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In the past week, multiple experts have offered insight into the failings of the Durbin amendment since its enactment seven years ago. Here’s what they had to say:
J.W. Verret, associate professor of law at George Mason University, spoke to the measure’s shortcomings for The Hill:
“In 2011, the Federal Reserve adopted rules implementing fee caps on debit card transactions, pursuant to the Dodd-Frank Act of 2010. These rules have led to diminished access to credit products for consumers and have failed in their promise to lower consumer debit fees. The last eight years have shown this to be a failed experiment.
Studies by the Federal Reserve Bank of Richmond demonstrate that the Durbin amendment didn’t even fulfill its intended purpose. Retailers simply kept the cost savings. Thus, the Durbin Act merely reflected a very successful act of lobbying by retailers.”
In The Daily Caller, Andrew Wilford, who is a policy analyst for the National Taxpayers Union Foundation, had this to say about retailer and regulator intervention in the card market:
“After the Durbin Amendment capped debit card swipe fees, a Federal Reserve Bank of Richmond report found that 98.8 percent of retailers either kept prices the same or raised them. And a Federal Reserve Bank of Boston report found that rewards benefits generally exceed any price discounts that retailers can provide for using debit or cash.
While retailers claim their effort to strong-arm credit card providers is pro-consumer, the reality is that the best thing is to keep courts and legislators out of this argument. Credit card companies should have the right to refuse their service to retailers that don’t abide by certain conditions, such as avoiding steering practices and honoring all cards.”
More than half of voters feel they have not received a discount from retailers since the Durbin amendment went into effect seven years ago, despite retailers’ promises otherwise, according to new Morning Consult data. As such, a plurality of voters believes the amendment should be repealed if savings aren’t being passed along, consistent with consumers’ views in 2017.
“Year after year, retailers continue to harm consumers by failing to pass along promised savings—to the tune of six to eight billion dollars each year—while obstructing data security legislation establishing standards for all parts of the industry.,” said Jeff Tassey, chairman of the board of the Electronic Payments Coalition (EPC). “As we hit another unfortunate milestone with the Durbin amendment, it’s time retailers put their customers over profits in all areas of payments.”
The Durbin amendment, passed as part of the Dodd-Frank Act, placed price controls on interchange for debit card transactions. This nominal fee contributes to the cost of maintaining the complex electronic payments system, including processing and authorizing card payments. Since 2011, consumers have lost out on perks like free checking and debit card rewards in order to offset the price controls.
Moreover, a 2017 report from Javelin Strategy & Research found small merchants are more concerned about value, not price, when it comes to debit card interchange. A majority of small merchants were satisfied with what they pay and are even happier “when they are allowed to choose additional benefits even at a greater cost.”
“The electronic payments industry remains committed to providing consumers and businesses with many choices to pay and encourage retailers to do their part in adopting new technologies,” said Tassey. “As the industry continues to lead on creating secure, convenient ways to pay, we look forward to working with consumers to make the checkout process fit their needs. However, Congress must look out for consumers’ and merchants’ best interests and remove unnecessary government intervention—like the Durbin amendment—in the marketplace to ensure important innovation can take place.”
To view EPC’s infographic on the polling, click here.
Morning Consult, on behalf of the Electronic Payments Coalition, conducted an online survey of 1,979 registered voters from September 11-13, 2018. Results from the full survey have a margin of error of +/- 2 percent.
The availability and convenience of electronic payments hinge on them being a secure method of exchanging money. For now, consumers are still willing to use these technologies, but retailers risk eroding trust in commercial institutions with their lack of security preparation.
Consumers expect the retail and payments industries to move forward together in developing safer, more secure technologies that will protect consumers from the intrusion and disturbance of fraud. Clearly, the data breaches of the past few years have made an impact on consumer attitudes, and they are becoming more vocal. Retailers must decide if they will heed this call and do the right thing by investing in the security we need today and the innovation of tomorrow.
Statement from Jeff Tassey, chairman of the board of the Electronic Payments Coalition, on SCOTUS’s Ohio v. American Express decision:
“EPC applauds today’s Supreme Court ruling for establishing once and for all that the electronic payments system is a two-sided market and for clearly explaining how it operates. As card networks serve both consumers and merchants, regulation favoring one harms the other. Today’s decision establishes the need for policymakers to account for the interdependent nature and competitive realities of two-sided markets, undo harmful regulation, and reject future attempts by one party trying to gain unjust benefits at the expense of the other. Because electronic payments provide businesses and consumers with great benefits, we must ensure nothing impedes the ability of card networks to balance the interests of both sets of customers.”
WASHINGTON (June 18, 2018)—Financial institutions continue to dedicate resources towards developing and implementing innovations to make payments more convenient and secure, just as voters expect them to do. However, a majority believe both retailers and large financial institutions should invest in innovation, according to new Morning Consult survey data.
