Cash is no longer king in today’s commercial world. Credit and debit card payments have exploded in the last decade as the preferred method of payment for transactions worldwide. And with this drastic shift, banks and retailers must ensure consumer data is protected at all stages of transactions.
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The Durbin Amendment strikes again. Today brings further evidence that the little-known amendment to the Dodd-Frank Act of 2010 by Sen. Richard Durbin (D-IL), which imposed price controls on debit card fees, has stripped access to financial services for the less affluent.
The Electronic Payments Coalition (EPC) announced today that Molly Wilkinson has resigned as Executive Director and accepted the position of Vice President of Regulatory Affairs for American Airlines.
Ms. Wilkinson joined EPC in June 2015 after serving as Senior Vice President of Regulatory Policy at Regions Financial Corporation and Executive Director of the Card Policy Council at American Bankers Association. She had a 22-year career in government service beginning at the New York State Legislature as a Research Assistant and concluding as the General Counsel for U.S. Senate Homeland Security & Governmental Affairs Committee for Ranking Member Senator Susan M. Collins.
During Ms. Wilkinson’s tenure, EPC led the fight for repeal of the Durbin amendment, which successfully passed out of the House Financial Services Committee (HFSC) in back-to-back Congresses as part of the CHOICE Act. Throughout this time, EPC rolled out a full-force campaign to highlight the policy’s failures to policymakers, consumers, and small businesses.
Representative Blaine Luetkemeyer, who championed the repeal of the Durbin amendment during the 115th Congress said, “Community banks and financial institutions continue to be hurt by the Durbin amendment’s price controls, but it’s not just banks that are hurt. It’s also low-income consumers who face increasing account fees and fewer rewards. I thank Molly for her leadership and EPC for all their hard work in the fight for repeal. I remain committed to repealing this harmful law.”
“Molly is an exceptional leader that knows how to get things done,” said Representative Ted Budd. “Her leadership brought the Electronic Payments Coalition tremendous success, and I know that she’s going to achieve the same level of excellence at American Airlines.”
“We’re excited for Molly and want to thank her for all she’s done over the past couple of years to advance the payments industry,” said Aaron Stetter of the Independent Community Bankers of America (ICBA) and immediate past EPC Board Chairman. “Under her leadership, we’ve had tremendous success demonstrating to Congress the Durbin amendment’s failures for consumers.”
“It’s been an honor to work on behalf of community banks, credit unions, and financial institutions to bring attention to a policy that has failed consumers for far too long,” said Wilkinson. “We’ve made great progress and EPC will continue to work to end this crony handout to retailers.”
To learn more about EPC, click here.
We have officially entered retailers’ favorite time of year: holiday shopping season. The next month should be joyful — but it might not be for consumers. Imagine unwrapping a notice that says your payment card was compromised at one of the dozens of merchants you visited on Black Friday or Cyber Monday.
It’s becoming a more frequent occurrence, and even though banks and credit unions typically make consumers financially whole for fraudulent transactions that result from a retailer breach, individuals are still deeply affected, spending hundreds of dollars to keep fraudsters from wreaking havoc on their credit history months, or even years, later.
As I read a recent op-ed regarding debit interchange price controls and a possible expansion to credit, I nearly spit out my coffee astonished by retailers’ misrepresentation of the state of play on the issue. In the desperate hope of turning the page, they are calling for Congress and this administration to double down on an anti-free market policy that has hurt low-income consumers, small businesses and small financial institutions — all while enriching retail behemoths. But to splash cold water on the delusions of big retailers, it’s not going to happen.
As the old saying goes, “fool me once shame on you, fool me twice shame on me.” In 2010, corporate retailers persuaded Sen. Richard Durbin (D-Ill.) to add an amendment to the Dodd-Frank Act, at the last moment with little scrutiny and debate. The provision, known today as the Durbin Amendment, capped interchange fees with the promise that it would lead to a level playing field for smaller retailers and save consumers on the goods they purchased.
Today, the Electronic Payments Coalition (EPC) released a report that found multiple dynamic fraud technologies are necessary to combat payment-card fraud.
EPC analyzed information from 20 countries that have varying levels of EMV adoption and use a mix of PIN and signature authentication. EPC found that chip-enabled smartcards—also known as chip cards—have dramatically reduced counterfeit card fraud. In countries where chip cards comprise at least 75 percent of payment cards, counterfeit fraud has declined by 84 percent over the last 11 years—even as the number of in-store transactions has increased 21-fold.
The report also examined the use of PIN and signature authentication, with research showing “there is no clear relationship between total card fraud and a country’s preference for using signatures or PINs” in conjunction with payment cards. This point emphasizes the need for choice—and not a government mandate—when it comes to payment-card security.
