 2022, PayPal's venture arm made considerable investments in Latin American fintech startups. In 2023, the company was one of multiple firms that invested $14 million into nocnoc, an e-commerce platform that connects global merchants with Latin America. The following year, PayPal's venture unit and other investors invested $15 million into Ume, a Brazilian payments company that serves small and mid-sized businesses. PayPal has extended its investment dollars beyond its payments purview in recent years. In 2023, the company was one of several investors that placed $30 million in Israeli data privacy management startup Mine. Last year, the venture arm and other investors invested $30 million in Rasa, a generative AI company. Recommended Reading Affirm targets offline growth
Yahoo
4 days ago
- Business
- Yahoo
Global Payments to sell payroll unit for $1.1B
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Global Payments plans to sell its payroll software services business to Grand Rapids, Michigan-based Acrisure for $1.1 billion, the company said in a press release Wednesday. As part of the transaction, the companies also entered a commercial agreement under which Global Payments will continue to offer the human resources and payroll software services to its merchant clients, the release said. In a separate release Wednesday, Acrisure noted the unit is currently known as Heartland Payroll Solutions, but will be rebranded after the closing. The companies said they expect the deal to close in the second half of this year. 'This transaction further sharpens our strategic focus and allows us to amplify investment in the markets and solutions where we are most differentiated, while also positioning the payroll business to benefit from greater scale and investment moving forward,' Global Payments CEO Cameron Bready said in the release. Atlanta-based Global Payment plans to sell off the payroll and human resources business as it seeks to narrow its focus on providing payments services to merchants and to streamline its operations around that purpose. The company earlier this year also divested its issuer business in a $13.5 billion sale to Fidelity National Information Services and last year sold its healthcare software Advanced MD unit to an investment firm for $1.1 billion. By contrast, Acrisure said the acquisition will allow it to keep diversifying the suite of software services it offers to its approximately 50,000 small and mid-sized business clients. The purchase will let it expand the human resource and payroll services it currently offers, and add to its other insurance, reinsurance and cybersecurity services. Acrisure, which recently raised $2.1 billion in a funding round that valued the company at $32 billion, will hire a Global Payments executive as part of the deal. The company said Vince Lombardo, the North America president for Global Payments' merchant solutions business, will become CEO of the Heartland Payroll business. The Heartland unit has about 1,000 employees, a spokesperson for Acrisure said in a statement via email. Acrisure plans to expand the unit's workforce as the business grows, according to the statement. 'All Heartland Payroll teams and employees currently dedicated to the payroll business will be given the opportunity to work at Acrisure,' the spokesperson added. Analysts who follow Global Payments noted that the sale falls in line with the company's plan to divest businesses that generate up to $600 million annually. While analysts for the investment firm Robert W. Baird & Co. estimated the Heartland unit generated between $125 million and $145 million in annual revenue, or about 1.5% of Global Payments' overall annual income, analysts for at the firm TD Cowen estimated a higher level, estimating the unit's revenue in the range of $250 million to $300 million. Recommended Reading FIS, Global Payments agree to Worldpay deal
Yahoo
4 days ago
- Business
- Yahoo
Fiserv reaffirms Clover revenue goal
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Fiserv still expects its Clover point-of-sale unit to take in $3.5 billion in revenue this year, despite disclosures during the first-quarter earnings call that suggested the fast-growing business was plateauing, Chief Financial Officer Bob Hau said at an investor conference last week. 'That's our expectation to deliver that $3.5 billion dollars, and we feel good about our ability to do that,' Hau said. 'I certainly recognize that the reported (Clover gross payment volumes) for the first quarter, and our outlook for the second quarter at 8% was a surprise, or a disappointment,' Hau acknowledged at the Barclays Emerging Payments and Fintech Forum on May 20. The volume growth flat-lining over the two quarters was due at least partly to the company focusing on 'quality' volume from small businesses that are large enough to buy additional services offered by Fiserv, with the company less interested in 'micro-merchant,' he said. 'We could get lots more volume, but that would not be the quality volume,' Hau said. Following Fiserv's first-quarter earnings report on April 24, analysts and investors wondered what the slowdown in Clover's volume might mean. For instance, analysts at Keefe, Bruyette and Woods suggested it might be a sign that Fiserv, which had developed a payments reputation similar to the 'gold standard' names Visa and Mastercard, was slipping. The Milwaukee-based company reported specifically that Clover's revenue climbed 27% over the year-earlier quarter despite the slowdown in payments volume growth. Restaurants and other merchants use the POS to take consumer payments. Hau noted in his comments last week that the first-quarter growth this year was in addition to 30% revenue growth for the first quarter of 2024, over 2023. 