“Time and time again, retailers have shown they are more interested in cutting their own costs instead of making the necessary upgrades to make checking out more efficient and protect customers from fraud,” said Jeff Tassey, chairman of the board of the Electronic Payments Coalition (EPC). “While financial institutions remain committed to innovation in order to strengthen consumer choice, retailers must step up and catch up to the times.”
With a majority of consumers trusting innovative payments authentication methods, such as biometrics and encryption, retailers must fulfill their role in the payments ecosystem by adopting and supporting new technologies. In fact, more than one in three voters say fingerprint identification is more secure, beating out “traditional” methods such as PIN.
EMV chip still plays an important role in reducing fraud and a plurality of voters believe stores should only accept electronic payments if they’re equipped with EMV. While the number of merchants accepting EMV continues to grow—in March, it was estimated that 63 percent of merchants were EMV-enabled—it remains vital that retailers upgrade so all card payments are chip-on-chip.
“Financial institutions will continue to invest in resources that make electronic payments safer, easier, and more beneficial for retailers and consumers, but all players in the payments ecosystem—including retailers— must pull their weight,” said Tassey. “As breaches increase and fraudsters switch their methods, collaboration remains critical in order to protect consumers from fraud. Coming off one of the most breach-filled years in 2017, we cannot afford to waste any more time.”
To view EPC’s infographic on the polling, click here.
Morning Consult, on behalf of the Electronic Payments Coalition, conducted an online survey of 2,201 registered voters from May 18-22, 2018. Results from the full survey have a margin of error of +/- 2 percent.
The below statement can be attributed to Jeff Tassey, Chairman of the Board of EPC, on the creation of the Secure Payments Partnership:
“Here retailers go again, lobbying Washington for further regulation in the interest of cutting their own costs instead of protecting their customers from fraud. Despite claims, all players in the payments ecosystem—including retailers—have the opportunity to provide feedback and participate in the process. We must all be committed to providing consumers with security and innovation without impeding consumer choice.”
Survey results have determined voters still prefer bank institutions over retailers with regard to developing payment technologies and protective initiatives.
The effort executed by Morning Consult showed four in five voters agree stores should update their technologies to ensure customers have a range of payment options at the register and retailers should share in the infrastructure fees that make electronic payments possible.
Voters still trust financial institutions over retailers to develop new payment technologies and safeguard personal information during the checkout process, according to new Morning Consult survey data.
In fact, a strong majority of voters expect retailers to step up when it comes to payments. Four in five voters agree that stores should update their technologies to ensure customers have a range of payment options at the register and that retailers should share in the infrastructure fees that make electronic payments possible.
“Financial institutions continue to develop new technologies to make electronic payments quicker, safer, and more convenient—all of which make retailers’ and consumers’ lives better,” said Jeff Tassey, chairman of the board of the Electronic Payments Coalition (EPC). “However, the onus is on retailers to step up and protect their customers at the checkout. As the recent data breach at Lord & Taylor showed, retailers must be proactive and do their fair share by updating their technology and safeguarding sensitive payment card information.”
Since November 2017, retailers have seen a 15 percent drop in voter trust when it comes to payment technology innovation. Meanwhile, at least 70 percent of voters trust banks, credit unions, credit card companies, and other financial institutions to innovate payment technology, with 1 in 2 trusting these entities the most.
These institutions also rank higher than big-box retailers and smaller businesses, both in store and online, when it comes to trust in protecting payment card information. That’s no surprise, as retailers are not subject to federal data security standards and have seen several breaches in recent weeks, including those at Best Buy, Kmart, Panera Bread, and Lord & Taylor.
“As the number of retail breaches continues to rise, more and more consumers have had financial data compromised and their lives upended,” said Tassey. “To combat this, financial institutions go beyond their federal requirements to protect consumers. This is likely why voters trust them to lead the way on all types of innovation. Retailers, a major part of the payments ecosystem, must join this fight against fraud and begin prioritizing the development and implementation of new technologies to better protect consumers.”
To view EPC’s infographic on the polling, click here.
Morning Consult, on behalf of the Electronic Payments Coalition, conducted an online survey of 1,994 registered voters from April 4-6, 2018. Results from the full survey have a margin of error of +/- 2 percent.
The National Retail Federation (NRF) has launched an ad campaign to advocate for “uniform national” data breach standards for “all affected industries.”
Welcome to the cause. The financial services industry already is subject to uniform standards and continually has fought for national rules to cover all affected industries.
Retailers opposed these efforts. Instead groups like the Retail Industry Leaders Association push lawmakers and regulators to instead adopt a government mandate that would cost billions to implement and do little to protect consumers.
Barclays of London introduced Personal Identification Numbers (PINs) in 1967, the year the Beatles and Monkees battled for the top of the charts. That music is timeless. PIN is not. Because PINs are a static data element, they don’t protect against counterfeit or card not present (CNP) fraud, which together account for about 85 percent of total U.S. card fraud.
According to the Aite Group, it would cost retailers $4 billion to fully implement PIN. That expense would be worthy if it adequately protected consumers, but it wouldn’t. In fact, an Aite analyst concluded mandating PIN would be “difficult to justify.”