“This report confirms what we’ve said all along: You can’t rely on a single security technology to effectively protect consumers. Everyone involved in these transactions—customers, retailers, banks, and processors—must work together to prevent future data breaches and stop increasingly sophisticated criminals from stealing sensitive financial information,” said Molly Wilkinson, executive director of EPC. “Polling shows consumers trust financial institutions more than anyone else involved to develop new technologies to protect their financial data, but everyone in the payment system should be responsible for implementing these new tools and protocols. This includes retailers, who are not currently held to similar standards as financial institutions like banks and credit unions.”
This research demonstrates a one-size-fits-all approach is not the solution for data security and underscores the importance of innovation like tokenization and biometrics. In fact, seven in ten voters agree and say it is likely a more secure way to pay for goods will be introduced over the next few years, according to recent Morning Consult survey data.
Banks, credit unions, and other financial institutions are investing millions of dollars in new technology in order to better protect consumers from data breaches that compromise their sensitive information. Four times as many voters trust financial institutions over retail stores to develop new, more secure payment technologies, according to the same Morning Consult poll.
With technology constantly improving to stay ahead of evolving criminals, EPC urges the government to support a dynamic data security strategy which relies on several tools to protect consumers and authenticate payments. Mandating one static technology, such as PIN, is a disservice to consumers who deserve access to the latest innovations and value their ability to choose how they pay.
To view the full study, click here.
The following statement can be attributed to Molly Wilkinson, executive director of the Electronic Payments Coalition (EPC), in response to House Financial Services Committee (HFSC) Chairman Hensarling’s announcement that he will not seek re-election in 2018.
“EPC congratulates Chairman Hensarling on a long, successful career in Congress, and thanks him for his service to our country. In his more than fourteen years as congressman, including more than four years as Chairman of the House Financial Services Committee, he has repeatedly stood up for consumers and the free market. As Chairman, he continuously demonstrated his principled commitment to ending the Durbin amendment’s harmful price controls, leading his committee to vote twice in favor of repealing the provision and speaking out on its negative consequences. It is important that members of Congress stand up for what is right, especially given the mounting evidence that shows the Durbin amendment is a failure. Chairman Hensarling has consistently fought in defense of consumers, small businesses, credit unions, and community banks, and we hope others in Congress will do the same in years to come.”
Digital Transactions: Merchants Celebrate the Durbin Amendment’s Sixth Birthday as Payments Group Sneers
The Durbin Amendment’s debit card interchange price cap took effect six years ago this month, prompting a merchant group to celebrate the occasion and claim the measure has saved consumers and merchants $48 billion. But a lobbying group of payment networks and banks derided those savings estimates and once again said the amendment has hurt consumers.
More than half of voters are concerned with data breaches when purchasing goods at a large retailer, according to new Morning Consult survey data, underscoring the need for national data security standards.
As the number of retail data breaches increases, consumers continue to place more trust in banks and card companies when it comes to security and innovation. The survey showed there is a 32-point margin between people who trust card companies versus people who trust retailers when it comes to keeping card information secure. Plus, banks and card companies are the only entities a majority of voters place a lot of trust when it comes to the security of their personal information.
While financial institutions are subject to the data security requirements set by the Gramm-Leach-Bliley Act (GLBA), there are no similar national standards for retailers. The Electronic Payments Coalition (EPC) has long advocated for national data security standards to better protect consumers’ personal information from breaches.
“Financial institutions are committed to protecting their customers’ information before a breach even occurs. But if it does, they work hard to minimize the harm to their customers,” said Molly Wilkinson, executive director of EPC. “Until there are similar data security standards for retailers as there are for financial institutions, community banks and credit unions will continue to take on the burden of card replacement costs, reimbursing customers for fraud, and monitoring for fraudulent activity.”
Additionally, seven in ten voters say it is likely a more secure way to pay for goods will be introduced over the next few years. Four times as many voters trust banks and financial institutions over retail stores to develop these new, more secure payment technologies.
“In today’s ever changing world, we cannot remain static with our technologies,” said Wilkinson. “This is why banks and card companies are continuously innovating and providing new technologies for their customers to make their lives better and safer. Providing consumers with the latest security, as well as easy ways to pay, is a major focus of the payments industry.”
To view EPC’s infographic on the polling, click here.
Morning Consult, on behalf of the Electronic Payments Coalition, conducted an online survey of 2,000 registered voters from August 23-24, 2017. Results from the full survey have a margin of error of +/- 2 percent.