Visa closes US open-banking unit as data fight heats up: source

[BENGALURU] Payments processor Visa has shuttered its open-banking business in the United States, according to a source familiar with the matter, as tensions mount between banks and fintechs over access to customer data.

The unit provides tools to fintechs for easier access to bank data, helping them offer smoother sign-ups and money transfers.

However, disputes between banks and fintechs have fuelled doubts about the future of open banking.

A Bloomberg report in July said that JPMorgan Chase had informed fintechs they would have to pay potentially hefty fees to access its customer data. PNC Financial CEO Bill Demchak has also said his bank was considering such a move.

Banks say such fees are necessary to recoup the cost of safeguarding and delivering customer data, while fintechs argue that banks should not be allowed to charge for information that belongs to customers, and the fees would slam their business.

Last month, venture capital giant Andreessen Horowitz’s general partner Alex Rampell likened the fees to “Operation Chokepoint 3.0”, a historical strategy in which regulators allegedly restricted certain industries’ access to financial services.

“We are focusing our open banking strategy in high-potential markets such as Europe and Latin America,” a spokesperson for Visa said.

Open banking has gained traction in Europe, where regulators required banks to share data with licensed third parties, but the US lacks such rules, leaving adoption to private agreements.

However, efforts to clarify the framework in the US are underway. On Thursday, the Consumer Financial Protection Bureau kicked off a rewrite of its regulations governing consumer control over the sharing of their personal data between banks and fintechs.

Visa’s closing the US open-banking unit was first reported by Bloomberg News. REUTERS