'Clover's rapid growth fueled optimistic valuation cases but in the most recent quarter, a sharp slowdown in Clover's payment volume growth — not revenue — sent the stock tumbling (~18%),' the Keefe, Bruyette and Woods analysts wrote in a May 17 note to their clients. 'While revenue growth remains solid (+27% in 1Q), many fear this volume inflection is the first derivative, raising concerns that the second derivative—revenue growth—could eventually follow suit.' Hau's comments came after the price of Fiserv's stock plunged following the first-quarter earnings report and the outlook provided afterward in a webcast with analysts. He delivered a preamble at the Barclays conference meant to address those investor concerns. 'Clearly, it's been a difficult stretch for all of us investors,' Hau said in those initial remarks. The challenge for the Clover service, which has been expanding at a rapid rate across geographies, comes as the company has had a change in leadership. Earlier this month, Mike Lyons became Fiserv's CEO after Frank Bisignano was confirmed as the Trump administration's new commissioner overseeing the Social Security Administration. Clover's volume slowdown could have something to do with reports earlier this month that consumer sentiment was slumping, despite a rebound reported this week. Fiserv's chief operating officer, Takis Georgakopoulos, told the Barclays audience that the economy wasn't affecting the company's outlook. 'When you look at the actual spending data, you see a modest slowdown, not a decline,' Georgakopoulos said, noting a drop in the average tab amount for some sectors, like restaurants. 'So, I would say slower growth, but still growth.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
CFPB to yank ‘unlawful' open banking rule
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. The Consumer Financial Protection Bureau has determined that a 2024 rule authorizing open banking is 'unlawful' and should be scrapped, 15 years after Congress enacted legislation to make it easier for consumers to switch financial institutions, the agency told a federal court. The bureau plans to vacate the rule as part of a lawsuit in Kentucky, the CFPB's chief legal officer, Mark Paoletta, wrote in a federal court filing Friday. 'After reviewing the Rule and considering the issues that this case presents, Bureau leadership has determined that the Rule is unlawful and should be set aside,' the agency wrote in a status report filing. The Bank Policy Institute, which represents most of the large U.S. banks, said Friday in a press release that the bureau had acknowledged the rule's 'clear legal deficiencies.' But Financial Technology Association CEO Penny Lee in a statement Friday called the CFPB decision 'a handout to Wall Street banks, who are trying to limit competition and debank Americans from digital financial services.' The CFPB passed its final rule in October, drawing an immediate lawsuit from the Bank Policy Institute, the Kentucky Bankers Association and Kentucky-based Forcht Bank. The banking groups argued that the rule, under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, imposed heavy compliance costs and did not address liability issues around fraud and misuse of consumers' financial data. The plaintiffs also said the bureau had exceeded its authority under the act in formulating the rule. In late March, U.S. District Court Judge Danny Reeves had stayed the lawsuit for 60 days to allow the bureau – under the leadership of acting director Russell Vought – to review its position on the matter. The agency's move to vacate the rule means 'years of wasted work from banks and fintechs that could have been saved by amending rather than abandoning the rule,' Todd Baker, a senior fellow at the Richman Center for Business, Law & Public Policy at Columbia University, wrote Saturday on LinkedIn. FTA members and other fintechs had hoped that the bureau would choose to revise the rule, addressing areas of contention, rather than vacate it entirely. On May 14, Reeves ruled that the FTA can intervene to defend the lawsuit, finding that its members' interests were not adequately protected by either party in the litigation. The CFPB's move to vacate the rule could make the intervention moot, however. The agency has sought to reduce about 90% of its pre-Trump staff of around 2,000 employees and Vought has requested that Congress slash the bureau's budget as part of a budget bill House Republicans passed last week. The staff cuts remain mired in federal litigation. The bureau said it intends to file for summary judgment in the case by Friday, the same date as the plaintiffs' motion for summary judgment is due. An FTA spokeswoman said Monday the association will then respond to the motions and that the rule remains in effect until Reeves issues a decision. Last week, the Financial Data & Technology Association, which represents about three dozen fintechs, wrote to Vought urging that the CFPB not dismantle the rule. 'Vacating the existing rule and starting from scratch risks prolonging regulatory uncertainty that could stall market development, stifling innovation in critical digital financial technologies, and emboldening incumbents to entrench their positions and legacy technologies rather than compete,' FDATA North America Executive Director Steve Boms wrote. FDATA and some of its members also convened a conference call on May 19 with reporters to discuss the various problems they anticipate if the agency vacates the rule. One primary issue several speakers cited is the CFPB's ability to craft a new rule – as mandated in the Dodd-Frank law – with a minimal staff under Vought's management. The current open banking rule took the bureau five years to enact, beginning in the first Trump administration. Bloomberg Law reported May 8 that the bureau would seek to vacate the rule, citing multiple sources familiar with the strategy. Recommended Reading CFPB issues final rule on open banking Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
